1) Debt utilization ratios are used to evaluate the firm’s debt position with regard to its
asset base and earning power.
2) The statement of cash flows helps measure how the changes in a balance sheet were
financed between two time periods.
3) Foreign exchange risk is the risk that a person or business will not be able to
exchange currencies.
4) Upon entering the capital markets, an investor might invest in common stocks,
preferred stock, negotiable certificates of deposit, and convertible securities.
5) Equity is a measure of the monetary contributions that have been made directly or
indirectly on behalf of the owners of the company.
6) Asset utilization ratios relate balance sheet assets to income statement sales.
7) The drawback of the future stock value procedure is that it does not consider
dividend income.
8) The percent-of-sales method for financial forecasting assumes that balance sheet
accounts maintain a relatively constant relationship to sales.
9) If a company has a written code of ethics, they will generally avoid ethical problems.
10) Investors will generally choose the call price rather than the shares of stock during a
forced conversion.
11) One way companies responded to the financial crisis of 2008-2009 was to cut their
cash dividends to stockholders.