1) Since operating leases result in the receipt of services from an asset without
increasing the assets or liabilities on a firm’s balance sheet, leasing may result in
misleading financial ratios.
2) If a new asset is being considered as a replacement for an old asset, the relevant cash
flows would be found by adding the operating cash flows from the old asset to the
operating cash flows from the new asset.
3) When the U.S. currency gains in value, the dollar value of a
foreign-currency-denominated portfolio of assets decline.
4) In evaluating a proposed project, incremental operating cash inflows are relevant
cash flows.
5) The basic shortcoming of EBIT-EPS analysis is that this model focuses on the
maximization of stock returns rather than on the maximization of share price.
6) A conversion feature in a bond has a greater chance of being exercised (to the
detriment of the bondholder) if market interest rates have risen since the bond was
issued.
7) Recent years have seen the emergence of a third path to political risk that
encompasses “global” events such as terrorism, antiglobalization movements and
protests, Internet-based risks, and concerns over poverty, AIDS, and the environment all
affect various MNCs’ operations worldwide.
8) Greater control over the acquisition of new materials or the distribution of finished
goods is an economic benefit of horizontal merger.