Ch 1 - 7

Question 1

The goal of a corporation?

Answer 1

1. To make a profit ( con: short cuts, risky moves, cheap quality) = can be vulnerable
2. Increase share price (maximizing shoulder holder value) - definition long term

3.Long-term Statinablity

4.Growth

5.Building relationships (Stakeholder relationships)

Question 2

Why is it maximizing value?

Answer 2

Increase share price

Question 3

What is nonprofit value?

Answer 3

capital gotta expensive or no access to it, go under/ bankruptcy

Question 4

How does corporate and social responsibility impact corporate decisions?

Answer 4

Due to them, Social wants to build trust and connection with the corporate decisions to increase financial success. While Corporate tries to bring loyalty to create an image to attract clients or opportunities.

Question 5

Do investors
only care about earnings, or other considerations like treatment of stakeholders and
long-term viability?

Answer 5

Investors care more about the treatment of stakeholders and long-term viability due to wanting to make money and safety investments that be good financially.

Question 6

What is the time value of money

Answer 6

money in the present is worth more than the same sum of money to be received in the future

Question 7

What depreciation and interest expense are on the income statement

Answer 7

amount reflects a portion of the acquisition cost of the asset for production purposes.

Question 8

What are current assets?

Answer 8

cash and other assets that are expected to be converted to cash within a year.

Question 9

What are current liabilities

Answer 9

amounts due to be paid to creditors within twelve months.

Question 10

What are the limitations of financial statements

Answer 10

fraudulent practice while recording information, dependency on historical costs, lack of comparability, and non-adjustability to inflation

Question 11

What is Accrual accounting

Answer 11

records payments and receipts when services or good are provided or debt is incurred.

Question 12

What is cash basis of accounting

Answer 12

cash receipts and disbursements

Question 13

What is Receivable turnover

Answer 13

an accounting measure used to quantify how efficiently a company is in collecting receivables from its clients

Question 14

What is the Profitability ratio; profit margin

Answer 14

Profit Margin = return on sales ratio or gross profit ratio

Profitability ratio = measures the amount of net income earned with each dollar

Question 15

Fixed asset turnover

Answer 15

how well or efficiently a business uses fixed assets to generate sales.

Question 16

Quick ratio

Answer 16

measures the ability of a company to use its near cash or quick assets

Question 17

What is the Current ratio

Answer 17

measures a company’s ability to pay short-term obligations or those due within one year

Question 18

Impact of current asset buildup (sales up vs sales down)

Answer 18

Sales affects the balance sheet because sales generate revenue and revenue increases the company’s assets

Question 19

Definition of working capital management

Answer 19

the process through which a company plans for utilizing its current assets and liabilities in the best possible manner to ensure operational effectiveness

Question 20

Permanent current assets

Answer 20

the minimum amount of current assets a company needs to continue operations

Question 21

temporary current assets

Answer 21

variable current assets that move in line with seasonal fluctuations in sales.

Question 22

Level production

Answer 22

each process step works in unison at a constant rate of production equal to the rate of customer demand or takt time.

Question 23

Level production advantage

Answer 23

increases the chance you can respond to special requests from customers and fill large orders on time.

Question 24

Level production disadvantage

Answer 24

lead to stockouts

Question 25

Optimal financing of assets

Answer 25

capital structure that results in maximum value

Question 26

What is Electronic Funds Transfer

Answer 26

transfer of money from one bank account to another, either within a single financial institution or across multiple institutions, via computer-based systems,

Question 27

Benefits of ACH

Answer 27

• Gain more control over your daily cash flow.
• Streamline the disbursement process.
• Improve cash flow forecasting.
• Set up recurring payments.
• Eliminate mail float.

Question 28

Benefits of checks

Answer 28

• No convenience fees. Many businesses charge convenience fees for electronic payments. …
• The safe way to send money. …
• Proof of payment. …

Question 29

economic order quantity

Answer 29

the ideal quantity of units a company should purchase to meet demand while minimizing inventory costs such as holding costs, shortage costs, and order costs

Question 30

Examples of carryings costs

Answer 30

warehouse storage fees, taxes, insurance, employee costs, and opportunity costs.

Question 31

what is float

Answer 31

money within the banking system that is briefly counted twice due to time gaps in registering a deposit or withdrawal