WorksheetsFinancial Management Quiz
Total questions: 50
Worksheet time: 25mins
What is the primary focus of financial management in a corporation?
Maximizing the market value of the shares of stocks.
Minimizing the number of shareholders.
Increasing the number of products sold.
Reducing the number of employees.
Which of the following best describes the purpose of financial management for both individuals and companies?
To ensure that cash and other resources are managed properly and not wiped out.
To increase the number of employees.
To reduce the price of products.
To avoid paying taxes.
According to the illustration, what does the market value of shares represent for shareholders?
The value of the shareholders’ wealth.
The total number of employees.
The company’s annual revenue.
The number of products sold.
If Globe Telecom Inc. shares are actively traded in the Philippine Stock Exchange (PSE), what can happen to the price of the stock and the total market value of the shares?
They may change every trading day.
They remain constant throughout the year.
They only increase and never decrease.
They are set by the government and do not change.
Which of the following is NOT mentioned as a component of the business finance course described in the module?
Human resource management techniques.
Fundamental principles of financial operation.
Financial analysis and planning.
Investment and financing decisions.
Based on the illustration, if Globe Telecom Inc. had 132,742,402 shares outstanding and each share closed at P2,200, what was the approximate market value of all shares?
More than P292 billion.
Less than P100 million.
Exactly P1 billion.
About P50 million.
Which of the following is NOT listed as a unit in the course outline for Business Finance?
Introduction to Financial Management
Review of Financial Statements Preparation, Analysis, and Interpretation
International Marketing Strategies
Managing Personal Finance
What is the primary objective of management according to the concept of shareholders’ wealth maximization?
Maximizing company profits
Maximizing shareholders’ wealth through maximization of stock price
Minimizing company risks
Increasing employee satisfaction
Which of the following is a factor that can influence the price of a stock?
Projected earnings and timeframe for realization
Number of employees in the company
The color of the company’s logo
The location of the company’s headquarters
According to finance literature, why should profit maximization NOT be the overriding objective of management?
It ignores the importance of marketing
It does not consider shareholders’ wealth maximization and can expose the company to more risks
It is illegal in most countries
It always leads to bankruptcy
Which unit in the course outline covers the concept of the Time Value of Money?
Unit I: Introduction to Financial Management
Unit IV: Sources and Uses of Short-term, and Long-term Funds
Unit V: Basic Long-term Financial Concepts
Unit VII: Managing Personal Finance
A company borrows more to finance expansion and generate more revenues. According to the text, what is a potential downside of this strategy?
It guarantees higher profits
It can expose the company to more risks and possible operating losses
It always increases the company’s stock price
It reduces the company’s market share
Which of the following is NOT listed as an ingredient for wealth maximization in a company?
Interest of employees
Prompt payment to suppliers and creditors
Increasing short-term profits at any cost
Compliance to government regulations
Why might profit maximization not be the most important goal of a company?
It always leads to higher long-term profits
It may require borrowing more, increasing bankruptcy risk
It guarantees employee satisfaction
It ensures compliance with all government regulations
Which of the following is a function of financial intermediaries in the financial system?
Issuing government bonds
Connecting savers and users of funds
Manufacturing goods
Setting government policies
Which group is NOT directly classified as a financial intermediary in the financial system?
Banks
Mutual funds
Households
Insurance companies
What is the main difference between common stocks and preferred stocks?
Common stocks have preference in dividend distribution
Preferred stocks have preference in dividend and asset distribution
Common stocks are only issued by the government
Preferred stocks do not exist in most companies
Which of the following is a characteristic of Treasury Bonds and Bills issued by the Philippine Government?
They are only available to corporations
They pay interest monthly
They are forms of government indebtedness and pay interest quarterly or semi-annually
They are not available for retail purchase
Which of the following is a possible negative consequence of focusing only on short-term profit maximization?
Improved long-term production capacity
Increased bankruptcy risk due to excessive borrowing
Enhanced compliance with regulations
Better relationships with the host community
Which of the following is an example of a debt security?
Common stock
Preferred stock
Treasury bond
Mutual fund
Which type of bond is usually issued by publicly listed companies, is long-term, and offers slightly higher interest than government securities?
Government bonds
Corporate bonds
Municipal bonds
Savings bonds
In terms of claim over assets upon liquidation, who has preference over common and preferred stockholders?
Common stockholders
Preferred stockholders
Bondholders
Shareholders
According to the organizational chart, who does the VP for Finance report to?
Board of Directors
President
VP for Production
VP for Sales and Marketing
Which of the following is NOT one of the companies listed for the supplemental learning activity on stock price movements?
PLDT
Globe Telecom
Jollibee Foods Corporation
Ayala Corporation
If you were to analyze which stock is most volatile in terms of price movements, what type of skill are you primarily using?
Memorization
Application of concepts and analysis
Simple recall
Guesswork
Which of the following is a responsibility of the Board of Directors in a corporation?
