1. Which of the following statements about the tradeoff theory of capital structure is most correct? a. The trade-off theory can be used to set a precise optimal structure for any given business. b. The trade-off theory tells us that businesses should use almost 100 percent debt financing. c. The trade-off theory tells us that businesses should use almost no debt financing. d. The trade-off theory tells us that businesses should use some debt financing, but not too much. e. The trade-off theory has no applicability at all to not-for-profit businesses.
2. Which of the following factors influence the estimate of a business's optimal capital structure? a. The amount of business (inherent) risk b. Lender/rating agency attitudes c. Industry averages d. The need to maintain financial flexibility (reserve borrowing capacity) e. All of the above factors influence the estimate
3. Which of the following statements concerning net income versus cash flow is most correct? a. Net income is a rough measure of a business's cash flow. b. Net income can be converted into a rough measure of cash flow by adding noncash expenses, typically depreciation. c. Net income can be converted into a rough measure of cash flow by adding nonoperating income. d. Net income can be converted into a rough measure of cash flow by adding the provision for bad debts. e. None of the above statements are correct.
4. True or False: Two important keys to successful revenue cycle management are information technology and electronic claims processing.
5. True or False: When a provider has market dominance, and hence can set its own prices (within reason), it is called a price taker.