fin mgt of the firm test 1 set 2

is a snapshot of the firm’s assets and liabilities at a given point in time

Assets are listed in order of

Positive when the cash that will be received over the next 12 months exceeds the cash that will be paid out
–Usually positive in a healthy firm

–Ability to convert to cash quickly without a significant loss in value
–Liquid firms are less likely to experience financial distress
–But liquid assets typically earn a lower return
–Trade-off to find balance between liquid and illiquid assets

is the price at which the assets, liabilities, or equity can actually be bought or sold.

Which is more important to the decision-making process? market value or book value

is more like a video of the firm’s operations for a specified period of time.

You generally report revenues first and then deduct any expenses for the period when doing an income statement t/f

GAAP says to show revenue when it accrues and match the expenses required to generate the revenue

the percentage paid on the next dollar earned

the tax bill / taxable income

one of the most important pieces of information that a financial manager can derive from financial statements