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Which will be larger: accrual taxes payable or accounting income tax expense Correct Answer:Â Accounting tax expense will be higher; actual taxes based on IRS rules will be lower
Which financial ratios measure "efficiency"? Correct Answer:Â Asset turnover and Fixed Asset turnover
Which ratio is the best measure of a firm's ability to pay bills? Correct Answer:Â Quick Ratio
Which decision requires using subjective estimates? Correct Answer:Â Economic life of a new asset
What is the yield to maturity on a bond? Correct Answer:Â The return earned from the purchase date to maturity
If a firm buys a 30-day CD, where is it carried on the balance sheet? Correct Answer:Â Cash and ST in current assets
How does a "prudent investor" select investments? Correct Answer:Â Seeks the highest return for "reasonable" amount of risk
What is the difference between WACC and CAPM's required return? Correct Answer:Â CAPM includes only equity required return; WACC includes debt and equity
What do points on the Efficient Frontier measure? Correct Answer:Â The maximum return for a given level of risk; maximum Return-to-risk ratio
What is Beta? Correct Answer:Â Measure of volatility of a stock's risk relative to the market
Why are accurate forecasts important? Correct Answer:Â Plan for resources to support sales
Which leverage measure shows the impact of EBIT changes on pre-tax profit (EBT)? Correct Answer:Â Financial leverage
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