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The strategic planning, organising, directing, and controlling of financial undertakings in an organisation or an institute that apply management principles.
This refers to the unsecured deposits invited by companies from the people mainly to finance working capital needs.
In this decision type of decision making, there are more than one proposal to be chosen however the firm has limited funds so that’s why they must ration these project proposals. Usually, they select a group of projects that yield the highest total return given such limited funds.
If the current ratio is equal to 2, and current liabilities is 100, how much is the current assets?
This is the excess capital over the minimum amount of working capital that must be maintained.
This refers to the level of inventory at which the total cost of inventory comprising ordering cost and carrying cost.
Which statement is false?
This is a statistical measure of the variability of a distribution around its mean. It is the square root of the variance.
The Merriam Company has determined that its return on equity is 15 percent. Management is interested in the various components that went into this calculation. You are given the following information: (total debt)/(total assets) = 0.35 and total assets = 1,000,000. What is the net income?
This is the required rate of return on the various types of financing.
A corporation is issuing 10% common stock that should be sold for Php 15 each. The business will incur flotation costs of Php 5 per share. What is the cost of equity?
The receivables turnover ratio is defined as
Which is not included in the group
FPL Company owes Php20,000 to supplier A, Php30,000 to Supplier B, 50,000 to Supplier C and a long term bonds payable 10,000. After struggling in its operations, the company ended up having Php20,000 cash on hand, Php30,000 worth inventories, Php40,000 Accounts receivable and equipment worth Php50,000. What is the net working capital?
Which of the following has a wrong order based on the discussion in capital budgeting process
This is the credit extended by one trader to another for the purchase of goods and services
Which does not belong to the classification of the sources of financing?
This is also known as the benefit-cost ratio of a project.
Identify what is being described. ABC manufacturing business purchases materials worth Php 1,000,000 from X company. the ammount is payable within 2 months.
This fund is used for daily operations
The finance manager must find ways to expedite cash collection while prolonging payments
This analysis is usually used to understand operational performance of the entity to help in making their business decisions.
This is the time required to recover the initial investment in a project.
This is an investment made by a company from one country into a company from another country.
The financial manager must estimate, how much finances required to acquire fixed assets and forecast the amount needed to meet the working capital requirements in future. This describes
This is the amount of profit, or return, that an individual can expect based on an investment made.
FPL Co has sales of 500,000, net operating profit of 50,000, interest expense of 10,000, tax expense of 20,000, total equity of 125,000 and total debt of 275,000. The net profit margin is:
Which is not a part of capital budgeting process?
FPL Co. Invested Php 1,100,000 on a merchandising business. Expected net cash inflows from year 1 to year 5 are as follows Php 100,000; Php 200,000; Php 300,000; Php 400,000 and Php 500,000 respectively. (Assume that each year has 360 days). What is the payback period?
All else being equal, which of the following will increase a company’s current ratio?
FPL Company has a total Assets worth 400,000 of which 250,000 are non current the company also has 200,000 total liabilities of which 150,000 are long term debts. What is the gross working capital?
This includes materials which have been put into production process but have not yet been completed
If you have a total assets of 100 and 25% is inventory, what is the Quick ratio if current liability is 100?
FLP Company has 1000 existing common shares. The market value of the share is Php 90 and the net earnings is Php 1,000. What is the cost of Capital assuming that the new shares will be issued at market price?
Ratios that measure the ability of the company to pay its short-term debts are called:
FPL Company has a net working capital of 100,000 and the company has 200,000 total liabilities of which 150,000 are long term debts. What is the gross capital?
This is a stage in capital budgeting wherein actual results are compared with the standard results
Minden Co has current assets that consist of cash: 20,000, receivables: 70,000 and inventory: 90,000. Current liabilities are 75,000. On the basis of the current ratio and the quick ratio, Minden Co is:
FPL Company has cash and cash equivalents worth 10,000; equipment worth 20,000; accounts receivable worth 15,000; notes receivable worth 12,000 ; accounts payable worth 10,000 and notes payable worth 5,000 maturing after one month. What is the current ratio?
What is the ultimate objective of Financial Management?
Which is not included in the group?
