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1. When considering a capital budgeting project the financial manager should consider: a. only the timing of the project cash flows. b. only the risk of the project cash flows. c. only the size and timing of the project cash flows. d. the size, timing, and risk of the project cash flows. 2. Financial leverage refers to the: a. amount of debt used in a firm’s capital structure. b. ratio of retained earnings to shareholders’ equity. c. ratio of paid-in surplus to shareholders’ equity. d. ratio of cost-of-goods-sold to total sales. 3. _____ refers to the difference between a firm’s current assets and its current liabilities. a. Operating cash flow b. Capital spending c. Net working capital d. Cash flow from assets 4. Which one of the following statements concerning net working capital is correct? a. The greater the net working capital, the greater the ability of a firm to m t its short-term obligations. b. The change in net working capital is equal to current assets minus current liabilities. c. Depreciation must be added back to current assets when computing the change in net working capital. d. Net working capital is equal to long-term assets minus long-term liabilities. 5. The cash flow from assets is equal to: a. operating cash flow minus th chang in net working capital plus net capital spending. b. earnings before interest and taxes plus depreciation plus taxes. c. earnings befor interest and taxes plus depreciation plus taxes minus net capital spending minus the change in net working capital. d. earnings before interest and taxes plus depreciation minus taxes minus net capital spending minus the change in net working capital. 6. Shareholders’ equity in a firm is $500. The firm ow