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Exam 8: Stockprivate

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Question 51

True/False

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Repurchases of shares may be viewed as an alternative to paying cash dividends.

A) True
B) False

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Question 52

Multiple Choice

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Preferred stock and long?term bonds are similar Because

A) they both have voting power
B) interest and dividend payments are fixed
C) interest and dividend payments are legal obligations
D) interest and dividend payments are tax?deductible expenses

E) A) and B)
F) C) and D)

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Question 53

True/False

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The statement of cash flow places emphasis on management's ability to retire debt.

Creditors would prefer 1) a quick ratio of 1.2 to a quick ratio of 0.8 2) a quick ratio of 0.8 to a quick ratio of 1.2 3) days sales outstanding of 46 to a Days sales outstanding of 35 4) days sales outstanding of 35 to a Days sales outstanding of 46

The quick ratio is a better measure of liquidity than the current ratio for manufacturers.

Both corporate earnings and cash dividends received by stockholders are taxed by the federal government.

Stockholders in a publicly held corporation have limited liability.

A major advantage associated with dividend reinvestment plans is forced saving.

As times?interest?earned increases,

Which of the following is a cash outflow?

Given the following information, construct the statement of changes in financial position. What happened to the firm's liquidity position during the year?

Stock dividends cause

Lower depreciation increases earnings and cash flow.

Preferred stock dividends are usually cumulative.

An increase in assets financed by equity increases the debt ratio.

The more financially leveraged a firm, the smaller is its debt ratio.

The price of a stock generally adjusts downward for the distribution of dividends.

If stockholders receive dividends in their traditional individual retirement account, the income tax is deferred.

Managements are often reluctant to reduce dividends because reductions may be viewed as indicating financial weakness.

A firm's balance sheet has the following entries: What will be each of these balance sheet entries after a a. $2 a share cash dividend b. four?for?one split c. 5 percent stock dividend (current price of the stock is $20)?