#1
What is the primary goal of financial management?
Maximize shareholder wealth
ExplanationFocus on increasing value for shareholders.
#2
What is the purpose of working capital in financial management?
To cover short-term operational needs
ExplanationFacilitate day-to-day operations and manage liquidity.
#3
What is the purpose of a cash flow statement in financial reporting?
To illustrate the sources and uses of cash over a period
ExplanationTrack cash inflows and outflows.
#4
What is the concept of 'opportunity cost' in financial decision-making?
The value of the best alternative forgone in order to pursue a particular option
ExplanationEvaluation of foregone alternatives.
#5
In financial terms, what does the acronym 'EBITDA' stand for?
Earnings Before Interest, Taxes, Depreciation, and Amortization
ExplanationMeasure of operating performance.
#6
What is the purpose of organizational structure?
All of the above
ExplanationOrganize operations efficiently, facilitate communication, and ensure accountability.
#7
What does the term 'ROI' stand for in financial management?
Return on Investment
ExplanationMeasure of profitability relative to the investment's cost.
#8
What is the formula for calculating the Debt-to-Equity ratio?
Total Debt / Total Equity
ExplanationMeasure of a company's financial leverage.
#9
What does the term 'SWOT analysis' stand for in business organization?
Strengths, Weaknesses, Opportunities, Threats
ExplanationEvaluation of internal and external factors.
#10
Which financial ratio measures a company's ability to meet its short-term obligations with its most liquid assets?
Quick ratio
ExplanationAssessment of short-term liquidity.
#11
What is the role of a Chief Executive Officer (CEO) in a business organization?
Setting strategic direction
ExplanationEstablishing long-term goals and vision.
#12
What is the role of a Chief Financial Officer (CFO) in a company?
Handling financial matters
ExplanationResponsible for financial planning, record-keeping, and reporting.
#13
Which financial statement provides a snapshot of a company's financial position at a specific point in time?
Balance sheet
ExplanationAssets, liabilities, and equity at a given moment.
#14
In financial management, what does the 'time value of money' refer to?
Future cash flows are worth more than present cash flows
ExplanationConcept that money today is worth more than the same amount in the future.
#15
Which financial decision involves the mix of debt and equity a company uses to finance its operations?
Financial leverage
ExplanationStrategic use of debt to amplify returns.
#16
In capital budgeting, what does the term 'Payback Period' indicate?
The time it takes for a project to generate positive cash flows equal to its initial investment
ExplanationDuration for investment recovery.
#17
What is the primary purpose of a budget in financial management?
To control costs
ExplanationPlan and allocate resources effectively.