A Sample of 33 Companies Was Randomly Selected and Data

question 22

Multiple Choice

A sample of 33 companies was randomly selected and data collected on the average annual bonus, turnover rate (%) , and trust index (measured on a scale of 0 - 100) .
The regression coefficient associated with Average Bonus was found to be -0.0007216. The correct interpretation of this value is

• A) Holding the trust index constant, increasing the average annual bonus by $100 Will decrease the turnover rate by 7.2%.
• B) For companies that have the same score on the trust index, increasing the average Annual bonus by $100 is associated with a decrease in turnover rate of 7.2%, on Average.
• C) For companies that have the same score on the trust index, increasing the average Annual bonus by $100 is associated with an increase in turnover rate of 7.2%, on Average.
• D) An increase of $100 in the average annual bonus decreases the turnover rate by 7.2%.
• E) None of the above.

Identify cash inflows and outflows associated with financing activities.

Understand the treatment of transactions involving the sale and purchase of equipment and their impact on cash flows.

Comprehend the effects of issuing and repaying debt on a statement of cash flows.

Recognize the significance of free cash flow as an indicator of financial health.

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Definitions:

Compounded

The process of generating earnings from previous earnings, calculated by applying the earnings rate not only to the principal but also to the accumulated earnings over past periods.

Compounds Semi-Annually

Interest on an investment or loan is calculated and added to the principal balance twice a year.

Compounds Monthly

Refers to the process of applying interest to an amount where the interest earned itself earns interest, recalculated on a monthly basis.

Effective Annual Rate

A measure of the annual return on an investment, taking into account the effect of compounding interest.