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Finance Fundamentals Quiz
Question 1:
What is the primary goal of financial management?
a. Maximizing shareholder wealth
b. Minimizing corporate taxes
c. Maximizing employee satisfaction
d. Maximizing revenue growth
Question 2:
Which of the following represents a long-term source of financing for a company?
a. Accounts payable
b. Bank loan
c. Trade credit
d. Accounts receivable
Question 3:
What does the term "cost of capital" refer to?
a. The interest rate paid on a company's long-term debt
b. The minimum rate of return required by investors to compensate them for the risk of investing in the company
c. The average rate of return earned on the company's investments
d. The cost associated with issuing new equity shares
Question 4:
What is the formula for calculating the return on investment (ROI)?
a. Net Profit / Total Revenue
b. (Net Income - Dividends) / Total Assets
c. (Net Income - Dividends) / Total Equity
d. (Net Income / Total Equity) * 100
Question 5:
What does the term "liquidity" refer to?
a. The ability of a company to meet its short-term obligations with its current assets
b. The degree to which an investment can be quickly converted into cash without significant loss of value
c. The amount of debt financing used by a company relative to its equity financing
d. The risk associated with a particular investment
Question 6:
What is the purpose of financial leverage?
a. To increase the liquidity of a company
b. To reduce the risk associated with investing in a company
c. To increase the return on equity by using debt financing
d. To minimize the tax liabilities of a company
Question 7:
Which of the following statements is true regarding the time value of money?
a. A dollar received today is worth more than a dollar received in the future
b. A dollar received in the future is worth more than a dollar received today
c. The time value of money is not relevant in financial decision-making
d. The time value of money only applies to large sums of money
Question 8:
What is the purpose of financial ratios?
a. To evaluate a company's financial performance and health
b. To determine the optimal capital structure for a company
c. To calculate the cost of equity for a company
d. To forecast future revenue growth for a company
Question 9:
Which financial ratio measures a company's ability to meet its short-term obligations with its current assets?
a. Debt-to-Equity ratio
b. Current ratio
c. Return on Equity ratio
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A. Operating expenses are a function of:
a. The cost of equity and the cost of debt
b. The interest rates on debt and the amount of debt
c. Design(s) of the value propositions, the skill level and processes for spending money to operate the company, and the loan term bond yield + the equity risk premium + risks specific to the company
d. Design(s) of the value propositions, processes used to produce the value proposition(s), and the skill level and processes for spending money to operate the company
B. Which of the following is most closely associated with margin as a %?
a. Sales revenue
b. The processes used to produce the company’s value proposition(s)
c. The proportion of debt and equity in the company’s capital structure
d. The average operating assets of the company
C. Which of the following is most closely associated with asset utilization?
a. The cost of equity
b. Expenses
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Below you have the three types of financial management decisions. Match each type of decision to a business transaction that would be relevant.
Capital budgeting
A. Deciding whether to issue new equity and use the proceeds to retire outstanding debt
Capital structure
B. Deciding whether to expand a manufacturing plant
Working capital management
C. Modifying the firm's credit collection policy with its customers
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Select all that is true about the role of financial managers and the types of financial
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Select one or more:
a. Capital structure describes the mix of short-term liabilities a firm uses to finance
its short-term assets.
b. The optimal financial management strategy of a financial manager is to reduce
the overall risk level of the firm.
c. The duties of the financial manager includes determining the capital structure and
which projects the firm should undertake.
Od.
Size and timing of cash flows is unimportant in a capital budgeting decision.
e. Capital Budgeting function involves planning and determining the firm's short
term investments.
Of. Determining the appropriate level of inventory is a working capital management
function.
ZA
do
W
X
L
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4.What decisions do managers take that is focused on the financial wellbeing of the company and sometimes includes acquisition of assets, financing and raising funds and capital?
A. Financial Decision
B. Investment Decision
C. Capital Budget Decision
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A. Investment, Financial, Dividend Decisions
B. Investment, Capital, Dividend Decisions
C. Investment, Financial, Capital Decisions
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A. Investment in Plant and Machinery
B. The decision to enter a new market
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Group of answer choices
maximization of market share.
maximization of shareholders’ wealth
maximization of capital employed.
maximization of profit.
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Which of the following would be part of a financial manager's investment decision? *a. Collecting receivables from customersb. Paying loansc. Allocating funds for permanent current assetsd. Paying dividends to shareholders
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Which of the following statement is INCORRECT?
Question 15 options:
1)
The finance manager manages the short-term balance sheet items of the company, such as current assets and current liabilities.
2)
The finance manager uses investment evaluation techniques to decide whether to purchase fixed assets.
3)
The finance manager seeks to maximise the firm’s wealth when deciding on the choice of capital sources such as debts and equity.
4)
The right-hand side of the balance sheet refers to the company’s investment decisions to buy fixed assets to generate returns.
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Question
Capital structure refers to how the firm finances its operations and growth through a combination of .
A. equity types
B. security types
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D. types of debt
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37. Lis/are a way to raise capital by selling ownership or equity:
A. Issuing Stock
B. Seeking Early-stage capital
C. Issuing Bonds
D. Developing profits
E. Seeking a Bank Loan
38.
is/are a way to raise capital through borrowing:
A. Issuing Stock
B. Seeking Early-stage capital
C. Issuing Bonds
D. Developing profits
E. Mutual Funds
39. If a firm's revenues are greater than costs, then the business would be considered:
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A goal of financial management is to maximize the shareholders' value. What are the pros and cons of this goal?
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Question 23 options:
Risk and return
Profit and loss
Assets and debts
Upside and downside
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. is modifying the firm's credit collection policy with its customers
Select one:
a.Financial accounting
b.Working capital management
c.Capital budgeting
d.Capital structure
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Leverage is
a. The ability to earn a satisfactory return on the investments in the business.
b. The ability to pay current debts when they come due.
c. The proportion of debt to stockholders' equity.
d. Also called profit margin.
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Which of the following is the social objectives of financial management?
Select one:
A.
None of the given option
B.
Effective utilization of finance
C.
Searching for new sources of finance
D.
Payment of reasonable dividends
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2. What is the role of finance in the development of an economy?
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