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a financial institution is an intermediary that channels the savings of individuals, businesses, and governments into loans or investments. true/false


which of the following is not a financial institution

newspaper publisher

primary and secondary markets are used for short and long term securities respectively. true/false


an efficient market is one that allocates funds to their most productive use as a result a competition amongst wealth, maximizing investors. true/false


the major securities traded in the capital markets are called

stocks and bonds

the liklihood that managers may place goals ahead of corporate goals called the agency problem. true/false


the accrual method recognizes revenue at the point of sale and recognizes expenses when incurred. true/false


the price/earning ratio represents the degree of confidence that investors have in the firms future performance. true/false


dividend payments change directly with changes in EPS. true/false


free cash flow is the cash flow a firm generates from its normal operations calculates as EBIT- taxes plus depriciation. true/false


the financial manager pllaces primary emphasis on cash flows, the inflow outflow of cash.true/false


a primary market is a financial market in which preowned securities are traded. true/false


the more equity a firm uses in relation to its assets, the higher its financial leverage.true/false


in cash budgeting, the impact of the depreciation is reflected in a reduction in tax payments.true/false


a firm with a total asset turnover lower than the industry standard may have

insufficient sales

in the statement of cash flows, retained earnings are handled through the adjustment of which two accounts

net profits and dividends

the financial leverage multiplier is an indicator of how much blank a corporation is utilizing

total debt

one way often used to insure that management decisions are in the best interest of the stockholders is to

tie management compensation to the performance of the companys common stock

what is an example of cash inflow

net profits after taxes, a decrease in accounts recievable, an increase in accruels

what is an example of cash outflow

an increase in accounts recieveable

in a corporation, the members of the board of directors are elected by the


managerial finance involves tasks such as

budgeting ,financial forecasting, cash management, and funds procurement

cash flows associated with the purchase and sale of fixed assets and business interests are called

investment flows

the blanke measures the percentage of profit earned on each slaes dollar before interest and taxes

operating profit margin

the key role of the financial manager is

decision making

a form with a gross profit margin which meets industry standard and a net profit margin which is below industry standard must have excessive

general and administrative expenses

the statement of cash flos provides a summary of the firms

all cash flow activities

the financial manager is interested in the cash inflows and outflows of the firm, rather than the accounting datam in order to ensure


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