#1
Which of the following is an example of an internal stakeholder in an organization?
Employees
ExplanationInternal stakeholders are those within the organization, like employees.
#2
What is the primary objective of financial decision-making in organizations?
Maximizing shareholder wealth
ExplanationFinancial decision-making aims to increase shareholder wealth.
#3
What is the role of a bondholder in financial decision-making?
Lending money to the company at a fixed interest rate
ExplanationBondholders lend money to the company at a set interest rate.
#4
Which of the following is a characteristic of a sole proprietorship?
Simplest form of business organization
ExplanationSole proprietorship is the simplest form of business.
#5
What is the purpose of a dividend policy in financial decision-making?
To determine the allocation of profits to shareholders
ExplanationDividend policy allocates profits to shareholders.
#6
Which of the following is a characteristic of a limited liability company (LLC)?
Separate legal entity from its owners
ExplanationLLCs are separate legal entities from their owners.
#7
Which financial ratio measures a company's ability to pay its short-term debts?
Current Ratio
ExplanationThe Current Ratio assesses short-term debt payment capability.
#8
What does the term 'capital budgeting' refer to in financial decision-making?
Evaluating investments in long-term assets
ExplanationCapital budgeting involves assessing long-term asset investments.
#9
What does the term 'financial leverage' refer to in financial decision-making?
The use of debt to increase the return on equity
ExplanationFinancial leverage is using debt to boost equity returns.
#10
Which financial statement provides a snapshot of a company's financial position at a specific point in time?
Balance Sheet
ExplanationThe Balance Sheet offers a snapshot of company finances.
#11
What does the term 'cost of capital' represent in financial decision-making?
The required rate of return on investment
ExplanationCost of capital is the required return on investments.
#12
Which financial ratio measures the efficiency of a company's operations in generating profits from its resources?
Return on Assets (ROA)
ExplanationROA measures efficiency in generating profits from resources.
#13
Which financial theory suggests that the value of a firm is determined by its future earnings?
Modigliani-Miller Theorem
ExplanationModigliani-Miller Theorem links firm value to future earnings.
#14
According to stakeholder theory, which group should a company prioritize in decision-making?
All stakeholders, including shareholders, employees, customers, and the community
ExplanationStakeholder theory prioritizes all stakeholders in decisions.
#15
In stakeholder analysis, which of the following is NOT typically considered a stakeholder?
Competitors
ExplanationCompetitors are not usually considered stakeholders.
#16
According to stakeholder theory, what is the primary responsibility of a corporation?
Creating value for all stakeholders
ExplanationCorporations' primary duty: create value for all stakeholders.
#17
In stakeholder theory, which group is considered the primary stakeholder of a corporation?
Shareholders
ExplanationPrimary stakeholder in corporations: shareholders.