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5 Written questions

5 Matching questions

  1. Operating expenses
  2. Profitability
  3. Financial management
  4. Current assets
  5. Debt-to-equity ratio
  1. a include marketing, administrative costs, and other expenses not directly related to producing a product or service.
  2. b calculated by dividing its long-term debt by its shareholders' equity, if it gets too high, it may have trouble meeting its obligations and securing the level of financing needed to fuel its growth.
  3. c the ability to earn a profit.
  4. d deals with two activities: raising money and managing a company's finances in a way that achieves the highest rate of return .
  5. e include cash plus items that are readily convertible to cash, such as accounts receivable, marketable securities, and inventories.

5 Multiple choice questions

  1. a method for expressing each expense item as a percentage of sales.
  2. shows the projected flow of cash into and out of the company during a specified period.
  3. a new firm's forecast should be preceded in its business plan by an explanation of the sources of the numbers for the forecast and the assumptions used to generate them.
  4. a statistical technique used to find relationships between variables for the purpose of predicting future values.
  5. a report similar to the annual report except that it contains more detailed information about the company's business.

5 True/False questions

  1. Fixed assetsassets used over a longer time frame, such as real estate, buildings, equipment, and furniture.


  2. Stabilitythe strength and vigor of the firm's overall financial posture.


  3. Pro forma balance sheetprovides a firm a sense of how its activities will affect its ability to meet its short-term liabilities and how its finances will evolve over time.


  4. Operating activitiesinclude net income (or loss), depreciation, and changes in current assets and current liabilities other than cash and short-term debt.


  5. Owner's equitymiscellaneous assets, including accumulated goodwill.


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