Quiz 1, Chapter 2

M2

Do you agree with each of the following statements? Explain. •EBITDA makes companies with asset-heavy balance sheets look healthier than they may actually be.•EBITDA portrays a company’s debt service ability— but only some types of debt.•EBITDA isn’t a determinant of cash flow at all.

4. What is the result of repaying debt? (Ignoring changes in the cost of capital) A B C E FL A decrease in both cash and liabilities, with decreased enterprise value An increase in both cash and liabilities, with enterprise value unchanged A decrease in both cash and shareholders' equity None of the options listed A decrease in both cash and shareholders' equity, with enterprise value unchanged I do not want to answer this question

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Answer a and b a) Discuss the concept of capital in terms of finance and the WAYS IT IS RAISED deliberately.b) Discuss the purposes and the functions of primary and secondary markets. Explain how the secondary market supports the function of the primary market, how 2008 financial market turmoil impedes this.

Balance Sheet Insolvency occurs when Liabilities are greater than the Assets resulting in negative capital equity.  For a Financial Institution, Insolvency Risk can be defined as the risk that there is insufficient capital to offset either a decrease in the market value of assets relative to liabilities or an increase in liabilities relative to the market value of assets.         A. Describe a situation where Insolvency Risk could be caused one of the many risks that a Financial Institution may face. B. Describe the best protection against insolvency risk at a Financial Institution.

Help. 14. Making a credit decision is based upon all of the following except which? a. character b. capital c. complaint d. Collateral 15. Statement I: The aggressive approach to working capital financing is where the company finances temporary current assets, some or all of its permanent current assets, and possibly some of its long-term capital assets with short-term debt. Statement II: The conservative approach to working capital financing is where the company finances temporary current assets, some or all of its permanent current assets, and possibly some of its long-term capital assets with short-term debt. Which of the above statements is/are true? a. I only b. II only c. Both I and II d. Neither I nor II

(1) What factors might lead a company to gainadditional funds through debt financing rather thanthrough equity financing? (2) Why does consumerdebt have a more negative connotation than businessdebt?

Q12.8 Under the residual income approach and the discounted cash flow approach to firm valuation, earnings and cash flows, respectively, are discounted using a firm's cost of equity. Discuss why the cost of equity is the appropriate discount rate to use to discount a firm's earnings and cash flows. Why is the cost of debt inappropriate to use to discount a firm's earnings or cash flows?

When we compute the EV/EBITDA multiple, i.e. the ratio of Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization, we estimate the enterprise value of a firm by adding the values of debt and equity and netting out cash. Could you provide a reason for netting out cash? O a. Cash can be used to pay down debt. O b. Cash is easy to value. O c. None of the given answers is correct. The income from cash is not part of EBITDA. Cash is liquid. O d. O e.

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What is the definition of “opportunity cost” as it relates to the time value of money? It is the loss of a potential gain choosing one alternative over another, particularly ignoring the time value of money. It is the benefit side of the cost/benefit ratio. It is the price of selling an asset. It is the amount of money invested in saving bonds. exoplain your answer give correct answer

please answer below in detail

Why can an M&A fail? O a. Economies of scale O b. shortcomings of the due diligence process, problems not discovered O c. Higher debt taking capability O d. Tax allowances

99 Information found in the income statement does NOT help users to______________  Select one: a. help assess the risk of not achieving future cash flows. b. calculate the exact amount of future dividends. c. evaluate the past performance of the enterprise. d. provide a basis for predicting future performance.

Which of the following statements is not correct? Group of answer choices A)Purchasing fixed assets using cash decreases the current ratio. B)Accruing a commission expense will affect the net profit margin ratio. C)Increasing the financial leverage ratio guarantees the net profit margin ratio will increase. D)Purchasing treasury stock results in a decrease in the current ratio. E)All of the above are correct

Which of the following transactions would result in an increase in capital employed? A. Paying a trade payable in cash B. Writing off a bad debt C. Purchasing on credit D. Repaying a loan E. Selling inventory at a profit F. Increasing the bank overdraft to purchase a non - current asset

Q1)B. Determine whether the sentences are True Or False: 1) Stabilizing the economy is the primary function of Commercial banks ( -------------- ) 2) The Credit creation activity can raise aggregate demand which leads to more production in the economy( -------------- ) 3) Risk aversion is the difference between the return on a risky asset and less risky asset, which serves as compensation for investors to hold riskier securities ( -------------- ) 4) The transfer of risk occurs in the capital  markets ( -------------- ) 5) The tighter the probability distributions of expected future returns, the higher the risk of a given investment(-------------- ).

please do not give me direct answer i want explanation of all options ,please do not plagiarise it thnku

Which of the following statement is INCORRECT?   Question 20 options:   1)  The finance manager manages the short-term balance sheet items of the company, such as current assets and current liabilities.   2)  The finance manager uses investment evaluation techniques to decide whether to purchase fixed assets.   3)  The finance manager seeks to maximise the firm’s wealth when deciding on the choice of capital sources such as debts and equity.   4)  The right-hand side of the balance sheet refers to the company’s investment decisions to buy fixed assets to generate returns.

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Which of the following is incorrect about debt financing? A. Debt financing always generates excess returns which benefits equity investors b. One benefit of debt financing is that interest on most debt is fixed c. One benefit of debt financing is that interest is a tax deductible expense d. It increases financial leverage

2. Which of the following is NOT an example of the financial distress game?A) Cash in and RunB) Playing for TimeC) Bait and SwitchD) Empire Building