Chapter 6: Financial Statement Analysis MCQs

Multiple-Choice Quiz

Chapter 6:   Financial Statement Analysis

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1. Determine a firm's total asset turnover (TAT) if its net profit margin (NPM) is 5 percent, total assets are $8 million, and ROI is 8 percent.

1.60           Correct! = (ROI) / (NPM) = TAT    (.08) / (.05) = 1.6

2.05

2.50

4.00

Chapter 22: Convertibles, Exchangeables, and Warrants MCQs

Multiple-Choice Quiz

Chapter 22:   Convertibles, Exchangeables, and Warrants

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1. A $500 par-value convertible debenture is selling at $520. If the conversion ratio is 20, what is the conversion price?

$19.23

$20.18

$25.00        Correct!

 Conversion ratio = (Face value) / (Conversion price)

 Conversion price = $500 / 20 = $25

$26.00

Chapter 21: Term Loans and Leases MCQs

Multiple-Choice Quiz

Chapter 21:   Term Loans and Leases

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1. One difference between a financial lease and operating lease is that:

there is a often a call option in a financial lease.

there is often an option to buy in an operating lease.

an operating lease is often cancellable by the lessee.

a financial lease is often cancellable by the lessee.

Chapter 20: Long-Term Debt, Preferred Stock, and Common Stock MCQs

Multiple-Choice Quiz

Chapter 20:   Long-Term Debt, Preferred Stock, and Common Stock

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1. A bond issue may be retired by:

calling the bonds if there is a call feature.

converting the bonds (if convertible) into common stock.

making a single-sum payment at final maturity.

all of the above.

Chapter 19: The Capital Market MCQs

Multiple-Choice Quiz

Chapter 19:   The Capital Market

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1. Letter stock is

a handwritten certificate representing a corporate IOU.

a mass mailing offering a security for sale.

securities issued by the United States Postal Service.

privately placed common stock that cannot be immediately resold to the general public.

Chapter 18: Dividend Policy MCQs

Multiple-Choice Quiz

Chapter 18:   Dividend Policy

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1. Retained earning are

an indication of a company's liquidity.

the same as cash in the bank.

not important when determining dividends.

the cumulative earnings of the company after dividends.

Chapter 17: Capital Structure Determination MCQs

Multiple-Choice Quiz

Chapter 17:   Capital Structure Determination

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1. The term "capital structure" refers to:

long-term debt, preferred stock, and common stock equity.

current assets and current liabilities.

total assets minus liabilities.

shareholders' equity.

Chapter 16: Operating and Financial Leverage MCQs

Multiple-Choice Quiz

Chapter 16:   Operating and Financial Leverage

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1. If I believe in the basic principle of a risk-reward relationship, my conclusion regarding security ratings and yields between an Aaa bond and a Baa bond would be that:

the Aaa bond would have the lower yield.

the Aaa bond would have the higher yield.

the Baa bond would have lower default risk.

default risks would differ but yields would be equal.

Chapter 15: Required Returns and the Cost of Capital MCQs

Multiple-Choice Quiz

Chapter 15:   Required Returns and the Cost of Capital

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1. A single, overall cost of capital is often used to evaluate projects because:

it avoids the problem of computing the required rate of return for each investment proposal.

it is the only way to measure a firm's required return.

it acknowledges that most new investment projects have about the same degree of risk.

it acknowledges that most new investment projects offer about the same expected return.

Chapter 14: Risk and Managerial Options in Capital Budgeting MCQs

Multiple-Choice Quiz

Chapter 14:   Risk and Managerial Options in Capital Budgeting

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1. The investment proposal with the greatest relative risk would have

the highest standard deviation of net present value.

the highest coefficient of variation of net present value.

the highest expected value of net present value.

the lowest opportunity loss likelihood.

Chapter 13: Capital Budgeting Techniques MCQs

Multiple-Choice Quiz

Chapter 13:   Capital Budgeting Techniques

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1. A profitability index of .85 for a project means that:

the present value of benefits is 85% greater than the project's costs.

the project's NPV is greater than zero.

the project returns 85 cents in present value for each current dollar invested.

the payback period is less than one year.

Chapter 12: Capital Budgeting and Estimating Cash Flows MCQs

Multiple-Choice Quiz

Chapter 12:   Capital Budgeting and Estimating Cash Flows

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1. All of the following influence capital budgeting cash flows EXCEPT:

accelerated depreciation.

salvage value.

tax rate changes.

method of project financing used.

Chapter 11: Short-Term Financing MCQs

Multiple-Choice Quiz

Chapter 11:   Short-Term Financing

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1. Under COD terms, the seller:

extends credit to the buyer on open account.

extends credit to the buyer subject to bank approval.

requires the buyer to make partial payment at fixed intervals.

bears the risk of the buyer's refusing the goods shipped.

Chapter 10: Accounts Receivable and Inventory Management MCQs

Multiple-Choice Quiz

Chapter 10:   Accounts Receivable and Inventory Management

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1. A firm's inventory turnover (IT) is 5 times on a cost of goods sold (COGS) of $800,000. If the IT is improved to 8 times while the COGS remains the same, a substantial amount of funds is released from or additionally invested in inventory. In fact,

$160,000 is released.

