1. Green desires to form a new company to manufacture lawn mowers. Green is concerned about...

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Finance

1. Green desires to form a new company to manufacture lawnmowers. Green is concerned about having his personal assets exposedto liability for the new company’s contracts and torts.Furthermore, he wants to retain control over the company’soperations and growth for the next few years. He will need aninfusion of equity capital to begin operations. He hopes to takethe company public in about five years if it is advantageous to doso at the time. Which of the following types of businessassociations would be best for Green’s new company? (A) Corporation(B) General partnership (C) Limited partnership (D) Member-managedlimited-liability company
2. If a firm increases its regular quarterly dividend payment,the increase could indicate which of the following? I. Improvedearnings prospects for the firm II. A reduction in agency problemsof free cash flow III. A reduction in tax payments for shareholders(A) I only (B) II only (C) I and II only (D) II and III only
3. The term “net working capital” refers to (A) inventories,receivables, and current notes and investments (B) assets dividedby liabilities (C) current assets less short-term liabilities (D)net assets left over after subtracting cost of goods sold
4. A firm that would like to know whether it has enough cash tomeet its bills would be most likely to use which category offinancial ratio? (A) Liquidity (B) Leverage (C) Efficiency (D)Profitability

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4.3 Ratings (842 Votes)

1 A corporation is owned and controlled by its members Corporation is a separate legal identity from its members So the members have limited liability their personal assets are not liable in the case of business losses A corporation can raise funds and members need not have to raise capital as in the case of a partnership or sole See Answer

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1. Green desires to form a new company to manufacture lawnmowers. Green is concerned about having his personal assets exposedto liability for the new company’s contracts and torts.Furthermore, he wants to retain control over the company’soperations and growth for the next few years. He will need aninfusion of equity capital to begin operations. He hopes to takethe company public in about five years if it is advantageous to doso at the time. Which of the following types of businessassociations would be best for Green’s new company? (A) Corporation(B) General partnership (C) Limited partnership (D) Member-managedlimited-liability company2. If a firm increases its regular quarterly dividend payment,the increase could indicate which of the following? I. Improvedearnings prospects for the firm II. A reduction in agency problemsof free cash flow III. A reduction in tax payments for shareholders(A) I only (B) II only (C) I and II only (D) II and III only3. The term “net working capital” refers to (A) inventories,receivables, and current notes and investments (B) assets dividedby liabilities (C) current assets less short-term liabilities (D)net assets left over after subtracting cost of goods sold4. A firm that would like to know whether it has enough cash tomeet its bills would be most likely to use which category offinancial ratio? (A) Liquidity (B) Leverage (C) Efficiency (D)Profitability