Week 6 Quiz

Which of the following is the primary objective of financial management?

• a) Maximizing sales revenue

• b) Minimizing expenses

• c) Maximizing shareholder wealth

• d) Maximizing employee satisfaction

What is the term for the mix of debt and equity used to finance a company?

• a) Financial leverage

• b) Capital structure

• c) Working capital

• d) Cash flow management

Which financial management function involves long-term investment decisions?

• a) Dividend decision

• b) Working capital management

• c) Capital budgeting

• d) Financial risk management

The concept of 'time value of money' implies that:

• • a) Money today is worth more than money in the future

• • b) Money loses its value over time

• • c) Future money is more valuable than present money

• • d) Money value remains constant over time

Which of the following best describes working capital management?

• a) Managing the firm’s long-term assets

• b) Managing short-term assets and liabilities

• c) Deciding on dividend payouts

• d) Evaluating merger and acquisition decisions

Which ratio measures a firm's ability to meet short-term obligations?

• a) Profit margin

• b) Debt-to-equity ratio

• c) Current ratio

• d) Return on assets (ROA)

What is the main goal of capital budgeting decisions?

• a) Reducing the firm's expenses

• b) Increasing liquidity

• c) Selecting the best long-term investments

• d) Maximizing dividends

The cost of debt capital is generally lower than equity because:

• a) Debt holders have voting rights

• b) Debt is a more risky investment

• c) Interest payments are tax-deductible

• d) Equity holders are paid before debt holders

Which of the following represents the residual claim on the firm's assets?

• a) Bondholders

• b) Employees

• c) Equity shareholders

• d) Creditors

he dividend payout ratio is calculated as:

• a) Dividends / Total revenue

• b) Dividends / Net income

• c) Net income / Dividends

• d) Retained earnings / Net income