41. All of the following represent cash outflows to the firm except a. Taxes. b. Interest payments. c. Dividends. d. Purchase of plant and equipment. e. Depreciation. e ANSWER: Easy DIFFICULTY: Cash flows TOPICS: 42. Other things held constant, if a firm holds cash balances in excess of their optimal level in a non-interest bearing account, this will tend to lower the firm's a. Profit margin. b. asset turnover. c. Return on equity. d. All of the above. e. Answers b and c above. e ANSWER: Easy DIFFICULTY: Excessive cash balances TOPICS: 43. Other things held constant, which of the following will not affect the current ratio, assuming an initial current ratio greater than 1.0? a. Fixed assets are sold for cash. b. Long-term debt is issued to pay off current liabilities. c. Accounts receivable are collected. d. Cash is used to pay off accounts payable. e. A bank loan is obtained, and the proceeds are credited to the firm's checking account. c ANSWER: Easy DIFFICULTY: Current ratio TOPICS:
41. All of the following represent cash outflows to the firm except a. Taxes. b. Interest payments. c. Dividends. d. Purchase of plant and equipment. e. Depreciation. ANSWER: e DIFFICULTY: Easy TOPICS: Cash flows 42. Other things held constant, if a firm holds cash balances in excess of their optimal level in a non-interest bearing account, this will tend to lower the firm's a. Profit margin. b. asset turnover. c. Return on equity. d. All of the above. e. Answers b and c above. ANSWER: e DIFFICULTY: Easy TOPICS: Excessive cash balances 43. Other things held constant, which of the following will not affect the current ratio, assuming an initial current ratio greater than 1.0? a. Fixed assets are sold for cash. b. Long-term debt is issued to pay off current liabilities. c. Accounts receivable are collected. d. Cash is used to pay off accounts payable. e. A bank loan is obtained, and the proceeds are credited to the firm's checking account. ANSWER: c DIFFICULTY: Easy TOPICS: Current ratio
Test-Bank-for-CFIN-4-4th-Edition-by-Besley.docx