Worksheetslqfm
Total questions: 50
Worksheet time: 32mins
A company reports increasing profits every year, yet its cash balance continues to decline. Which financial statement best explains this situation?
Balance Sheet
Cash Flow Statement
Income Statement
Retained Earnings Statement
When the market interest rate rises above a bond’s coupon rate, what happens to the bond’s price?
It increases
It decreases
It stays at par
It becomes callable
A financial manager wants to improve liquidity without taking new loans. Which of the following actions best achieves that?
Purchasing additional inventory on credit
Buying fixed assets for cash
Speeding up collection from customers
Declaring higher dividends
Which of the following activities is classified as Financing Outflow (FO) in a direct cash flow statement?
Cash received from customers
Cash paid for machinery
Cash paid to shareholders as dividends
Cash received from sale of land
If ₱10,000 is invested for 3 years at 8% annual compound interest, the future value is? (2 Decimal Places)
(a)
In financial statement analysis, a horizontal analysis is most useful for:
Evaluating trends over multiple years
Comparing a company to its competitors
Determining which department uses most resources
Evaluating cash versus noncash transactions
A firm has a current ratio of 2:1. Paying off ₱100,000 of short-term debt using cash will:
Increase the ratio
Decrease the ratio
Leave the ratio unchanged
Depend on long-term liabilities
The market value of ABC Corporation’s shares rose despite a slight decrease in net income. Which factor best explains this?
Investors expect better future performance
The company’s book value decreased
Dividend payout ratio was reduce
The firm issued new common stock
A firm has current assets of ₱800,000 and current liabilities of ₱400,000. What does its 2:1 ratio signify?
It is insolvent
It has too much debt
It’s operating inefficiently
It can pay debts twice over
Which of the following increases cash from operating activities?
Payment to suppliers
Decrease in accounts receivable
Purchase of equipment
Issuance of shares
A ₱1,000 bond with a 10% coupon pays interest annually and has 5 years left to maturity. Market rate = 10%. What is its price?
₱950
₱980
₱1,000
₱1,050
The goal of the financial manager is best described as:
Maximizing accounting profit
Minimizing debt and taxes
Maximizing the market value of equity
Maintaining equal assets and liabilities
A firm’s net income increased, but its return on equity (ROE) fell. What can explain this?
Lower taxes
Decrease in total equity
Reduction in debt
Increase in total equity faster than income growth
A company has a gross profit margin of 35% and sales of ₱800,000. Compute COGS.
₱500,000
₱520,000
₱550,000
₱600,000
If ₱50,000 invested today grows to ₱80,000 in 6 years, what is the annual compound rate?
7%
8%
9%
10%
A firm’s quick ratio improves but its current ratio declines. Which likely caused this?
Increased cash holdings
Decrease in accounts receivable
Decrease in inventory
Increase in short-term loans
A company’s operating cash flow was positive, but its total cash decreased. Which statement explains this best?
Poor collections
Heavy investing outflows
High interest expense
Increased depreciation
A risky investment promises 20% return, while a risk-free asset yields 8%. What motivates rational investors to pick the risky one?
Expected utility
Risk aversion
Inflation hedge
Liquidity preference
The time value of money concept implies:
Future cash is worth more than present cash
Present cash is worth more than the same future amount
Money’s value doesn’t change with time
Risk and time are unrelated
In a portfolio context, which statement is TRUE about diversification?
t eliminates all investment risk.
It increases overall risk.
It reduces unsystematic risk,
A firm’s inventory turnover declined from 8 times to 5 times per year. What does this suggest?
Sales volume increased
Inventory is piling up slower than before
The company holds inventory longer, tying up cash
The company has become more efficient
When computing cash received from customers under the direct method, an increase in accounts receivable should be:
Added to sales
Subtracted from sales
Ignored
Treated as investing outflow
Which statement best reflects the risk-return trade-off?
Higher risk always leads to loss
All investors avoid risk
Risk and return are independent
Investors expect higher return for higher risk
A stock just paid a ₱5 dividend and is expected to grow 5% annually. Required return = 10%. Find the current price.
(a)
Which decision best illustrates the financing function of financial management?
Choosing between leasing and buying equipment
Selecting a supplier with discount terms
Declaring dividends
Expanding inventory for seasonal sales
Which of the following activities would NOT appear in a direct-method cash flow statement?