Total asset turnover, receivables turnover and inventory turnover ratios measure
In this financial statement analysis method, all figures are expressed as percentages of an important item such as total assets in the statement of financial position and net sales in income statement
This is an analysis of percentage financial statements where all balance sheet or income statement figures are expressed for a base year equal 100 percent and subsequent financial statement items are expressed as percentages of the values in the base year.
This is the use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment.
FPL Company's average profit is 1,000,000 and his average investment is 450,000. What is the Accounting rate of return?
FPL Company has a gross working capital of 100,000 and the company has 200,000 total liabilities of which 150,000 are long term debts. What is the total current assets?
This refers to a situation in which possible future events can have reasonable probabilities assigned while uncertainty refers to situations in which there is no viable method of assigning probabilities to future random events.
Mr. P plans to buy new equipment worth Php 1,000,000 in order to improve efficiency of his manufacturing business. The incremental net cash inflow that it can generate is Php 400,000 per year. What is the post payback profitability if the equipment has 5 years of estimated useful life?
If you have a financial source that is required to be paid within ten years, this describes
Which is an example of borrowed funds?
This is an industry for borrowers with a limited or tainted credit history.
Which is not a process in capital budgeting?
These are policies that provide the framework to determine whether or not to extend credit to a customer and how much credit to extend.
This is concerned with the increase in revenue and decrease in expenses
These are source of finances are those which are required for a period of more than five years.
This is a form of financing which is mobilized through the issuance of securities such as shares and debenture
These are funds that are required to purchase fixed assets such as land, building, plant, machinery, furniture and fixtures.
This one measures and considers the cash inflows earned after pay-back period.
These are goods which have not yet been committed to production in a manufacturing business concern
The current assets and current liabilities of FPL company is 25 and 25 respectively. Reviewing the past transactions the company purchased merchandise worth 5 and it was immediately paid. However, it was discovered that this transaction was mistakenly recorded as a purchase on account. After adjusting the errors, what is the the current ratio?
FPL Company's average profit is 150,000. What is the average investment if accounting rate of return is 5.5?
In this approach, the mix of debt and equity capital can increase the value of the firm by reducing overall cost of capital up to certain level of debt.
This is the after tax cost of long-term funds through borrowing.
This determines the amount of profit to be distributed among shareholders and amount of profit to be treated as retained earnings for financing its long term growth
Current assets divided by current liabilities is the definition of the:
The quick ratio is defined as:
A firm has a profit margin of 15 percent on sales of 20,000,000. If the firm has debt of 7,500,000, total assets of 22,500,000, and an after tax interest cost on total debt of 5 percent, what is the firm’s ROA?
This is the capital invested in total current assets of the business concern.
FPL Company plans to make Php50,000 loan with Php7,000 annual interest. If the cost incurred related to this instrument is Php2,000 and the total tax rate is 30%, what is the cost of debt?
Lancaster Co. and York Co. have the same value of return on assets (ROA). What will happen if Lancaster Co. adjusts its accounting records for the disposal of unusable equipment at a loss?
This is a decision support tool that uses a tree-like graph or model of decisions and their possible consequences, including chance event outcomes, resource costs, and utility.
FPL Co has sales of 500,000, operating profit of 50,000, interest expense of 10,000, tax expense of 20,000, total equity of 125,000 and total debt of 275,000. Their return on assets is:
Company A’s ROE is 20 percent, while Company B’s ROE is 15 percent. Which of the following statements can be true?
Minden Co has current assets that consist of cash: 20,000, receivables: 70,000 and inventory: 90,000. Current liabilities are 75,000. The quick ratio is
The objective of having a good _____________________ is to maximize the value of the firm and minimize the overall cost of capital.
This type of decision making applies when the projects proposed are independent from each other. The acceptance or rejection of one proposal does not affect the decision on the other proposals.
Which of the following is not a classification of funds on the basis of period?
This refers to the variability of returns due to fluctuations in the securities market which is more particularly to equities market
Lone Star Plastics has the following data: Gross Sales 100,000 Gross profit margin 6.0% Tax rate 40% What is Lone Star’s net income after taxes?
