Multiple choice

1) Maximization of shareholder wealth is a concept in which 

A. profits are maximized on a quarterly basis.

B. virtually all earnings are paid as dividends to common stockholders.

C. increased earnings is of primary importance.

D. optimally increasing the long-term value of the firm is emphasized.

2) What is the primary goal of financial management? 

A. Maximizing cash flow

B. Maximizing shareholder wealth

C. Increased earnings

D. Minimizing risk of the firm

3) One of the major disadvantages of a sole proprietorship is 

A. the simplicity of decision making.

B. low organizational costs.

C. that there is unlimited liability to the owner.

D. low operating costs.

4) The statement of cash flows does NOT include which of the following sections? 

A. cash flows from sales activities

B. cash flows from investing activities

C. cash flows from operating activities

D. cash flows from financing activities