Introduction to Finance & Financial Statement Analysis

Finance can be defined as

• the system of debits and credits.

• the science of the production, distribution, and consumption of wealth.

• the art and science of managing money.

• the art of merchandising products and services.

Which of the following legal forms of organization is most expensive to organize?

• Sole proprietorships.

• Partnerships.

• Corporations.

• Limited partnership.

The primary goal of the financial manager is

• minimizing risk.

• maximizing profit.

• maximizing wealth.

• minimizing return.

A more recent issue that is causing major problems in the business community is

• the privatization of ownership.

• short-term versus long-term financial goals of

• management.

• ethical problems.

The ________ provides a financial summary of the firm's operating results during a specified period.

• income statement

• balance sheet

• statement of cash flows

• statement of retained earnings

If Nico Corporation has cost of goods sold of RM300,000 and inventory of RM30,000, then the inventory turnover is ________ and the average age of inventory is ________.

• 36.5; 10

• 10; 36.5

• 36.0; 10

• 10; 36.0

If Nico Corporation has annual purchases of RM300,000 and accounts payable of RM30,000, then average purchases per day are ________ and the average payment period is ________.

• 36.5; 821.9

• 36.0; 833.3

• 821.9; 36.5

• 833.3; 36.0

Candy Corporation had pretax profits of RM1.2 million, an average tax rate of 34 percent, and it paid preferred stock dividends of RM50,000. There were 100,000 shares outstanding and no interest expense. What were Candy Corporation's earnings per share?

• RM3.91

• RM4.52

• RM7.42

• RM7.59

Firm ABC had operating profits of RM100,000, taxes of RM17,000, interest expense of RM34,000 and preferred dividends of RM5,000. What was the firm's net profit after taxes?

• RM66,000

• RM49,000

• RM44,000

• RM83,000

The ________ is useful in evaluating credit and collection policies.

• average payment period

• current ratio

• average collection period

• current asset turnover