Test Bank all Chapter, Answer at the end of

Corporate Finance Core Principles and Applications, 6e Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan

( all Chapter, Answer at the end of each Chapter)

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Version 1 1 Chapter 1 MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question.1) Which one of these is an intangible asset?

• A building
• Accounts receivable
• Inventory
• A loan to a client
• A patent

2) Current assets include

• inventory and cash.
• cash and buildings.
• inventory and machinery.
• equipment and cash.
• buildings and inventory.

3) Short-term finance

• ensures sufficient equipment is available to produce the daily amount of product

desired.

• ensures that long-term debt is acquired at the lowest possible cost.
• ensures that dividends are paid to all stockholders on an annual basis.
• balances the amount of company debt to the amount of available equity.
• is concerned with managing net working capital.

4) Which one of the following is a capital budgeting decision? 2 / 4

Version 1 2

• Deciding whether to open an office in a foreign location
• Determining how quickly customers are required to pay their receivables
• Determining whether to use short- or long-term liabilities
• Deciding how many shares of stock to repurchase
• Determining how much cash to keep on hand

5) The managers in a firm have agreed to move the company's headquarters from a rented space to a new building that the company will purchase. The is an example of

• a net working capital decision.
• a capital budgeting decision.
• a short-term financing decision.
• a capital structure decision.
• a cash flow decision.

6) Which of the following is a net working capital decision?

• Deciding whether to build an apartment building
• Negotiating whether to lease or buy a new store location
• Determining whether to issue debt or equity to pay for the firm's expansion
• Deciding how much inventory to keep on hand
• Determining whether to replace a fleet of vehicles

7) The process of planning and managing a firm's long-term investments is referred to as

• capital budgeting.
• agency cost analysis.
• financial depreciation.
• working capital management.
• capital structure.

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Version 1 3 8) Capital structure decisions involve the

• determination of the ideal mix of current versus long-term assets.
• deciding which fixed assets will be used to produce a tangible product.
• determination of the ideal mix of current assets and current liabilities.
• choices related to acquiring or disposing of long-term assets.
• choices related to long-term debt and equity financing.

9) Net working capital is best defined as

• excess cash on hand.
• a firm's current assets.
• current assets minus current liabilities.
• total assets minus total liabilities.
• cash and near-cash assets.

10) The treasurer and the controller of a corporation generally report to the

• president.
• board of directors.
• chief executive officer.
• chief financial officer.
• chairperson of the board.

11) Which one of the following statements is correct concerning the organizational structure of a corporation?

• The vice president of finance reports to the chairperson of the board.
• The chief operations officer reports to the chief executive officer.
• The controller reports to the president.
• The treasurer reports to the chief executive officer.
• The chief operations officer reports to the vice president of production.
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