Quiz Ch 15 – T/F Successful Corporations and Venture Capital
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
True or false: Some accomplished companies offer venture capital to innovative startups.
True or false: Some accomplished companies offer venture capital to innovative startups.
True or false: The target cash balance is usually set in a way that doesn’t require adjustment for either seasonal patterns or unforeseen random fluctuations, which is both logical and typical.
True or false: A company’s collection policy, the methods it employs to collect accounts receivable, is vital in maintaining a short average collection period. However, an excessively strict collection policy can lead to profit reduction due to lost sales.
True or false: Given that receivables and payables originate from sales transactions, a company with a substantial receivables-to-sales ratio is likely to exhibit a correspondingly elevated payables-to-sales ratio.
True or false: When calculating net working capital, a firm that finances a new manufacturing plant with short-term loans intended to convert to first mortgage bonds upon completion would prefer to distinguish the construction loan from its current working capital liabilities.
True or false: A line of credit, whether formal or informal, sets the maximum credit amount a bank will provide in the future, conditional on the borrower’s financial strength.
True or false: For the majority of initial public offerings (IPOs), underpricing is NOT a significant concern.
True or false: Permanent current assets are a reflection of the fact that some components of current assets don’t diminish to zero even during a business’s seasonal or cyclical lows. Consequently, these permanent current assets signify a minimal level of current assets that necessitates funding.
True or false: Spinning, in underwriting, is when an underwriter sells shares of a high-demand new issue to a CEO for personal gain, intending to cultivate future business from the CEO’s company.
True or false: The new issue prospectus is the agreement between the underwriter and the issuing company.