Questions from Corporate Finance


Q: If a firm’s inventory turnover ratio increases, what will happen to

If a firm’s inventory turnover ratio increases, what will happen to the firm’s operating cycle?

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Q: If a firm’s inventory turnover ratio increases, what will happen to

If a firm’s inventory turnover ratio increases, what will happen to the firm’s cash cycle?

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Q: Everything else held constant, will an increase in the amount of

Everything else held constant, will an increase in the amount of inventory on hand increase or decrease the firm’s profitability?

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Q: Using beta as a risk measure has been fully integrated into corporate

Using beta as a risk measure has been fully integrated into corporate finance and the investment industry. You can obtain a beta for most companies at many financial Web sites. Sites that list a beta...

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Q: Would a firm ever use short-term debt to finance permanent

Would a firm ever use short-term debt to finance permanent current assets? Why or why not?

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Q: Suppose that short-term borrowing actually becomes more expensive than long

Suppose that short-term borrowing actually becomes more expensive than long-term borrowing. How would this affect the firm’s choice between a flexible financing policy and a restrictive policy?

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Q: If asset-backed loans are cheaper than unsecured loans, what

If asset-backed loans are cheaper than unsecured loans, what is the disadvantage to the firm in using an asset-backed loan?

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Q: Is an increase in the cash account a source of funds or

Is an increase in the cash account a source of funds or a use of funds?

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Q: What will be the carrying cost associated with a compensating balance requirement

What will be the carrying cost associated with a compensating balance requirement?

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Q: What will be the shortage cost associated with a compensating balance requirement

What will be the shortage cost associated with a compensating balance requirement?

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