If a Dakin's Dairy is highly geared, what corrective action should be taken?

Reduce debt and increase equity

What are the financial objectives, according to the syllabus? Options: Liquidity, Solutions, Efficiency, Profitability, Growth; Liquidity, Solvency, Effectiveness, Profitability, Growth; Liquidity, Solvency, Efficiency, Profitability, Gearing; Liquidity, Solvency, Efficiency, Profitability, Growth

Liquidity, Solvency, Efficiency, Profitability, Growth

Cash flow management strategies include: cost controls, distribution of payments, discounts for early payment, factoring, marketing objectives, exchange rates

distribution of payments, discounts for early payment, factoring

The managers of a business pursue an objective of having adequate cash flow. What possible conflict of objectives can result from this action?

a conflict between managers and shareholders of the business

Which of the following is a characteristic of equity finance? Options: The finance must be repaid at a future date, The returns to the suppliers of finance are called dividends, Suppliers of finance have no rights of ownership over the business, Suppliers of finance have prior claim on assets in the event of liquidation

The returns to the suppliers of finance are called dividends

What is the role of the Australian Securities Exchange (ASX)?

to make markets for the sale and purchase of shares

A business has current liabilities of $200 000 million and current assets of $250 000 million. Which of the following statements correctly describes the position of the business?

The business has a current ratio of 1.25:1 and does not have a liquidity problem.

Bill's Building Supplies has sold goods totaling $50,000 to a number of builders on 90 days' credit. The business now finds that it has a short-term cash flow problem. What is the appropriate solution to this problem? Options: extend trade credit to the builders, sell the debts and lease them back, negotiate a term loan with a finance company, sell the accounts receivable to a finance company

sell the accounts receivable to a finance company

What are cost centres used to determine?

The contribution to total costs of different sections of a business

What value can be used to determine the liquidity of a business? Options: The amount of cash held by the business, The working capital or current ratio, The value of all assets held by a business, The value of all liabilities of a business

The working capital or current ratio

The selling of a business’s current debtors to a specialist debt collecting firm.

What is the most appropriate strategy for a financial manager to use for debt finance? Options: Obtain short-term loans instead of long-term loans, Ensure that debt is only used to purchase non-current assets, Organise the repayment of loans over as many years as possible, Shop around for the lowest interest rates and most suitable repayment terms for the business

Shop around for the lowest interest rates and most suitable repayment terms for the business

Why do currency fluctuations represent a financial risk to business?

Conversion from one currency to another can result in lower revenue and higher expenses.

HSC Finance questions Flashcards

Student preview

37 questions

Show all answers

1.

FLASHCARD QUESTION

Front

What does a cash flow statement show?

Back

liquidity

2.

FLASHCARD QUESTION

Front

The ability to use resources effectively, ensuring financial stability and profitability

Back

efficiency

3.

FLASHCARD QUESTION

Front

The amount of cash moving into and out of a business

Back

Cash Flow

4.

FLASHCARD QUESTION

Front

The accounting equation is

Back

Assets = Liabilities + Owners' Equity, Liabilities = Assets - Owners' Equity, Owners' Equity = Assets - Liabilities

5.

FLASHCARD QUESTION

Front

Which of the following is NOT a current asset? Cash, Inventory, Building, Accounts Receivable

Back

Building

6.

FLASHCARD QUESTION

Front

Which of the following is NOT a current liability? Credit card, Cash, Accounts Payable, Overdraft

Back

Cash

7.

FLASHCARD QUESTION

Front

Which financial statement contains the information to calculate the current ratio (current assets / current liabilities)?

Back

Balance Sheet

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