S1. Principles of Finance (2)

Which of the following methods ignores the time value of money in investment appraisal?

• Net Present Value (NPV)
  

• Payback Period
  

• Internal Rate of Return (IRR)

Which of the following is an example of a long-term financing option?

• Debentures
  

• T-bill

• Certificate of deposit

• Trade credit

Which financial statement provides a snapshot of a company’s financial position at a specific point in time?

• Income Statement
  

• Cash Flow Statement
  

• Balance Sheet
  

• Statement of Retained Earnings
  

Which of the following describes the concept of time value of money?

• A dollar today is worth more than a dollar in the future.
  

• Money has a higher value when invested.
  

• Money loses value over time due to inflation.

• Future money has the same value as money today.

Which of the following is an example of a primary market transaction?

• Buying shares on the stock exchange
  

• Initial Public Offering (IPO)
  

• Trading government bonds
  

• Selling shares to another investor

Managing cash involves ensuring that there is neither a shortage nor an excess of cash.

• True

• False

Which of the following is NOT a factor in time value of money calculations?

• Principal amount
  

• Interest rate
  

• Inflation rate

• d. Time period
  

What is the primary purpose of the income statement?

• To show the company’s financial position at a point in time.
  

• To summarize the company’s revenues and expenses over a period.
  

• To track cash inflows and outflows.
  

• To list all the company’s assets and liabilities.
  

What is capital budgeting?

• Managing a company’s working capital
  

• Deciding how to finance short-term assets
  

• Evaluating long-term investment opportunities
  

• Estimating a company’s profitability
  

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

• Maximizing revenue
  

• Minimizing costs
  

• Maximizing shareholder wealth
  

• Achieving zero debt