#1
What is the primary goal of financial management?
Maximizing shareholder wealth
ExplanationOptimizing value for shareholders.
#2
Which financial statement provides a snapshot of a company's financial position at a specific point in time?
Balance sheet
ExplanationCurrent financial status representation.
#3
Which financial ratio measures a company's efficiency in managing its inventories?
Inventory turnover ratio
ExplanationRate of inventory turnover.
#4
Which financial statement reports a company's revenues and expenses over a specific period?
Income statement
ExplanationPeriodic financial performance overview.
#5
What does the term 'Dividend Yield' measure?
The percentage of earnings paid out as dividends to shareholders
ExplanationShareholder dividend return rate.
#6
What is the concept of 'Working Capital' in financial management?
The difference between current assets and current liabilities
ExplanationCurrent assets minus liabilities.
#7
Which of the following statements best describes the concept of risk-return tradeoff?
Higher risk is sometimes associated with higher returns
ExplanationAccepting more risk can lead to greater rewards.
#8
What is the formula for calculating Return on Investment (ROI)?
(Net Profit / Total Investment) x 100%
ExplanationAssessing profitability relative to investment.
#9
What does the term 'Liquidity' refer to in financial management?
The ability to convert assets into cash quickly without significant loss
ExplanationEase of converting assets into cash.
#10
What is the concept of the time value of money (TVM) in financial management?
Money has different values at different points in time
ExplanationValue change over time due to interest.
#11
What does the Debt to Equity ratio measure?
The company's financial leverage and risk exposure
ExplanationBalance between debt and equity.
#12
What does the term 'Capital Budgeting' refer to in financial management?
Budgeting for long-term investment decisions
ExplanationPlanning for long-term investments.
#13
What is the formula to calculate the Weighted Average Cost of Capital (WACC)?
(Cost of Debt x Debt Ratio) + (Cost of Equity x Equity Ratio)
ExplanationAverage cost of funding capital.
#14
What is the formula to calculate the Net Present Value (NPV) of an investment?
Present Value of Cash Inflows - Present Value of Cash Outflows
ExplanationAssessing investment profitability.