$100,000 is additionally invested.

$60,000 is additionally invested.

$60,000 is released.      Correct!

 IT = 5 = $800,000/ INVENTORY (old)

 Therefore, INVENTORY (old) = $800,000/5 = $160,000

 IT = 8 = $800,000/ INVENTORY (new) 

 Therefore, INVENTORY (new) = $800,000/8 = $100,000 

 $160,000 - $100,000 = $60,000 released (i.e., Source of Funds)

Chapter 9: Cash and Marketable Securities Management MCQs

Multiple-Choice Quiz

Chapter 9:   Cash and Marketable Securities Management

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1. Marketable securities are primarily

short-term debt instruments.

short-term equity securities.

long-term debt instruments.

long-term equity securities.

Chapter 8: Overview of Working Capital Management MCQs

Multiple-Choice Quiz

Chapter 8:   Overview of Working Capital Management

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1. In finance, "working capital" means the same thing as

total assets.

fixed assets.

current assets.

current assets minus current liabilities.

Chapter 7: Funds Analysis, Cash Flow Analysis, and Financial Planning MCQs

Multiple-Choice Quiz

Chapter 7:   Funds Analysis, Cash Flow Analysis, and Financial Planning

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1. According to the accounting profession, which of the following would be considered a cash-flow item from an "investing" activity?

cash inflow from interest income.

cash inflow from dividend income.

cash outflow to acquire fixed assets.

all of the above.

Chapter 1 Introduction to Management and Organizations

TRUE/FALSE QUESTIONS
A MANAGER’S DILEMMA
1. According to the discussion in a “A Manager’s Dilemma,” Tom Gegax believes that believes that helping
employees balance personal and work lives will lead to increased performance.
(True; moderate; p. 3)

2. As CEO, Tom Gegax’s managerial philosophies are likely to significantly impact whether his company
achieves its goals.
(True; moderate; p. 10)

WHO ARE MANAGERS?

Chapter 5: Risk and Return MCQs solved

Multiple-Choice Quiz

Chapter 5:   Risk and Return

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1. This type of risk is avoidable through proper diversification.

portfolio risk

systematic risk

unsystematic risk

total risk

Chapter 4: The Valuation of Long-Term Securities MCQs solved

Multiple-Choice Quiz

Chapter 4:   The Valuation of Long-Term Securities

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1. What's the value to you of a $1,000 face-value bond with an 8% coupon rate when your required rate of return is 15 percent?

More than its face value.

Less than its face value.

$1,000.

True.

Chapter 3: The Time Value of Money MCQs solved

 Multiple-Choice Quiz

Chapter 3:   The Time Value of Money

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1. You want to buy an ordinary annuity that will pay you $4,000 a year for the next 20 years. You expect annual interest rates will be 8 percent over that time period. The maximum price you would be willing to pay for the annuity is closest to

$32,000.

$39,272.             Correct!

 PVA = $4,000 (PVIFA at 8% for 20 periods)

 PVA = $4,000 (9.818) = $39,272

$40,000.

$80,000.

Chapter 2: The Business, Tax, and Financial Environments MCQs solved

 

Multiple-Choice Quiz

 Chapter 2:   The Business, Tax, and Financial Environments

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1. Which of the following enjoys limited liability?

A general partnership.

A corporation.

A sole proprietorship.

None of the above.

Chapter 1: The Role of Financial Management MCQs solved

 

Multiple-Choice Quiz

Chapter 1:   The Role of Financial Management

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

the number of people employed in the firm.

the book value of the firm's assets less the book value of its liabilities.

the amount of salary paid to its employees.

the market price per share of the firm's common stock.

ECO-401 Chapter 1 MCQs part 3 MANAGEMENT SKILLS

MANAGEMENT SKILLS

74. The three essential managerial skills put forth by Katz include _____________.
a. technical, human, and empirical
b. human, empirical, and conceptual
c. technical, interpersonal, and controlling
d. technical, human, and conceptual
(d; moderate; p. 12)

ECO-401 Chapter 1 MCQs part 2 WHAT IS MANAGEMENT

WHAT IS MANAGEMENT?

43. _____________ is the process of getting activities completed efficiently and effectively with and through other people.
a. Leading
b. Management
c. Supervision
d. Controlling
(b; easy; p. 7)

44. The distinction between a managerial position and a nonmanagerial position is  _______________.
a. planning the work of others
b. coordinating the work of others
c. controlling the work of others
d. organizing the work of others
(b; moderate; p. 7)

Chapter 1 Introduction to Management and Organizations

Chapter 1 Introduction to Management and Organizations
 
TRUE/FALSE QUESTIONS

A MANAGER’S DILEMMA
1. According to the discussion in a “A Manager’s Dilemma,” Tom Gegax believes that believes that helping
employees balance personal and work lives will lead to increased performance.
(True; moderate; p. 3)