Quiz Ch 15 – T/F Defining a Firm’s Initial Public Offering
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
True or false: A seasoned equity offering refers to the initial public issue by a company.
True or false: A seasoned equity offering refers to the initial public issue by a company.
True or false: The definition of net working capital involves dividing current assets by current liabilities.
True or false: Depreciation, a non-cash expense, doesn’t affect the cash budget, so changes in depreciation charges (doubling or halving) have no impact on it.
True or false: Short-term cash budgets, like a monthly cash budget for the upcoming month, are for active cash control, while long-term cash budgets, like a yearly cash budget, are for planning.
True or false: Dimon Products expects $5 million in sales this year, 90% on credit and 10% in cash. Future sales are projected to grow steadily at 10% annually. It is claimed that Dimon’s accounts receivable will stay constant because the 10% cash sales can support the 10% growth rate, assuming other factors remain unchanged.
True or false: Informal lines of credit and revolving credit agreements are similar, but the former creates a legal obligation for the bank, making it a more reliable funding source for borrowers.
True or false: If a firm constructs its monthly cash budget assuming uniform cash receipts and payments throughout the month, but in reality, receipts are concentrated at the beginning of each month, it is likely to overstate its peak borrowing needs.
True or false: Modifying a company’s collection policy can have repercussions on sales, working capital, and profits.
True or false: A firm’s DSO of 28 days, with credit terms of 2/10, net 30 days, signifies efficient credit department operations and an absence of overdue accounts.
True or false: Venture capital, which constitutes equity capital for young businesses, is supplied by venture capital firms, affluent individuals, and investment institutions like pension funds.