Corporate Finance Fundamentals Quiz
Test your knowledge with 13 questions on financial management, NPV, WACC, capital budgeting, leverage, ratios & more in this corporate finance quiz.
#1
Which of the following is a key objective of financial management?
Maximizing shareholder wealth
Minimizing employee satisfaction
Maximizing employee benefits
Minimizing environmental impact
#2
Which of the following financial statements reports a firm's financial position at a specific point in time?
Income Statement
Cash Flow Statement
Balance Sheet
Statement of Retained Earnings
#3
Which of the following is an example of a short-term financing option?
Common Stock
Preferred Stock
Bonds
Trade Credit
#4
Which of the following is NOT considered a primary financial decision?
Capital Budgeting
Dividend Policy
Working Capital Management
Production Scheduling
#5
Which financial statement shows the revenues and expenses incurred by a company over a specific period?
Balance Sheet
Statement of Cash Flows
Income Statement
Statement of Retained Earnings
#6
Which of the following represents a long-term source of financing?
Accounts Payable
Common Stock
Bank Overdraft
Trade Credit
#7
What is the formula for calculating the Net Present Value (NPV) of an investment?
NPV = Initial Investment / Present Value Factor
NPV = Present Value - Initial Investment
NPV = Cash Inflows - Cash Outflows
NPV = Discount Rate x Initial Investment
#8
What does the Weighted Average Cost of Capital (WACC) represent?
The average cost of borrowing
The average return expected by shareholders
The average cost of all sources of capital weighted by their proportion in the capital structure
The average cost of equity capital
#9
What does the term 'Capital Budgeting' refer to in corporate finance?
The process of allocating resources to long-term assets
The process of managing short-term liabilities
The process of issuing new shares of stock
The process of evaluating the financial performance of a company
#10
What is the primary goal of financial risk management?
To eliminate all financial risk
To maximize profits regardless of risk
To minimize the impact of risk on firm value
To ignore risk entirely
#11
Which of the following measures the profitability of a firm's investment decisions?
Return on Equity (ROE)
Earnings per Share (EPS)
Return on Investment (ROI)
Net Present Value (NPV)
#12
What does the term 'Liquidity' refer to in corporate finance?
The ability of a firm to meet its short-term obligations
The ability of a firm to generate long-term profits
The ability of a firm to issue new shares of stock
The ability of a firm to reduce its debt levels
#13
What is the primary purpose of financial leverage?
To increase the risk of a firm
To decrease the cost of capital
To increase the return on equity
To decrease the return on investment
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