Formulating marketing strategies
Approving the information and other disclosures reported in the financial statements
Ensuring production meets customer demands
Providing assistance in payroll preparation
What is one of the main responsibilities of the President in a corporation?
Identifying adequate and competitively priced raw materials
Overseeing the operations of a company and ensuring that strategies approved by the board are implemented
Directing and coordinating company sales
Determining the location and maximum amount of office space needed by the company
Which of the following is NOT a responsibility of the VP for Sales and Marketing?
Formulating marketing strategies
Performing market and competitor analysis
Ensuring production meets customer demands
Analyzing and evaluating effectiveness and cost of marketing methods applied
The VP for Production is responsible for which of the following?
Directing and coordinating company sales
Identifying production technology/process that minimizes production cost and makes the company cost competitive
Providing assistance in payroll preparation
Approving company’s strategies, goals, and budgets
Which function is NOT listed under the responsibilities of the VP for Administration?
Coordination functions of administration, finance, and sales and marketing departments
Assisting other departments in hiring employees
Approving the information and other disclosures reported in the financial statements
Determining the location and the maximum amount of office space needed by the company
Which of the following is a function of the VP for Finance?
Formulating marketing strategies
Investing
Overseeing the operations of a company
Identifying production technology/process
A stockholder who owns 10% of the voting shares in a company with ten directors on the board would be able to:
Elect all ten directors
Elect one director
Elect five directors
Not elect any director
Which of the following questions is related to the financing decisions of the VP for Finance?
How to formulate marketing strategies?
How to ensure production meets customer demands?
How to finance long-term investments and working capital requirements?
How to coordinate functions of administration?
If a company wants to minimize its operating costs, which VP is primarily responsible for identifying means, processes, or systems to achieve this?
VP for Sales and Marketing
VP for Production
VP for Administration
VP for Finance
Which of the following best describes the purpose of the Statement of Financial Position or Balance Sheet?
Provides information regarding the liquidity position and capital structure of a company as of a given date.
Provides information regarding the revenues and expenses of a company over a period.
Explains the changes in cash balance from one period to another.
Summarizes the significant accounting policies of a company.
What does the Statement of Profit or Loss or Income Statement provide?
Information about the liquidity position of a company
Information regarding the revenues, expenses, and net income of a company over a given accounting period
Explanation of changes in stockholders’ equity
Description of the company’s business nature
Which of the following is NOT a factor affecting the declaration of dividends?
Availability of investment opportunities
Access to long-term sources of funds
Capital structure
Number of employees
Which statement provides an explanation regarding the change in cash balance from one accounting period to another?
Statement of Financial Position
Statement of Profit or Loss
Statement of Cash Flows
Statement of Changes Stockholder’s Equity
Which of the following is a reason for changes in the Statement of Changes Stockholder’s Equity?
Recording business transactions
Cash dividend declaration
Posting to ledger accounts
Analyzing business transactions
Why is a summary of significant accounting policies important in the notes to financial statements?
It describes the company’s products.
It provides alternative accounting policies to companies.
It lists the company’s employees.
It shows the company’s cash flow.
Which of the following is NOT part of the review of the financial statement preparation process?
Analyzing business transactions
Recording in the journals
Posting to ledger accounts
Declaring cash dividends
A company’s liquidity is determined by comparing its current assets with which of the following?
Total revenue
Current liabilities
Net income
Stockholders’ equity
If a company issues new shares of stocks, which financial statement will reflect this change?
Statement of Profit or Loss
Statement of Cash Flows
Statement of Changes Stockholder’s Equity
Notes to Financial Statements
Why might putting all the details on the face of the balance sheet make it too long?
Because the PPE account may have too many components
Because it includes all business transactions
Because it lists all employees
Because it summarizes accounting policies
Which of the following is NOT a type of adjusting entry made during the accounting process?
Accruals
Prepayments
Depreciation and amortization expenses
Inventory purchases
Which ratio is used to measure a company's ability to pay its short-term obligations?
Return on Equity
Current Ratio
Debt Ratio
Gross Profit Margin
Which of the following is a profitability ratio?
Debt to Equity Ratio
Net Profit Margin
Inventory Turnover Ratio
Acid-test Ratio
If a company wants to evaluate how efficiently it collects payments from its customers, which ratio should it use?
Accounts receivable turnover ratio
Debt Ratio
Return on Assets
Interest Coverage Ratio
The main difference between the Current Ratio and the Acid-test Ratio in liquidity analysis is:
The Acid-test Ratio includes inventory, while the Current Ratio does not.
Both ratios include only cash and receivables.
The Current Ratio is always lower than the Acid-test Ratio.
The Current Ratio includes all current assets, while the Acid-test Ratio excludes inventory.
A company has a high Debt to Equity Ratio. What does this indicate about the company's financial structure?
The company relies more on equity than debt for financing.
The company has a balanced mix of debt and equity.
The company relies more on debt than equity for financing.
The company has no long-term liabilities.
