A company is planning to expand its operations in the next five years. How should a financial manager contribute to this plan?

By ensuring there are enough funds available to support the expansion and achieve long-term objectives.

By designing the new office layout.

By hiring new staff for the expansion.

By creating advertisements for the new location.

What is the primary purpose of the objectives of financial management in a business?

To set goals for business operations

To increase the number of employees

To expand into new markets only

Which mnemonic is suggested in the material to remember the objectives of financial management?

Popular Guys Enjoy Lebanese Sweets

Big Elephants Always Understand Small Elephants

Please Give Every Little Student

Explain why the objectives of financial management might change over time for a business.

Because business goals and external conditions can evolve

Because the objectives are fixed and never change

Because only new businesses need objectives

Because objectives are not important for financial management

What does profitability refer to in a business context?

The earnings of the business after expenses have been paid

The total sales before any expenses are paid

The amount spent on advertising

Which of the following is the correct formula for Gross Profit?

Gross Profit = Revenue - Cost of Goods Sold (COGS)

Gross Profit = Revenue + Cost of Goods Sold (COGS)

Gross Profit = Revenue x Cost of Goods Sold (COGS)

Gross Profit = Revenue / Cost of Goods Sold (COGS)

Which of the following best describes Net Profit?

Gross profit minus expenses such as wages and rent

Revenue minus only the cost of goods sold

Total sales before any deductions

Cost of goods sold minus revenue

Why is it important for a business to distinguish between Gross Profit and Net Profit?

To understand both the direct profitability from sales and the overall profitability after all expenses

To calculate the number of employees needed

To determine the price of goods

To decide on the color of the company logo

What does the term "acquisitions" refer to in the context of business growth?

A business buying out or taking over another business

Two or more businesses joining to form one larger business

Increasing the number of staff in a business

Expanding the product range of a business

Which of the following is an example of a merger?

Virgin Airlines acquiring Tiger Airlines

A business increasing its production

Explain the difference between internal and external growth for a business, providing an example of each.

Internal growth involves increasing sales or staff; external growth involves mergers or acquisitions.

Internal growth involves mergers; external growth involves increasing production.

Internal growth involves acquisitions; external growth involves expanding product range.

Internal growth involves buying other businesses; external growth involves hiring more staff.

What does the term "efficiency" refer to in the context of a business?

How much revenue is used to pay off expenses

How much profit a business makes

The number of employees in a business

The total assets owned by a business

Which formula is used to determine the efficiency of a business?

Total assets / Total liabilities

A healthy business usually has an expense ratio of 0.5/1. What does this mean?

For every $1 made, 50 cents is spent on expenses

For every $1 made, $1 is spent on expenses

For every $1 made, 25 cents is spent on expenses

For every $1 made, $2 is spent on expenses

Why is an expense ratio of 0.5/1 considered desirable for a business?

It means the business is spending less than it earns

It means the business is spending more than it earns

It means the business is breaking even

It means the business has no expenses

What does an expense ratio of 0.7/1 mean for a business?

For every $1 made, 70 cents is spent on expenses

For every $1 made, 30 cents is spent on expenses

For every $1 made, $1 is spent on expenses

For every $1 made, 10 cents is spent on expenses

If Huntmaster’s expense ratio drops from 0.7/1 in the first quarter to 0.4/1 in the second quarter, what does this indicate about their efficiency?

They have become more efficient

They have become less efficient

Their efficiency has not changed

Why is a lower expense ratio considered better for a business?

It means the business is more efficient

It means the business is spending more on expenses

It means the business is less efficient

It means the business has higher expenses than revenue

A company has total expenses of $4,000 and total revenue of $10,000. What is the expense ratio, and what does it mean?

0.4/1; 40 cents is spent on expenses for every $1 made

0.4/1; 60 cents is spent on expenses for every $1 made

0.6/1; 40 cents is spent on expenses for every $1 made

0.6/1; 60 cents is spent on expenses for every $1 made

What is the definition of liquidity in a business context?

The ability of a business to pay its short term debts.

The total value of a business’s assets.

The profit a business makes in a year.

The amount of money a business owes in the long term.

Which of the following is the correct formula to measure liquidity?

Liquidity ratio = Current assets / Current liabilities

Liquidity ratio = Current liabilities / Current assets

Liquidity ratio = Total assets / Total liabilities

Liquidity ratio = Net income / Current assets

Why are current assets important for measuring liquidity?

They can be converted into cash within 12 months.

They represent the total profit of a business.

They are used to pay long-term debts.

They are always in the form of physical goods.

The image represents the concept of liquidity in a business context.

The image represents the global reach of business liquidity.

The image shows a hand holding a physical asset.

The image is unrelated to the concept of liquidity.

The image shows a business transaction.

If a business has a current ratio of 2:1, what does this indicate?

The business has $2 of current assets for every $1 of current liabilities

The business has $2 of current liabilities for every $1 of current assets

The business has $1 of current assets for every $2 of current liabilities

The business has equal current assets and liabilities

Why might a business be concerned if its bank account is overdrawn?

It means the business has withdrawn more money than is in its account

It means the business has too many assets

It means the business has paid off all its debts

It means the business is making a profit

A business has $10,000 in current assets and $5,000 in current liabilities. Based on the desirable ratio mentioned, is this business considered healthy? Explain your reasoning.

Yes, because the ratio is 2:1, which is desirable

No, because the ratio is 1:1, which is not desirable

Yes, because the ratio is 3:1, which is better than desirable

No, because the ratio is 0.5:1, which is not desirable

What is the formula for calculating the liquidity ratio?

Current Assets / Current Liabilities

Current Liabilities / Current Assets

Total Assets / Total Liabilities

What does a liquidity ratio of 1:2 mean for a business?

The business has $1 of current assets for every $2 of current liabilities.

The business has $2 of current assets for every $1 of current liabilities.

The business has $1 of current assets for every $1 of current liabilities.

The business has $2 of current liabilities for every $1 of current assets.

Is a liquidity ratio of 1:2 considered healthy for a business? Why or why not?

No, because the business does not have enough assets to pay off its liabilities.

Yes, because the business can pay off all its liabilities.

Yes, because the business is reinvesting money.

No, because the business has too much cash.

Business Financial Management Quiz

Quiz

•

Business

•

12th Grade

•

Practice Problem

•

Easy

Elke Raftery

Used 1+ times

FREE Resource

Winning industry awards

Increasing product prices

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the primary role of a financial manager in a business?

To ensure that a business has enough funds to meet their short and long-term goals and objectives.

To manage the marketing strategies of the business.

To oversee the production process in the company.

To handle only the day-to-day cash transactions.

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Why is it important for a financial manager to ensure a business has enough funds?

So the business can meet its short and long-term goals and objectives.

So the business can hire more employees.

So the business can increase its advertising budget.

So the business can reduce its product prices.

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According to the material, what is considered the most difficult time for any new business?

What was the approximate number of businesses that filed for bankruptcy in the 2014–2015 financial year, as mentioned in the material?

Why is good financial management important for a business, according to the material?

Based on the information provided, what role does a financial manager play in a business?

If a business fails to have good financial management in its first year, what is a likely consequence based on the material?

What is the primary role of a financial manager in a business?

Why is it important for a financial manager to ensure a business has enough funds?

A company is planning to expand its operations in the next five years. How should a financial manager contribute to this plan?

Which of the following is NOT one of the five main objectives of financial management?

What is the primary purpose of the objectives of financial management in a business?

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