FPL Co has current assets of 180,000 (cash: 20,000, accounts receivable: 70,000, inventory: 90,000), and long-term assets that had an amount of 400,000, exclusive of accumulated depreciation worth 180,000. Sales were 500,000, and operating profit was 50,000. Tax was 20,000 and interest paid was 10,000. Their total asset turnover ratio is:
Which of the following can increase net profit margin?
Which of the following does not belong to the group?
FPL Co has sales of 500,000, net operating profit of 50,000, interest expense of 10,000, tax expense of 20,000, total equity of 125,000 and total debt of 275,000. Their return on equity in comparison to their return on assets is:
Sexy Corporation’s current ratio is 0.5, while Coke Company’s current ratio is 1.5. Both firms want to “window dress” their coming end-of-year financial statements. As part of its window dressing strategy, each firm will double its current liabilities by adding short-term debt and placing the funds obtained in the cash account. Which of the statements below best describes the actual results of these transactions?
The financial manager finds ways on how to obtain various capitalization for the business
FPL Company has a total Assets worth 400,000 of which 250,000 are non current the company also has 200,000 total liabilities of which 150,000 are long term debts. What is the net working capital?
These funds are obtained from banks and credit unions
This is the minimum amount of capital that must be maintained
Its objective is to provide information about the financial position and the financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions
In this part, the financial manager concentrates on the principles of safety, liquidity and profitability while investing capital.
Which is an example of owner's financing?
In this type of analysis you may compare figures from several years, so you are comparing the amounts in each account from the past up to the present.
This is concerned with the increase in revenue and decrease in costs and expenses
Return on sales, return on assets and return on equity are examples of
Fama’s French Bakery has a return on assets (ROA) of 10 percent and a return on equity (ROE) of 14 percent. If equity is equal to 100,000. What is the value of total assets?
Which of the following statements is correct regarding capital structure theories?
If you have a financial source that is required to be paid within four years, you have a
Identify the function being described: The board of directors and finance manager decided to offer stocks to the public so that they can have the resources for business expansion.
Which statement is true?
The payable turnover is equal to 6, what is the average payment period?
Which of the following alternatives could potentially increase current ratio?
This shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing and financing activities
FPL Co. Statement of Financial Position has Total Assets worth 100,000 wherein 60,000 is non-current. It also has Total Liabilities worth 200,000 wherein 80,000 is non-current. It was found out that there was an unrecorded depreciation worth 20,000 and unrecorded purchase of merchandise on account worth 15,000. What is the current ratio?
Selzer Inc. has a net profit after taxes worth 62,195. It has a total assets worth 3 million, with a debt-to-equity ratio of 0.64. What is the firm’s return on equity (ROE)?
The current assets and current liabilities of FPL company is 10 and 20 respectively. Reviewing the past transactions the company purchased merchandise worth 5 and it was immediately paid. However, it was discovered that this transaction was mistakenly recorded as a purchase on account. After adjusting the errors, what is the the current ratio?
This policy is usually used when the companies are facing constraints of earnings and unsuccessful business operation
Fana’s American Bakery has a return on assets (ROA) of 10 percent and a return on equity (ROE) of 14 percent. If total assets is 100,000, what is the value of its total equity?
This is the process in which a business determines and evaluates potential expenses or investments that are large in nature.
This is also considered as the evaluation of the ability of a company to pay its financial obligations
This is essentially an accounting strategy with a focus on the maintenance of a sufficient balance between a company’s current assets and liabilities
This is a metric that measures the degree to which a company uses fixed income securities such as debt and preferred equity.
These shares represent the ownership of a company and thus the capital raised by issue of such shares is known as ownership capital or owner’s funds.
Which statement is false
Analyze the given choices and identify which one is not included when these finances will be classified on the basis of source of generation.
A firm has a profit margin of 15 percent on sales of 20,000,000. If the firm has debt of 7,500,000 and total assets of 22,500,000 what is the firm’s ROA?
This represents the basic criteria for the extension of credit to customers.
This is the condition under which goods are sold on credit are referred as credit terms. This basically includes credit period, cash discount and cash discount period
Which is not a function of financial management?
