Fin370/t Wk 1 Apply Homework |54 Questions| With Correct Answers.

The board of directors {Ans: are elected by shareholders}Last year Mocha Java, Inc. had an ROA of 10 percent, a profit margin of 5 percent, and sales of $25 million. What is Mocha Java's total assets? {Ans: $12.5m ROA = 0.10 = 0.05 × ($25m/Total assets) => Total assets = 0.05 × $25m/0.10m = $12.5m}Which of the following is the maximum growth rate that can be achieved by financing asset growth with new debt and retained earnings? {Ans: sustainable growth rate}The agency relationship in corporate finance occurs? {Ans: when the shareholders hire a manager to run their company.}This type of business organization is entirely legally independent from its owners. {Ans: public corporations}Which of the following is unlikely to have a high capital intensity ratio? {Ans: law firm}