#1
What does the Payback Period represent in financial decision-making?
The time it takes to recover the initial investment
The rate of return on investment
The present value of future cash flows
The ratio of net income to total assets
#2
What is the primary goal of financial management in a business?
Maximizing shareholder wealth
Maximizing revenue
Minimizing expenses
Achieving break-even point
#3
Which financial statement provides a snapshot of a company's financial position at a specific point in time?
Income Statement
Statement of Cash Flows
Balance Sheet
Statement of Retained Earnings
#4
Which financial evaluation method measures an investment's profitability by comparing the present value of its expected cash flows to the initial investment?
Net Present Value (NPV)
Internal Rate of Return (IRR)
Payback Period
Discounted Payback Period
#5
What does the Profitability Index (PI) indicate in financial analysis?
The ratio of net present value to initial investment
The ratio of present value of cash inflows to outflows
The ratio of discounted cash inflows to outflows
The time it takes to recover the initial investment
#6
Which financial ratio measures a company's ability to pay off its short-term liabilities with its current assets?
Return on Investment (ROI)
Current Ratio
Debt-to-Equity Ratio
Profit Margin Ratio
#7
What does the Debt-to-Equity Ratio indicate about a company's financial leverage?
The proportion of debt financing relative to equity financing
The proportion of equity financing relative to debt financing
The company's ability to generate profits
The company's liquidity position
#8
Which of the following is NOT a component of the Time Value of Money (TVM)?
Present Value
Future Value
Discounted Value
Interest Rate
#9
Which of the following statements about the Internal Rate of Return (IRR) is true?
It measures the profitability of an investment as a percentage
It is calculated by dividing the initial investment by the present value of cash inflows
It is not affected by the timing of cash flows
It assumes reinvestment of cash inflows at the project's cost of capital
#10
Which financial evaluation method assumes that cash flows generated by an investment are reinvested at the project's rate of return?
Net Present Value (NPV)
Internal Rate of Return (IRR)
Profitability Index (PI)
Payback Period
#11
Which of the following statements about the Discounted Payback Period is true?
It considers all cash flows after the payback period
It does not consider the time value of money
It is equivalent to the payback period
It is calculated by discounting cash flows at the project's rate of return
#12
What is the formula to calculate Return on Investment (ROI)?
(Net Profit / Cost of Investment) * 100%
(Net Profit / Revenue) * 100%
(Revenue / Cost of Investment) * 100%
(Net Profit / Total Assets) * 100%
#13
What is the formula to calculate the Future Value (FV) of a single sum investment?
FV = PV * (1 + r)^n
FV = PV / (1 + r)^n
FV = PV * (1 - r)^n
FV = PV / (1 - r)^n
#14
What is the main drawback of using the Payback Period as an investment evaluation method?
It does not consider the time value of money
It is difficult to calculate
It does not account for all cash flows beyond the payback period
It is not widely accepted by financial analysts
#15
What is the formula to calculate Net Present Value (NPV)?
NPV = Initial Investment / Discount Rate
NPV = Present Value of Cash Inflows - Initial Investment
NPV = Future Value of Cash Inflows - Initial Investment
NPV = Initial Investment * (1 + Discount Rate)