1) The percent-of-sales forecast is likely to be most accurate when used with cyclical
companies.
2) Private placement eliminates the expensive and lengthy registration process with the
Securities and Exchange Commission.
3) An increase in inflation will cause a bond’s required return to rise.
4) For Japanese firms that have high levels of operating and financial leverage,
maintaining sales volume is of critical importance even at the cost of price.
5) Some preferred stocks are “participating preferreds,” allowing for an increase in the
preferred stock dividend when the common stock dividend equals the preferred stock
dividend, and additional payouts then occur.
6) Asset utilization ratios can be used to measure the effectiveness of a firm’s managers.
7) The aggressive financing plan involves utilizing long-term financing for permanent
and temporary current assets.
8) Investment banking has changed from a very competitive price-sensitive
environment to one where relationships determine who gets the business.
9) In a horizontal merger, the integration that occurs comes from acquiring companies
that supply resources to the company’s production process.
10) Just-in-time inventory management typically pushes the cost of holding inventory
from the manufacturer to the manufacturer’s suppliers.
11) A rising euro and a falling dollar will cause an increase in U.S. exports to Europe.
12) The cash budget approach to financial forecasting assumes that balance sheet
accounts maintain a constant relationship to cash.
13) The particular type of shareholder voting used has become less important with the
influence of takeovers, leveraged buy-outs, and other challenges to management
control.
14) “Basic earnings per share” does not include the dilutive effects of all of a firm’s
convertible bonds.
15) A “takeover tender offer” lets a company attempt to acquire a target firm against its
will.
16) Basic earnings per share includes all convertible bonds outstanding.