Which of the following is not a method of “benchmarking”?
Conduct an industry group analysis.
Evaluating a single firm’s performance over time.
Identify a group of firms that compete with the company being analyzed.
Utilize the DuPont system to analyze a firm’s performance
What decision criteria should managers use in selecting projects when there is not enough capital to invest in all available positive NPV projects?
The discounted payback.
The modified internal rate of return.
The internal rate of return.
The profitability index
If a company’s weighted average cost of capital is less than the required return on equity, then the firm:
Has debt in its capital structure
Must have preferred stock in its capital structure
Is financed with more than 50% debt
Is perceived to be safe
A firm’s capital structure is the mix of financial securities used to finance its activities and can include all of the following except
stock.
bonds.
equity options.
preferred stock
Which of the following cannot be engaged in managing the business?
a sole proprietor
a general partner
a limited partner
none of these
Which of the following does maximizing shareholder wealth not usually account for?
Government regulation.
The timing of cash flows.
Amount of Cash flows.
Risk.
The strategic plan does NOT identify
future mergers, alliances, and divestitures.
major areas of investment in real assets.
the lines of business a firm will compete in.
working capital strategies.
Firms that achieve higher growth rates without seeking external financing
none of these.
have less equity and/or are able to generate high net income leading to a high ROE.
have a low plowback ratio.
are highly leveraged.
The cash conversion cycle
begins when the firm uses its cash to purchase raw materials and ends when the firm collects cash payments on its credit sales.
estimates how long it takes on average for the firm to collect its outstanding accounts receivable balance.
shows how long the firm keeps its inventory before selling it.
begins when the firm invests cash to purchase the raw materials that would be used to produce the goods that the firm manufactures.
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