Bus Fin 620 ? Mr. Weinstock ? Chapter 3 Which of the following is a use of cash? Retirement of long-term debt Sale of Equity Payment of Dividends I only II only I and II only I and III only I, II, and III Which of the following does not accurately describe the relationship between book value and market value? Book value is an accounting summary of value and is, therefore, inferior to market value as information for financial managers Market value is almost certainly different from book value because economic worth of an asset and/or long-term liability changes over time. Financial managers should always evaluate market values when making decisions for the firm The market value of fixed assets is sometimes difficult to determine Market value always exceeds book value Which of the following would increase the working capital of Brutus, Inc.? Brutus pays one of its accounts payable with cash Brutus pays out cash to a supplier Brutus pays off a short-term note with cash, closing the notes payable account Brutus takes out a bank loan due five years from now Both a. and c. increase working capital Which of the following statements is true? Depreciation is a non-cash expense Net income is the same as cash flow to creditors An addition to net working capital is the same as cash flow from assets. Interest is always an expense and never income Cash flow to stockholders is equal to net new equity
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