Question

The Sarbanes-Oxley Act, which was enacted in 2002, has:
A) increased the number of U.S. firms going public on foreign exchanges.
B) increased senior management's involvement in the corporate annual report.

C) increased the annual compliance costs of all publicly traded firms in the U.S.

D) all of the above.
E) none of the above.

7) The market value of a firm's fixed assets:
A) in addition to the firm's capital expenditures reflects the true value of a firm.

B) will never exceed the book value of those assets.
C) is amortized annually by the depreciation expense.
D) is equal to the estimated current book value of those assets.
E) is less predictable than the book value of those assets.

8) Cash flow from assets will increase with:
A) a decrease in net capital spending
B) a decrease in the cash flow to creditors
C) an increase in the change in net working capital

D) all of the above

E) none of the above

9) Cash flow to creditors decreases when:

A) current liabilities are repaid.
B) new long-term loans are acquired.
C) accounts payables decrease.

D) long-term debt is repaid.

E) interest expense declines.

Answer 1

6]

D) all of the above.

SOX imposes more responsibility of the senior management for the quality of financial statements. SOX has increased the cost of compliance, resulting in an increasing number of U.S. firms going public on foreign exchanges.

7]

E) is less predictable than the book value of those assets.

It is not amortized, and is not equal to book value. It may or may not exceed the book value.

8]

A) a decrease in net capital spending

CFFA = operating cash flow - net capital spending - change in net working capital