Financial Management Quiz

Which of the following industries has the highest average inventory turnover ratio?

• Supermarkets

• Retail clothing stores

• Automobile dealerships

• Jewelry stores

Generally, the higher the current ratio, the greater the ability of a firm to pay its current obligations.

• True

• False

When the general level of interest rates rise, bond prices for previously issued bonds fall.

• True

• False

The treasurer of a large corporation is primarily concerned with

• gathering and reporting information for external bodies

• investing, financing, and asset management decisions

• preparing budgets and forecasts.

• gathering and reporting accounting information for internal company use.

________ occurs when a firm puts a limit on the amount of its investments.

• Working capital management

• Marginal structure

• Capital rationing

• Capital structure

Which of the following would be considered a capital budgeting decision?

• Pfizer develops a new therapy and brings it to market.

• Goldman Sachs obtains short-term loans to finance day to day operations

• Walmart purchases inventory for resale to customers.

• Apple sells bonds and uses the proceeds to repurchase stock.

Suppose you have a table of future values for $1 deposited for various rates of interest, and you need the factor for 8 percent compounded semiannually for 10 years. You would look in the ________ period row and the ________ percent rate column.

• 10, 8

• 8, 16

• 10, 16

• 20, 4

Sinking fund payments are made to a trustee in order to enable the trustee to retire a portion of the bond issue each period.

• True

• False

If the profitability index of a project is less than 1, its NPV will be less than 0.

• True

• False

If a preferred stock issue has a cumulative

• cumulative voting rights are granted if dividends are not paid in two consecutive quarters.

• dividends in arrears must be paid before the firm can pay common stock cash dividends.

• preferred stockholders are entitled to limited voting rights

• preferred stockholders can participate in the residual earnings of the company.