Exam 8: Implementing Strategies: Finance and Accounting Issues

On a balance sheet, bonds are included in the current liabilities row.

The cash account is used as the plug figure in projected balance sheets.

To be a price leader or a price follower is a decision that may require finance/accounting policies.

What tends to become a more attractive financing technique when interest rates are high?

Stock that a firm has repurchased is called ________ stock.

To determine the price-earnings ratio, divide the Earnings per Share (EPS) by the stock price.

Stock issuances are always better than debt for raising capital.

A way to raise capital for new projects is to acquire existing businesses.

As a balance sheet entry, goodwill represents the favor a business has acquired through its environmentally conscious and socially responsible actions.

Explain briefly what is meant by capital structure.

When additional stock is issued to finance implementation of strategy, the existing stockholders' ownership and control of the enterprise are strengthened.

Too much debt in the capital structure of an organization can endanger stockholders' returns and jeopardize company survival, particularly in periods of high earnings.

EPS/EBIT analysis is a widely used technique for determining a firm's competitive threats.

Which is NOT a step in performing a projected financial analysis?

A conservative rule of thumb is to establish a business' worth to be 10 times the firm's most current annual profit.

In projected financial statements, what is used as a plug figure?

Two primary sources of capital are debt and equity.

The proportion of debt to equity on a balance sheet is often referred to as a firm's

Even if earnings remain the same, an increase in treasury stock impacts the EPS positively.

The primary sources of capital are known as debt and EPS.