Financial Management Quiz

The primary goal of financial management is to:

• Maximize profits

• Maximize shareholder wealth

• Minimize costs

• Ensure firm survival

A company's ability to meet its short-term obligations is measured by the:

• Profit margin

• Current ratio

• Debt ratio

• Gross margin

Which of the following is NOT a component of working capital management?

• Inventory management

• Accounts receivable management

• Dividend policy

• Cash management

The process of determining the present value of a future cash flow is known as:

• Compounding

• Depreciation

• Discounting

• Amortization

A bond's face value is also known as its:

• Coupon rate

• Par value

• Market value

• Yield

The Weighted Average Cost of Capital (WACC) includes:

• Cost of debt and equity

• Depreciation

• Accounts receivable

• Net income

Which financial statement shows the profitability of a company over a specific period?

• Income statement

• Balance sheet

• Cash flow statement

• Retained earnings statement

The formula for calculating Return on Assets (ROA) is:

• Net Income ÷ Total Assets

• Net Income ÷ Total Equity

• EBIT ÷ Total Assets

• EBIT ÷ Total Equity

Which of the following reduces a firm's working capital?

• Increasing accounts payable

• Selling inventory for cash

• Paying off a short-term loan

• Increasing accounts receivable

A company’s cost of equity can be estimated using:

• Net Present Value

• CAPM model

• Dividend Discount Model

• Both b and c