Sophia Finance Milestone 4(a)|Principle of Finance Milestone 4 Sophia Course (100% correct)

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Sophia Principles of Finance Milestone 4 1 What is one disadvantage of NPV as a capital budget method? It can be misleading if inputs like cash flow turn out to be wrong. It is rarely used, so t... here is disagreement as to what an adequate NPV is. It cannot be used to compare investments with different upfront costs. It does not deliver an overall picture of the gain or loss of implementing a project. CONCEPT Net Present Value 2 Select a reason why a company would want to go public. To increase direct oversight from investors To decrease administrative costs To consolidate control of the company in the hands of management To have access to cheaper capital than a private company would CONCEPT Comparing Public and Private Financing 3 A company with a 120-day operating cycle determines its cash conversion cycle using the following data: Receivable days: 35 Inventory days: 95 Payable days: 45 What is the company's cash conversion cycle? 105 75 25 165 CONCEPT Cash Conversion Cycle 4 Which of the following is a goal of working capital management? To ensure liquidity and increase cash holding costs To balance adequate cash flow against maximal returns To lengthen the span of time between payment of accounts payable and collection of accounts receivable To minimize free working capital and maximize opportunity costs CONCEPT Working Capital Financing 5 What does the residual dividend model mean for investors? They should expect to always receive very small dividends. They should expect a level of uncertainty regarding their dividends. They should expect dividend distributions that are equal to net income. They should expect to consistently receive the same dividend. CONCEPT Setting the Dividend 6 Which of the following is an advantage of venture capital? Venture capital investments typically carry a small amount of risk and generate small to moderate returns. Venture capital is typically easy to secure even with the most basic of business plans. New companies can access large amounts of upfront capital that does not have to be repaid, as a loan would be. There are no upfront costs to a company seeking venture capital funding. CONCEPT Venture Capital 7 Rose is concerned about a stock in her portfolio because in recent periods, the dividend she has received for each share has gotten smaller while the share price has remained relatively constant. What financial metric is Rose analyzing [Show More]

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