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Intermediate Accounting

Business

Quiz 12 :

Non-Current Financial Liabilities

Quiz 12 :

Non-Current Financial Liabilities

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What are "zero-coupon bonds"?
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Multiple Choice
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Answer:

C

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Universal Inc. is in the process of acquiring another business. In light of the acquisition,shareholders are currently re-evaluating the appropriateness of the firm's capital structure (the types of and relative levels of debt and equity). The two proposals being contemplated are detailed below: img Requirements: a. Calculate the estimated return on equity (ROE)under the two proposals. (ROE ~ net income after taxes / market value of equity; net income after taxes = (EBIT - interest on long-term debt)× (I - tax rate).) b. Which proposal will generate the higher estimated ROE?
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Answer:

img

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Which statement is correct about financial leverage?
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Multiple Choice
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Answer:

A

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Fast Track Inc. is in the process of acquiring another business. In light of the acquisition,shareholders are currently re-evaluating the appropriateness of the firm's capital structure (the types of and relative levels of debt and equity). The two proposals being contemplated are detailed below: img Requirements: a. Calculate the estimated return on equity (ROE)under the two proposals. (ROE ~ net income after taxes / market value of equity; net income after taxes = (EBIT - interest on long-term debt)× (I - tax rate).) b. Which proposal will generate the higher estimated ROE?
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Which of the following would be a "non-current liability"?
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Explain the meaning of financial leverage and leveraged buyout.
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Which statement best explains the concept of "leverage"?
Multiple Choice
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Bank Buy Inc. is in the process of acquiring another business. In light of the acquisition,shareholders are currently re-evaluating the appropriateness of the firm's capital structure (the types of and relative levels of debt and equity). The two proposals being contemplated are detailed below: img Requirements a. Calculate the estimated return on equity (ROE)under the two proposals. (ROE ~ net income after taxes / market value of equity; net income after taxes = (EBIT - interest on long-term debt)× (I - tax rate).) b. Which proposal will generate the higher estimated ROE? c. What is the primary benefit of leveraging an investment decision? What are two drawbacks to leveraging an investment decision?
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Which statement is correct about financial leverage?
Multiple Choice
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Blue Corp is in the process of acquiring another business. In light of the acquisition,shareholders are currently re-evaluating the appropriateness of the firm's capital structure (the types of and relative levels of debt and equity). The two proposals being contemplated are detailed below: img Requirements a. Calculate the estimated return on equity (ROE)under the two proposals. (ROE ~ net income after taxes / market value of equity; net income after taxes = (EBIT - interest on long-term debt)× (I - tax rate).) b. Which proposal will generate the higher estimated ROE? c. What is the primary benefit of leveraging an investment decision? What are two drawbacks to leveraging an investment decision?
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What are "secured bonds"?
Multiple Choice
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Which statement is not correct about financial leverage?
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What is a bond indenture?
Multiple Choice
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Which statement is correct about the financial leverage of a company with an equity base of $400,000?
Multiple Choice
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Which statement best explains a "leveraged buyout"?
Multiple Choice
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What is a "covenant"?
Multiple Choice
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Why do bonds often include covenants?
Multiple Choice
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Which is not a reason why companies borrow funds?
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What are "non-current liabilities"?
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Which statement is not correct about financial leverage for a $300,000 investment versus a $100,000 investment?
Multiple Choice
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