Cash paid to employees
Cash received from customers
Depreciation expense
Cash paid for supplies
A firm’s debt-to-equity ratio rises sharply from 0.8 to 2.0. Which is most accurate?
Firm reduced its risk
Firm increased leverage and financial risk
Firm issued more equity
Profitability improved
A firm has positive net income but negative cash from operations. Which scenario could explain this?
Cash sales exceeded credit sales
Company issued new stock
Receivables and inventory increased significantly
Company paid off long-term debt
If ₱100,000 will be received 5 years from now and the discount rate is 12%, what is the present value? (2 decimal places)
(a)
Which statement about systematic risk is TRUE?
It can be eliminated through diversification
It is unique to each firm
It is measured by standard deviation only
It comes from market-wide factors and cannot be diversified away
Which ratio best assesses a company’s efficiency in using assets to generate sales?
Current ratio
Debt ratio
Profit margin
Total asset turnover
If market rates fall after a bond is issued, its price will:
Rise
Fall
Stay the same
Depend on par value
A ₱1 increase in sales raises net income by ₱0.20. What is the company’s profit margin?
10%
15%
20%
25%
A firm’s operating cash flow includes which of the following?
Dividends paid to shareholders
Interest paid on bonds
Cash received from equipment sale
Proceeds from issuing stock
Which statement about diversification is INCORRECT?
It reduces unsystematic risk
Adding more stocks always eliminates market risk
It spreads investment across assets to lower volatility
Portfolio risk may drop without reducing expected return
Which item is an Investing Outflow (IO) in the direct cash flow method?
Cash received from customers
Cash paid to employees
Purchase of equipment
Payment of dividends
A company’s total debt ratio is 0.60. What does this mean?
60% of assets are financed by equity
60% of assets are financed by debt
Equity is twice the debt
Company has no leverage
Which is the most liquid asset on a company’s balance sheet?
Inventory
Accounts Receivable
Prepaid Expense
Cash and Cash Equivalents
A financial analyst notes that a company’s return on assets exceeds its return on equity. This implies:
Company is highly leveraged
Company has no debt
Company uses debt to boost profits
Assets are under-utilized
Which financial decision concerns how much earnings should be distributed versus retained?
Investment decision
Financing decision
Dividend decision
Liquidity decision
In 2025, a company’s income statement shows:
Sales = ₱1,000,000
COGS = ₱600,000
Operating Expenses = ₱250,000
Net Income = ₱150,000
Compute the Vertical Analysis of Operating Expenses.
(a)
ABC Corp. has the following:
Compute the Quick Ratio.
(a)
How much is the future value of ₱50,000 invested for 4 years at 6% annual compound interest? (2 decimal places)
(a)
What is the present value of ₱120,000 to be received after 5 years if the discount rate is 10%? (2 decimal places)
(a)
Compute the percentage change in Net Income from 2024 to 2025 using horizontal analysis.
(a)
DEF Company had ₱5,000,000 in sales and ₱500,000 net income. Total assets are ₱2,000,000 and total equity for 2023 is ₱1,250,000 and total equity for 2024 is ₱1,050,000.
Compute the Return on Equity (ROE). (2 decimal places)
(a)
Preferred stock is similar to bonds in that:
It has a fixed maturity date
It usually pays fixed dividends
It represents ownership of the company
It has voting rights
Sales increased from ₱1,200,000 in 2024 to ₱1,500,000 in 2025. Cost of goods sold increased from ₱700,000 to ₱900,000. Which statement is TRUE regarding the percentage change?
Sales increased by 25%, COGS increased by 22.86%
Sales increased by 20%, COGS increased by 30%
Sales increased by 25%, COGS increased by 28.57%
Both increased by 20%
A company is evaluating two projects. Project A increases sales by ₱200,000 but also increases operating expenses by ₱180,000. Project B increases sales by ₱150,000 and expenses by ₱100,000. Which project improves profitability more?
Project A
Project B
Both are equal
Cannot be determined
XYZ Corp.’s debt-to-equity ratio increased from 0.8 to 1.2 in a year. Which of the following interpretations is correct?
The company is relying more on debt financing
The company has improved equity financing
The company’s liquidity has improved
The company is issuing more shares
