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WorksheetsACCA FM Review 1 - Fin Mgmt Function & Environ
Total questions: 22
Worksheet time: 11mins
In a financial market, the price to borrow money is called the?
Deposit
Interest Rate
Credit
Cost
The primary goal of financial management is
to maximize the return
to minimize the risk
to maximize wealth of owners
to maximize profit
Dividend decision is concerned with
only distribution of dividend to shareholders
how much to be retained in business
how much profit earned is distributed to shareholders and how much to be retained in the business
none of the above
What are the aspects of Working Capital Management?
Receivable management
Inventory management
Cash management
All of the above
Risk, as it relates to working capital, means that there is jeopardy to the firm for not maintaining sufficient current assets to ___________.
Support appropriate level of Sales and take prompt payment discounts.
Meet its cash obligations as they occur and take advantage of prompt payment discounts.
Meet its cash obligations as they occur and support appropriate level of sales.
Maintain current and acid-test ratios at or above industry norms.
Negative working Capital represents that:
Current Liabilities > Current Assets
Current Liabilities < Current Assets
Both (a) and (b)
None of the above
Which of the following could be turned into cash the easiest or quickest?
Raw materials
Finished product
Semi-finished product
None of these
What does this represent?
Cash flow
Business Activity
Working capital cycle
Liquidity cycle
The _________________ the amount of time between buying materials (inputs) to receiving payments from the customer the higher the risk to a firm.
Longer
Shorter
The working capital situation of a firm can be improved by obtaining ______________ forms of _____________ term finance.
external, short
internal, long
Obtaining too much external finance to improve working capital can make the problem worse.
True
False
Net working capital is the difference between current assets and current liabilities.
The goal of working capital management is to ensure adequate cash flow for operations.
Temporary current assets are assets that fluctuate with seasonal variations in a firm's business.
The expenses incurred to create and process an order to a supplier.
purchasing costs
ordering costs
stockout costs
carrying costs
Reorder level determines how low inventory should be before reordering occurs.
TRUE
FALSE
demand e.g. Christmas sale
shortages or fluctuations in demand
Below are the importance of inventory control, except;
How to maximize costs involved, which could directly increase production
How much inventory to be ordered to replace sold inventory
When to order inventory to prevent excess or deficiency in storage
What type of inventory is suitable for the production process
