____ refers to the percentage expense of obtaining future funds.
A. Risk
B. Cost of capital
C. Rate on investment
D. Return on investment
Answer: B
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Entrepreneurship Chapter 15
- After successfully operating for five years, Tina plans to sell her computer service center. Which of the following would be Tina's main financial management need as she exits the business through sale?
- After being in business for 24 months, Paul's auto spare parts company Chromson Inc. grows to a relatively stable size. Which of the following would be Paul's primary financial management need at this stage?
- If the owner plans to _____ a business, he or she should be removing all surplus cash and tightening the cash-to-cash cycle to the shortest time possible.
- For an owner, the main financial management emphasis while transferring a business to family members must be to:
- Which of the following is true of financial management for a business exit?
- At the _____ stage of a business, the emphasis of financial management is to build owner wealth, to conserve assets, to match cash inflows to outflows, and to maximize the return on capital assets by making optimal investing decisions.
- The emphasis of financial management during the _____ phase is to obtain increasing amounts of cash inflows to pay for added inventory, productive assets, and employees.
- Which of the following is true of the debt-to-equity ratio?
- ____ measures the extent to which a business can meet its obligations for the long haul.
- _____ is a measure of how much money can be made available to pay obligations within the fiscal year.
- ____ measure a management's effectiveness in using the invested capital of the business to provide profits.
- ____ ratios measure the relative risk that a business setback could cause bankruptcy.
- ____ ratios measure the business's ability to pay debts and expenses that are due in the current accounting period.
- ____ ratios measure management effectiveness in creating wealth from sales and from invested funds.
- ____ ratios measure how productive a particular asset is in producing sales movement.
- Restrictions imposed by loan contracts on the operations of a business, such as requiring that a specific minimum net worth be maintained, a specific debt-to-equity ratio not be exceeded, no dividends be paid to stockholders and so on, are known as _____.
- Borrowing money is a better alternative to investing additional personal funds because obtaining equity investment from others:
- Which of the following ways does borrowing help increase potential profits?
- Which of the following is the formula for calculating owner's return on equity (ROE)?
- Uncertainty of returns in a business is referred to as _____.
- The ratio of debt to equity that provides the maximum level of profits is called _____.
- When debt increases as a percentage of total investment, the value of the firm:
- _____ is a measure of the amount of debt relative to total investment.
- The weighted average cost (WAC) refers to: