Corporate Finance 101 Quiz

What is the primary goal of Corporate Finance?

• To increase the company's debt

• To maximize shareholder value

• To minimize company expenses

• To expand the company's workforce

Which analysis method evaluates whether a project will add value by comparing cash inflows with the initial investment?

• Payback Period

• Internal Rate of Return

• Net Present Value

• Return on Investment

What is the process of deciding which projects will generate the highest returns for a company called?

• Capital Structuring

• Capital Budgeting

• Risk Management

• Equity Financing

Which type of financing involves borrowing funds through loans or bonds?

• Equity Financing

• Debt Financing

• Crowdfunding

• Venture Capital

What is a potential downside of equity financing?

• Dilutes ownership

• Limits company growth

• Increases financial risk

• Requires interest payments

What does working capital management primarily focus on?

• Long-term investments

• Short-term assets and liabilities

• Employee training programs

• Market expansion strategies

Which component of working capital management involves ensuring enough cash is available for daily expenses?

• Debt Management

• Inventory Management

• Accounts Receivable Management

• Cash Management

Why is Corporate Finance important for businesses?

• It eliminates all financial risks

• It ensures a fixed profit margin

• It helps in maximizing shareholder value

• It focuses solely on reducing costs

How does Corporate Finance help in managing risk?

• By focusing only on short-term gains

• By increasing the company's debt

• By evaluating and mitigating financial risks

• By eliminating all financial risks

What was one of the actions GE took to stabilize after the 2008 financial crisis?

• Increased its dividend

• Sold off key assets

• Acquired new companies

• Expanded its workforce