Fin 534 Quiz

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FIN 534 quiz 7 week 8



1.A company expects sales to increase during the coming year, and it is using the AFN equation to forecast the additional capital that it must raise. Which of the following conditions would cause the AFN to increase?


The company previously thought its fixed assets were being operated at full capacity, but now it learns that it actually has excess capacity.

The company increases its dividend payout ratio.

The company begins to pay employees monthly rather than weekly.

The company’s profit margin increases.

The company decides to stop taking discounts on purchased materials.

2.Which of the following statements is CORRECT?


Once a firm has defined its purpose, scope, and objectives, it must develop a strategy or strategies for achieving its goals. The statement of corporate strategies sets forth detailed plans rather than broad approaches for achieving a firm's goals.

A firm’s corporate purpose states the general philosophy of the business and provides managers with specific operational objectives.

Operating plans provide management with detailed implementation guidance, consistent with the corporate strategy, to help meet the corporate objectives. These operating plans can be developed for any time horizon, but many companies use a 5-year horizon.

A firm’s mission statement defines its lines of business and geographic area of operations.

The corporate scope is a condensed version of the entire set of strategic plans.

3.Last year Wei Guan Inc. had $350 million of sales, and it had $270 million of fixed assets that were used at 65% of capacity. In millions, by how much could Wei Guan's sales increase before it is required to increase its fixed assets?







4.Last year Godinho Corp. had...