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WorksheetsCASH MANGEMENT
Total questions: 37
Worksheet time: 21mins
Name
Class
Date
1.
The objective of wealth maximization takes into account
a)
Amount of returns expected
b)
Timing of anticipated returns
c)
Risk associated with uncertainty of returns
d)
All of the above
2.
1 Good cash management boils down to
a)
investing excess funds at the most favorable interest rate and borrowing at the lowest rate when there is a temporary cash shortage.
b)
investing excess funds at the lowest rate and borrowing at the highest rate when there is a temporary cash shortage.
c)
hedging currency exposure with judicious use of futures, forwards, and currency option contracts
d)
none of the above
3.
Which of the following assets is not considered as current asset:
a)
Stock
b)
Furniture
c)
Cash
d)
Goodwill
4.
Current Assets are those assets which can be converted into cash within
a)
One month
b)
3 months
c)
12 months
d)
9 months
5.
EBIT refers to
a)
Equity before interest and tax
b)
Earning before investment and taxation
c)
Earning before interest and tax
d)
None of the above
6.
Who is responsible for the budget?
a)
Accountants
b)
Shareholders
c)
Investors
d)
Management
7.
1 Efficient cash management techniques can
a)
reduce the investment in cash balances and foreign exchange transaction expenses.
b)
provide for maximum return from the investment of excess cash.
c)
result in borrowing at lowest rate when a temporary cash shortage exists.
d)
all of the above
8.
A cash budget is used to determine:
a)
profit
b)
cash closing balance
c)
the value of the business
d)
the debts of the business
9.
Which is a factor that might cause a business to adjust its budget figures?
a)
Economic trends
b)
Local elections
10.
What do many businesses do with the money they have accumulated asa result of periods of positive cash flow?
a)
Reinvest in the business
b)
Spend all available cash
11.
Which is an example of current liabilities that a business should include in its balance sheet?
a)
Employees’ salaries
b)
Owner’s equity
12.
Which is a way that businesses can use financial information?
a)
To identify trends
b)
To select selling strategies
13.
To develop realistic budgets, existing businesses usually base their estimates on:
a)
industry data.
b)
past performance
14.
Risks that are caused by changes in the market and affect the production and distribution of products are called _____________ risks.
a)
economic
b)
marketing
15.
Established businesses base their cash flow estimates on figures obtained from:
a)
past financial statements.
b)
regional competitors.
16.
Cash flow is defined as:
a)
inflows and outflows of cash and cash equivalents
b)
operating activities
17.
The spreadsheet that records and totals cash flow is:
a)
balance sheet
b)
cash flow statement
18.
Describe the components of a cash flow statement:
a)
all are correct
b)
operating activities
c)
investing activities
d)
financing activities
19.
The break even point is reached when
a)
revenue equals all business costs.
b)
revenue is greater than costs
20.
Cite examples of sources of cash that flow out of a business:
a)
rent, utilities, loan payments, insurance
b)
investment income, accounts receivable, money in cash register
21.
From the spreadsheet we worked together in class, we added together the yellow highlighted items, and you should get the answer highlighted in green. (Operating activities + Investing activities + financing activities).
a)
How cash flow is calculated
b)
How revenue is calculated
22.
Which of the following is an example of a cash in-flow for a business?
a)
payment to suppliers
b)
paying back a loan to a bank
c)
payment from debtors
d)
purchase of fixed assets
23.
Which of the following is an example of a cash out-flow for a business?
a)
payments to creditors
b)
sale of goods
c)
payment from debtors
d)
receiving a loan from the bank
24.
Complete this statement with the best option: ‘The longer the cash-flow cycle… .’
a)
the less cash the business will need
b)
the lower will be the firm’s working capital needs
c)
the less chance there is for the business to run out of cash
d)
the more working capital and cash the business will need
25.
Which is the best explanation for a business running into cash-flow problems?
a)
demanding quick payment from customers
b)
allowing customers a long credit period
c)
delaying payments to suppliers
d)
producing goods when demanded by customers
26.
Which of the following is NOT a use of cash-flow forecasts?
a)
They indicate how much cash is available for paying bills
b)
They show how much the bank needs to lend to stop insolvency
c)
They indicate whether the business is holding too much cash
d)
They indicate how much profit the business will make
27.
Business cash flow forecasts are of use in all of the following situations except:
a)
calculating last year’s profit or loss
b)
finding out how much cash will be needed to start a business
c)
keeping informed about the liquidity of the business
d)
helping the manager to plan when to borrow money
28.
A firm is forecast to have a negative closing bank balance. Which would reduce the problem?
a)
sell more goods on 4 months credit
b)
produce more goods
c)
ask customers to pay in cash and not sell goods on credit
d)
ask suppliers if the firm can pay for goods in cash
29.
If a cashflow forecast suggests that a firm will run out of cash, which would help the problem?
a)
purchase more fixed assets
b)
repay a bank loan
c)
pay suppliers immediately
d)
delay paying suppliers
30.
The monthly net cash flow for a business is calculated by:
a)
sales revenue - cost of goods sold
b)
total cash in - total cash out
c)
total cash out - total cash in
d)
total cash in - cost of goods sold
31.
The monthly net cash flow for a business is calculated by:
a)
sales revenue - cost of goods sold
b)
total cash in - total cash out
c)
total cash out - total cash in
d)
total cash in - cost of goods sold
32.
The term _________ describes how efficiently an asset can be converted into
cash.
a)
Liquidity
b)
Solvency
c)
Conversion rate
d)
Working capital cycle
33.
Which of the would not cause a cash flow problem?
a)
Understocking
b)
Over borrowing
c)
Poor credit control
d)
Seasonal demand fluctuations
34.
What is a long term way to improve cash inflow?
a)
Take out a loan
b)
Take out an overdraft
c)
Use a factoring service
35.
Depreciation
a)
operating activity
b)
financing activity
c)
investing activity
d)
significant non cash activity
36.
payments of dividens
a)
operating activity
b)
investing activity
c)
financing activity
d)
significant non cash activity
37.
sale of building, purchase of equipment
a)
operating activity
b)
financing activity
c)
investing activity
d)
significant non cash activity
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