Download Full Quiz : Click Here
1) What is the primary goal of financial management?
A.Maximizing cash flow
B.Increased earnings
C.Maximizing shareholder wealth
D.Minimizing risk of the firm
2) Maximization of shareholder wealth is a concept in which
A.virtually all earnings are paid as dividends to common stockholders.
B.increased earnings is of primary importance.
C.optimally increasing the long-term value of the firm is emphasized.
D.profits are maximized on a quarterly basis.
3) Insider trading occurs when
A.lawyers, investment bankers, and others buy common stock in companies represented by their firms.
B.someone has information not available to the public which they use to profit from trading in stocks.
C.any stock transactions occur in violation of the Federal Trade Commissions restrictions on monopolies.
D.corporate officers buy stock in their company.
4) Which of the following is an inflow of cash?
A.the sale of the firm's bonds
B.funds spent in normal business operations
C.the retirement of the firm's bonds
D.the purchase of a new factory
5) The statement of cash flows does NOT include which of the following sections?
A.cash flows from investing activities
B.cash flows from operating activities
C.cash flows from financing activities
D.cash flows from sales activities
6) An increase in investments in long-term securities will:
A.increase cash flow from financing activities.
B.increase cash flow from investing activities.
C.decrease cash flow from financing activities.
D.decrease cash flow from investing activities
7) In examining the liquidity ratios, the primary emphasis is the firm's
A.ability to pay short-term obligations on time.
B.ability to effectively employ its resources.
C.ability to earn an adequate return.
D.overall debt position.
8) If a firm has both interest expense and lease payments,
A.times interest earned will be the same as fixed charge coverage.
B.times interest earned will be smaller than fixed charge coverage.
C.fixed charge coverage cannot be computed.
D.times interest earned will be greater than fixed charge coverage.
9) The most rigorous test of a firm's ability to pay its short-term obligations is its
A.debt-to-assets ratio.
B.current ratio.
C.times-interest-earned ratio.
D.quick ratio.
10) Refer to the figure above. The firm's inventory turnover ratio is
A.2.7x.
B.10x.
C.0.1x.
D.8x.
11) A firm's long term assets = $75,000, total assets = $200,000, inventory = $25,000 and current liabilities = $50,000.
A.current ratio = 1.5; quick ratio = 2.0
B.current ratio = 0.5; quick ratio = 1.5
C.current ratio = 2.5; quick ratio = 2.0
D.current ratio = 1.0; quick ratio = 2.0
12) A firm has current assets of $75,000 and total assets of $375,000. The firm's sales are $900,000. The firm's fixed asset turnover is
A.2.4x
B.3.0x
C.12.0x
D.5.0x
13) In order to estimate production requirements, we
A.add beginning inventory to desired ending inventory and divide by two.
B.add beginning inventory to projected sales in units and subtract desired ending inventory.
C.add beginning inventory to desired ending inventory and subtract projected sales in units.
D.add projected sales in units to desired ending inventory and subtract beginning inventory.
14) The percent-of-sales method of financial forecasting
A.provides a month-to-month breakdown of data.
B.assumes that balance sheet accounts maintain a constant relationship to sales.
C.is more detailed than a cash budget approach.
D.requires more time than a cash budget approach.
15) In the percent-of-sales method, an increase in dividends
A.more information is needed.
B.has no effect on required new funds.
C.will increase required new funds.
D.will decrease required new funds.
16) The key initial element in developing pro forma statements is
A.a collections schedule.
B.a sales forecast.
C.an income statement.
D.a cash budget.
17) A firm has beginning inventory of 300 units at a cost of $11 each. Production during the period was 650 units at $12 each. If sales were 700 units, what is the cost of goods sold (assume FIFO)?
A.$8,100
B.$7,700
C.$8,000
D.$9,000
18) The pro forma income statement is important to the overall process of constructing pro forma statements because it allows us to determine a value for:
19) The concept of operating leverage involves the use of __________ to magnify returns at high levels of operation.
20) When a firm employs no debt
Download Full Quiz : Click Here
21) Under which of the following conditions could the overuse of financial leverage be detrimental to the firm?
22) The break-even point can be calculated as
23) A firm's break-even point will rise if
24) In break-even analysis, the contribution margin is defined as
25) A conservatively financed firm would
26) During tight money periods
27) When the yield curve is upward sloping, generally a financial manager should:
28) Which of the following combinations of asset structures and financing patterns is likely to create the most volatile earnings?
29) An aggressive working capital policy would have which of following characteristics?
30) Which of the following is not a condition under which a prudent manager would accept some risk in financing?
31) "Float" takes place because
32) Which of the following is not a valid reason for holding cash?
33) The system whereby funds are moved between computer terminals without use of checks is
34) When developing a credit scoring report, many variables would be considered. Which of the following best represent the major factors Dun & Bradstreet would examine?
35) The three primary policy variables to consider when extending credit include all of the following except
36) Variables important to credit scoring models include
37) What is generally the largest source of short-term credit small firms?
38) Commercial paper that is sold without going through a broker or dealer is known as
39) Which of the following is not a method for lenders to control pledged inventory?
40) Which method of controlling pledged inventory provides the greatest degree of security to the lender?
41) A large manufacturing firm has been selling on a 3/10, net 30 basis. The firm changes its credit terms to 2/20, net 90. What change might be expected on the balance sheets of its customers?
42) Trade credit may be used to finance a major part of the firm's working capital when
43) As the compounding rate becomes lower and lower, the future value of inflows approaches
44) An annuity may be defined as
45) Increasing the number of periods will increase all of the following except
46) John Doeber borrowed $125,000 to buy a house. His loan cost was 11% and he promised to repay the loan in 15 equal annual payments. How much are the annual payments?
47) Mr. Blochirt is creating a college investment fund for his daughter. He will put in $850 per year for the next 15 years and expects to earn an 8% annual rate of return. How much money will his daughter have when she starts college?
48) If you were to put $1,000 in the bank at 6% interest each year for the next ten years, which table would you use to find the ending balance in your account?
Download Full Quiz : Click Here
