Scribd
Upload
210 views2 pages

Financial Management Quiz

The document appears to be a quiz covering various financial concepts: 1) Shareholder wealth is represented by the market price per share of a firm's common stock. 2) The long-run objective of financial management is to maximize the value of the firm's common stock. 3) A shareholder would be an example of a principal, while a manager would be an example of an agent.

Uploaded by

Sauban Ahmed
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
210 views2 pages

Financial Management Quiz

The document appears to be a quiz covering various financial concepts: 1) Shareholder wealth is represented by the market price per share of a firm's common stock. 2) The long-run objective of financial management is to maximize the value of the firm's common stock. 3) A shareholder would be an example of a principal, while a manager would be an example of an agent.

Uploaded by

Sauban Ahmed
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Quiz 1

1. "Shareholder wealth" in a firm is represented by:


a. the number of people employed in the firm
b. the book value of the firm's assets less the book value of its liabilities.
c. the amount of salary paid to its employees
d. the market price per share of the firm's common stock

2. The long-run objective of financial management is to:


a. maximize earnings per share
b. maximize the value of the firm's common stock
c. maximize return on investment
d. maximize market share

3. A(n)          would be an example of a principal, while a(n)          would be an example of


an agent.
a. shareholder; manager
b. manager; owner
c. accountant; bondholder
d. shareholder; bondholder

4. The market price of a share of common stock is determined by:


a. the board of directors of the firm.
b. the stock exchange on which the stock is listed.
c. the president of the company.
d. individuals buying and selling the stock.

5. Prichard’s sales in the year ended 31st December 2011 were £390,000. The sales produced a
gross profit ratio of 30%. If the cost of inventory on 31st December 2011 was £96,000, what
would be his inventory days? Please assume purchases as equivalent to cost of sales.

a. 128 days
b. 120 days
c. 109 days
6. Marlin’s wholesale reported its sales in the year ended 30th June 2012 as £511,000. If her
receivable days are calculated to be 63 days, ascertain her trade receivables as at 30th June
2012.
a. £126.400
b. £88,200
c. £321,930

7. A business would attempt to negotiate extended credit period from its suppliers if
a) it experiences cash flow problems
b) it wishes to negotiate better trade discounts
c) it wishes to extend credit period allowed to its customers
d) it wishes to earn more cash discounts
i. a & c
ii. b & d
iii. b, c & d

8. Which of the following may be expected to improve a company’s liquidity


a. Reduction of trade payable days
b. Reduction of trade receivable days
c. Increase of the Inventory days
d. Repayment of Loan Notes

9. An analyst compiles the following data for a company:

FY13 FY14 FY15


ROE 19.8% 20.0% 22.0%
Return on total assets 8.1% 8.0% 7.9%
Total asset turnover 2.0 2.0 2.1

Based only on the information above, the most appropriate conclusion is that,
over the period FY13 to FY15, the company’s:
a. net profit margin and financial leverage have decreased.
b. net profit margin and financial leverage have increased.
c. net profit margin has decreased but its financial leverage has increased.

10. What does the P/E ratio measure?


a. The “multiple” that the stock market places on a company’s EPS.
b. The relationship between dividends and market prices.
c. The earnings for one common share of stock.

You might also like