1. Petra, Inc. has $400,000 in current assets, $1.25 million in plant and equipm
ID: 2723067 • Letter: 1
Question
1. Petra, Inc. has $400,000 in current assets, $1.25 million in plant and equipment, and $250,000 in goodwill. In what order should these assets be reported on the balance sheet?
there is no correct ordering of these assets on the balance sheet
goodwill, plant and equipment, current assets
current assets, plant and equipment, goodwill
plant and equipment, currents assets, goodwill
2. A higher discount rate will __________.
decrease the present value of a future cash flow
increase the present value of a future cash flow
decrease the future value of a future cash flow
not affect the present value of a future cash flow
3. Why is the quick ratio considered by some to be a better measure of liquidity than the current ratio?
The quick ratio more accurately reflects a firm's profitability.
The quick ratio omits the least liquid current asset from the numerator of the ratio.
The current ratio does not include accounts receivable.
The quick ratio measures how "quickly" cash flows through the firm.
4. Which of the following is the goal of the firm?
tax payment maximization
shareholder wealth maximization
profit maximization
revenue maximization
there is no correct ordering of these assets on the balance sheet
goodwill, plant and equipment, current assets
current assets, plant and equipment, goodwill
plant and equipment, currents assets, goodwill
2. A higher discount rate will __________.
decrease the present value of a future cash flow
increase the present value of a future cash flow
decrease the future value of a future cash flow
not affect the present value of a future cash flow
3. Why is the quick ratio considered by some to be a better measure of liquidity than the current ratio?
The quick ratio more accurately reflects a firm's profitability.
The quick ratio omits the least liquid current asset from the numerator of the ratio.
The current ratio does not include accounts receivable.
The quick ratio measures how "quickly" cash flows through the firm.
4. Which of the following is the goal of the firm?
tax payment maximization
shareholder wealth maximization
profit maximization
revenue maximization
Explanation / Answer
Q.1 plant and equipment, currents assets, goodwill
Q.2A higher discount rate will __________.
decrease the present value of a future cash flow
Q.3
Why is the quick ratio considered by some to be a better measure of liquidity than the current ratio?
The quick ratio omits the least liquid current asset from the numerator of the ratio.
Which of the following is the goal of the firm?
shareholder wealth maximization
decrease the present value of a future cash flow
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