This is a measure of both a company's efficiency and its short-term financial health.
Which is not an objective of inventory management?
This is the required return on investment of the common shareholders of the company.
Minden Co has current assets that consist of cash: Php20,000, receivables: Php70,000 and inventory: Php90,000. Current liabilities are Php75,000. The current ratio is:
Which is not a motive of holding cash?
FPL decided to buy an equipment worth Php 100,000. This can generate net cash inflow of 125,000 per year (365 days). What is the payback period?
Which of the following is not considered a capital component for the purpose of calculating the weighted average cost of capital (WACC) as it applies to capital budgeting?
PFL Co has sales of 500,000, operating profit of 50,000, interest expense of 10,000, tax expense of 20,000, total equity of 125,000 and total debt of 275,000. Their return on equity is:
Return on equity is directly affected by
This is the discount rate that equates the present value of the expected net cash flows with the initial cash outflow
Which of the following statements is true?
Which is considered as medium-term source finance?
Which of the following is not a form of special financing?
The difference between the present value of cash inflows and the present value of cash outflows.
These proposals are those that compete with other. Therefore, the acceptance of one proposal will exclude the acceptance of the other proposals.
Which does not belong to the group?
According to this approach, the mix of debt and equity capital can increase the value of the firm by reducing overall cost of capital up to certain level of debt.
This is a measurement of the degree to which a firm or project incurs a combination of fixed and variable costs
This is the completed products and is already final output of the production process
This is an investment vehicle for investors who pool their savings for investing in diversified portfolio of securities with the aim of attractive yields and appreciation in their value.
The payable turnover is equal to 60, what is the average payment period?
Identify what is being described. The company had a net profit after taxes worth Php 1,000,000. The board and the management decided not to distribute dividends to shareholders instead, it retained its earnings for the year so that the business can have resources for future use.
FPL company has machineries and equipment worth 150,000, land and building for business 1,000,000, Cash 150,000, Inventories 30,000 and accounts receivables 50,000. He also owes 200,000 to a bank. How much is the gross working capital?
Examples of this outlay are the purchase of fixed assets such as land and building, plant and machinery, expenses relating to improvement or renovation these fixed assets and costs incurred for the research and development projects
Given: Debt= 1,000,000 ; Common Shares = 10,000,000 ; Preference Shares = 5,000,000 Cost of Debt = 10% ; Cost of Preference Shares = 5% ; Cost of Equity = 3%
Amazona company wants to increase its debt to total assets ratio, which of the following activities could make this possible?
The planning committee approves the proposals, with the help of profitability, economic constituents, financial volatility and market conditions.
A corporation is issuing 10% common stock that should be sold for Php 15 each. The business will incur flotation costs of Php 2 per share. With growth rate of 5% What is the cost of capital?
The competent authority spends the money for the proposals
Which of the following alternatives could potentially result in a increase of current ratio?
FPL Company has a gross working capital of 100,000 and the company has 200,000 total liabilities of which 150,000 are long term debts. What is the net capital?
This is the rise in inflation that leads to reduction in the purchasing power which influences only few people to invest due to Interest Rate Risk which is nothing but the variability of return of the investment due to oscillation of interest rates due to deflationary and inflationary pressures.
Stennett Corp.’s CFO has proposed that the company made a new debt and used the proceeds to buy equipment. Which of the following is likely to occur if this proposal is adopted?
This is concerned with the acquisition, financing, and management of assets with some overall goal in mind. Its decision function includes areas such as investment, financing, and asset management decisions
This type financing borrows money with interest from financial institutions such as banks and credit-unions.
FPL Co has sales of 500,000, operating profit of 50,000, interest expense of 10,000, tax expense of 20,000, total equity of 125,000 and total debt of 275,000. Their debt to assets ratio is:
Shepherd Enterprises has a debt-to-equity ratio of 40 percent. The company’s total assets is equal to Php 800 million. What is the value of the company's total liabilities?
These are sources of finances which have a required of payment for a period not exceeding one year.
In this type of financing, the business entity which has already operated may get funds internally from depreciation funds and retained earnings.
This is the required return on investment of the lenders of a company.
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