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Flashcards in Chp7-Quiz Deck (10):
1

A flexibility crisis is a rare, unpredictable event

TRUE

2

The quantitative ratio, that serves as an indicator of a firm's ability to meet contractual obligations is

Coverage ratio

3

The coverage ratio elements are

1) Interest Payment, 2) Tax Rate, and 3) Sinking Fund Obligations

4

Every financing alternative where the dilution effect on EPS of issuing new shares is matched exactly by the dilution resulting from interest payments on new debt is called

Breakeven point

5

Risk involves rare, unpredictable events.

FALSE

6

The status of the capital markets at the time that funding is needed is the FRICTO step of

Timing

7

Which of the following is not a step in FRICTO analysis?

Flexibility, Risk, and Income - all of the above are steps in FRICO analysis

8

The income step of FRICTO analysis addresses which of the following?

EPS dilution, Explicit Costs, and Implicit Costs - all of the above

9

Breakeven EBIT calculations enable managers to assess

The point at which EPS dilution is equal for two financing alternatives

10

Which of the following is not a step in FRICTO analysis?

Tenacity