BUSN2037 Financial Management

Practice Quiz
The questions provided in this sample simply give you an idea how the exam looks like.
They do not necessarily reflect the focused topics or contents of the true exam paper.

Which one of the following questions involves a capital budgeting decision?
A) How many shares of stock should the firm issue?
B) Should the firm purchase a new machine for the production line?
C) Should the firm borrow money to acquire new equipment?
D) How much inventory should the firm keep on hand?
E) How much money should be kept in the checking account?
Deciding which long-term investment a firm should make is a __ decision.
A) working capital management
B) capital constraints
C) cost of capital
D) capital budgeting
E) capital structure
Which one of the following best states the primary goal of financial management?
A) Maximize current dividends per share
B) Maximize the current value per share
C) Avoid financial distress
D) Maximize profit
E) Maintain steady growth while increasing current profits
The balance sheet of Perez Printing shows $680 in inventory, $2,140 in fixed assets, $210 in
accounts receivables, $250 in accounts payable, and $80 in cash. How much net working capital does
the company have?
A) $970
B) $720
C) $640
D) $3,110
E) $2,860
Silva Enterprises has inventory of $11,600, fixed assets of $22,400, total liabilities of $12,900, cash
of $1,900, accounts receivable of $8,700, and long-term debt of $6,500. What is the net working
capital?
A) $44,600
B) $15,700
C) $12,600
D) $15,800
E) $9,300
Activities of a firm that require the spending of cash are known as:
A) sources of cash.
B) uses of cash.
C) cash collections.
D) cash receipts.
E) cash on hand.
For the past year, Zhao Events had taxable income of $198,600, beginning common stock of
$68,000, beginning retained earnings of $318,750, ending common stock of $71,500, ending retained
earnings of $316,940, interest expense of $11,300, and a tax rate of 21 percent. What is the amount of
dividends paid during the year?
A) $157,280
B) $159,935
C) $163,200
D) $153,555
E) $158,704
Which ratio identifies the amount of total assets a firm needs in order to generate $1 in sales?
A) Return on assets
B) Equity multiplier
C) Retention ratio
D) Capital intensity ratio
E) Current ratio
Khadimally, Incorporated, expects sales of $763,500 next year. The net profit margin is 5.3 percent
and the firm has a dividend payout ratio of 18 percent. What is the projected increase in retained
earnings?
A) $26,294.75
B) $137,430.00
C) $33,181.71
D) $7,283.79
E) $40,465.50
Which one of the following actions will increase the present value of an amount to be received
sometime in the future?
A) Increase in the time until the amount is received
B) Increase in the discount rate
C) Decrease in the future value
D) Decrease in the interest rate
E) Decrease in both the future value and the number of time periods
Answers
B
D
B
B
D
B
E
D
C
C