#1
What is the primary goal of financial management?
Maximizing shareholder wealth
Maximizing sales revenue
Minimizing expenses
Increasing market share
#2
Which financial statement reports a company's revenues and expenses over a period?
Balance sheet
Income statement
Statement of cash flows
Statement of retained earnings
#3
Which financial analysis technique is used to evaluate a company's profitability by comparing its net income to its shareholders' equity?
Return on assets (ROA)
Return on equity (ROE)
Gross profit margin
Operating profit margin
#4
Which financial statement shows a company's financial position at a specific point in time?
Income statement
Balance sheet
Statement of cash flows
Statement of retained earnings
#5
What does the concept of time value of money imply?
A dollar today is worth more than a dollar in the future
A dollar in the future is worth more than a dollar today
A dollar today has the same value as a dollar in the future
A dollar today is worth less than a dollar in the future
#6
What is the purpose of financial ratios?
To predict future market trends
To measure a company's financial performance
To calculate tax liabilities
To determine market share
#7
What is the purpose of the capital markets?
To facilitate the exchange of goods and services
To provide long-term financing for businesses and governments
To regulate financial institutions
To provide short-term financing for individuals
#8
Which of the following represents a long-term source of finance?
Bank overdraft
Trade credit
Debentures
Accounts payable
#9
What does the debt-to-equity ratio measure?
Profitability
Liquidity
Risk
Efficiency
#10
What is the formula for calculating the net present value (NPV) of an investment?
NPV = Initial investment - Present value of cash inflows
NPV = Present value of cash inflows - Initial investment
NPV = Initial investment / Present value of cash inflows
NPV = Present value of cash inflows + Initial investment
#11
Which financial ratio measures a company's ability to meet its short-term obligations with its most liquid assets?
Current ratio
Quick ratio
Debt-to-equity ratio
Return on investment (ROI)
#12
What is the role of a financial manager in working capital management?
Maximizing long-term investments
Minimizing the cost of equity
Optimizing short-term assets and liabilities
Managing shareholder communications
#13
What is the purpose of financial leverage?
To increase the risk of investment
To decrease the return on investment
To increase the potential return on investment
To decrease the cost of debt
#14
What does the working capital turnover ratio measure?
A company's ability to pay its short-term debts
The efficiency of a company's working capital management
The profitability of a company's operations
A company's ability to generate sales relative to its working capital
#15
What is the time value of money (TVM) principle in financial management?
Money has a fixed value over time
Future cash flows are worth more than present cash flows
Present cash flows are worth more than future cash flows
Money has no value unless invested
#16
What does the Capital Asset Pricing Model (CAPM) help determine?
The cost of equity
The cost of debt
The cost of retained earnings
The cost of preferred stock
#17
Which of the following is NOT a component of the DuPont analysis?
Profit margin
Total asset turnover
Equity ratio
Financial leverage