Financial Management Quiz

"Shareholder wealth" in a firm is represented by:

• the number of people employed in the firm.

• the book value of the firm's assets less the book value of its liabilities.

• the amount of salary paid to its employees.

• the market price per share of the firm's common stock.

The decision function of financial management can be broken down into the decisions.

• financing and investment

• investment, financing, and asset management

• financing and dividend

• capital budgeting, cash management, and credit management

The long-run objective of financial management is to:

• maximize earnings per share.

• maximize the value of the firm's common stock.

• maximize return on investment.

• maximize market share.

A(n) would be an example of a principal, while a(n) would be an example of an agent.

• shareholder; directors

• manager; owner

• accountant; bondholder

• shareholder; bondholder

The market price of a share of common stock is determined by:

• the board of directors of the firm.

• the stock exchange on which the stock is listed.

• the president of the company.

• individuals buying and selling the stock.

A technique for evaluating financial statements that expresses the relationship among selected items of financial statement data is

• vertical analysis.

• horizontal analysis.

• ratio analysis.

• common size analysis.

Horizontal analysis is also called

• common size analysis.

• vertical analysis.

• trend analysis.

• linear analysis.

Silva Corporation reported net sales of $240,000, $420,000, and $540,000 in the years 2010, 2011, and 2012 respectively. If 2010 is the base year, what is the trend percentage for 2012?

• 129%.

• 135%.

• 164%.

• 225%.

Moon Beam, Inc. reported the following income statement data (in millions) net sales, $180; cost of goods sold, $120; and operating expenses, $33. Using vertical analysis, what percentage is assigned to cost of goods sold?

• 67%.

• 33%.

• 100%.

• 52%.

Solvency ratios measure the short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash

• False

• True