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WorksheetsBusiness Finance Reviewer
Total questions: 15
Worksheet time: 15mins
Which of the following statements correctly defines an income statement?
A financial statement that provides information on a company's financial position at a specific point in time.
A financial statement that shows a company's revenues, expenses, and net income over a specific period.
A projection of a company's assets, liabilities, and equity for a future period.
A summary of a company's cash flows, including operating, investing, and financing activities.
A report of a company's historical financial performance in a given year.
When comparing two investment options, which one is more desirable in terms of the time value of money?
An investment that offers a lower rate of return.
An investment that pays out its returns sooner.
An investment with a longer holding period.
An investment with uncertain returns.
Depending on your risk appetite
In the context of the time value of money, what does "discounting" refer to?
Reducing the value of future cash flows to their present value.
Increasing the value of present cash flows to their future value.
Calculating the average return on an investment.
Compounding interest over multiple periods.
Giving discounts to the investment
Which of the following is an application of simple interest?
Earnings on a savings account with monthly compounding
Credit card interest with compounding
Dividend earnings on stock investments
Mortgage payments on a fixed-rate loan
5-6 Lending
Which of the following statements about compound interest is true?
Compound interest is always lower than simple interest.
Compound interest is only calculated annually.
Compound interest calculations ignore the effect of time.
Compound interest makes you richer if you are the creditor.
Compound interest can result in exponential growth of an investment.
Which of the following factors has the greatest impact on the present value of future cash flows?
The frequency of compounding
The future value
The present value
The discount rate
The time period
When calculating the present value of future cash flows, what happens as the rate increases?
Present value increases
Present value decreases
Future value increases
Future value decreases
No changes
How does increasing the time period affect the future value of an investment, assuming a fixed interest rate?
It has no effect on the future value.
It decreases the future value.
It increases the future value.
It only affects the present value.
It increases the present value.
In the context of the time value of money, what does "amortization payment" refer to?
The process of calculating future value
A series of equal payments or receipts made at regular intervals
The initial investment amount
The effect of inflation on cash flows
The growth of the loan
A Philippine retail company is planning its sales budget for the next year. They want to expand their operations by opening new stores in different provinces. Which of the following factors should the company consider when estimating sales revenue?
Historical sales data of existing stores
Sales tax rates in different provinces
Competitor's pricing strategies
The exchange rate of the peso against the US dollar
The inflation rate
A manufacturing company in the Philippines is preparing its production budget for the next quarter. Due to possible disruptions in the supply chain, they want to maintain a safety stock of raw materials. What impact will this decision have on the production budget?
It will decrease the production capacity.
It will reduce the overall production cost.
It will have no effect on the production budget.
Company will earn a profit out from it.
It will increase the total raw material expenses.
A worker received a year-end bonus and is deciding where to invest it. Which investment option would likely provide the highest return on investment over the long term?
A time deposit account with simple interest
A government savings bond with fixed interest
Keeping the money in a regular savings account
A stock market index fund with compound returns
A debt instrument investment
A Filipino family is considering taking out a loan to buy a house. Which of the following factors would lead to a higher monthly mortgage payment?
A larger down payment
A smaller loan principal
A longer loan term
A lower interest rate
A loan without collateral
Pedro, an entrepreneur, wants to borrow money to expand his business. He has two loan options: one with simple interest and one with compound interest. Which loan will likely have a lower total interest cost over time?
The loan with simple interest
The loan with compound interest
Both loans will have the same total interest cost.
It depends on the specific terms of the loans.
It depends on the principal.
A Filipino retail company wants to optimize its cash collection process. Which of the following strategies would help them improve cash flow without negatively impacting customers?
Offering longer credit terms to customers.
Implementing stricter credit policies.
Encouraging customers to pay in cash with discounts.
Reducing the frequency of invoicing.
Increasing credit limits of regular customers.
