Chapter 7: Financial Management Flashcards
All of the following are cost categories in the life cycle analysis except:
A. Cost-to-life span ratio
B. Initial costs of the acquisition
C. Ongoing expenses
D. One-time future expenses
A. Cost-to-life span ratio
The standard business performance measures that results from subtracting all qualified operating expenses from income is called:
A. Revenue
B. Cash flow
C. Net operating income
D. Profit
C. Net operating income.
If Poncho Electronics intends to occupy one location for a long time to establish itself in the electronics market, it should consider:
A. Owning and occupying a property
B. Owning and managing a property
C. Renting a property
D. Owning several properties
A. Owning and occupying a property.
The maturity stage is characterized by:
A. Negative cash flow
B. Innovative projects capitally funded
C. Capitol investments being offset by depreciation
D. Fewer sales and greater customer loyalty
C. Capitol investments being offset by depreciation.
The total profit divided by the total amount originally used to generate revenue is called return on:
A. Capitol
B. Assets
C. Equity
D. Investments
D. Investments.
Dior Properties has planned a major renovation to a small office building to update equipment, decor, and office spaces. This is an example of a(n):
A. Indirect contributions to creating asset value
B. Direct contributions to creating asset value
C. Indirect contributions to retaining income
D. Direct contribution to retaining income
B. Direct contribution to creating asset value.
The actual remaining cash after debt service is:
A. Income
B. Cash flow
C. Net operating income
D. Profit
B. Cash flow.
The amount you invest to start up and operate a business is usually:
A. One-third of gross amount
B. A Capitol investment
C. Venture capital
D. Nontaxable
D. Nontaxable.
When analyzing several options for a facility project, non-cost issues assume greater importance when cost/savings comparisons:
A. Vary widely
B. Yield similar results
C. Are reviewed by senior management
D. Do not involve equity
B. Yield similar results.
The financial analysis that considers the costs of an asset against its usefulness is a:
A. Lowest first-cost analysis
B. Cost-benefit analysis
C. Life-cycle cost analysis
D. Time-sensitive analysis
B. Cost-benefit analysis.
The difference between the amounts of assets and liabilities is known as:
A. Depreciation
B. Residual value
C. Net worth
D. Retained earnings
C. Net worth.
The ability or expectation of _____________ to generate revenue is one of its distinguishing characteristics.
A. Retained earnings
B. Yield
C. Assets
D. Capital
D. Capitol.
Based on the general formula for taxation, whatever remains after deducting eligible expenses from gross income is:
A. Net profit
B. Taxable income
C. Retained earnings
D. Capital
B. Taxable income.
In which stage of the business cycle does product price rise dramatically?
A. Start up
B. Consolidation/growth
C. Maturity
D. Decline
B. Consolidation/growth.
