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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 represents the basic criteria for the extension of credit to customers.
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?
This fund is used for daily operations
These are goods which have not yet been committed to production in a manufacturing business concern
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.
This policy is usually used when the companies are facing constraints of earnings and unsuccessful business operation
The payable turnover is equal to 6, what is the average payment period?
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
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
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?
Which is an example of borrowed funds?
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?
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 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.
Amazona company wants to increase its debt to total assets ratio, which of the following activities could make this possible?
If you have a total assets of 100 and 25% is inventory, what is the Quick ratio if current liability is 100?
These funds are obtained from banks and credit unions
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:
This is the time required to recover the initial investment in a project.
Which does not belong to the group?
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?
Analyze the given choices and identify which one is not included when these finances will be classified on the basis of source of generation.
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?
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?
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.
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?
Total asset turnover, receivables turnover and inventory turnover ratios measure
This includes materials which have been put into production process but have not yet been completed
This is essentially an accounting strategy with a focus on the maintenance of a sufficient balance between a company’s current assets and liabilities
Which of the following has a wrong order based on the discussion in capital budgeting process
These are funds that are required to purchase fixed assets such as land, building, plant, machinery, furniture and fixtures.
Which is an example of owner's financing?
Which of the following statements is correct regarding capital structure theories?
This is the completed products and is already final output of the production process
Which is not an objective of inventory management?
Company A’s ROE is 20 percent, while Company B’s ROE is 15 percent. Which of the following statements can be true?
In this type of financing, the business entity which has already operated may get funds internally from depreciation funds and retained earnings.
This analysis is usually used to understand operational performance of the entity to help in making their business decisions.
This is an industry for borrowers with a limited or tainted credit history.
The competent authority spends the money for the proposals
This is a measure of both a company's efficiency and its short-term financial health.
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.
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.
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?
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 return on assets is:
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.
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:
If you have a financial source that is required to be paid within four years, you have a
Which statement is false
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 is not a function of financial management?
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.
Which does not belong to the classification of the sources of financing?
This is the discount rate that equates the present value of the expected net cash flows with the initial cash outflow
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?
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?
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?
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%
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.
These proposals are those that compete with other. Therefore, the acceptance of one proposal will exclude the acceptance of the other proposals.
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
The receivables turnover ratio is defined as
The finance manager must find ways to expedite cash collection while prolonging payments
Which is considered as medium-term source finance?
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?
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
These are policies that provide the framework to determine whether or not to extend credit to a customer and how much credit to extend.
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?
FPL Company's average profit is 150,000. What is the average investment if accounting rate of return is 5.5?
Return on equity is directly affected by
This is the minimum amount of capital that must be maintained
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?
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 the after tax cost of long-term funds through borrowing.
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 is a stage in capital budgeting wherein actual results are compared with the standard results
This is also known as the benefit-cost ratio of a project.
This is the credit extended by one trader to another for the purchase of goods and services
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.
This is the excess capital over the minimum amount of working capital that must be maintained.
Which is not a part of capital budgeting process?
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?
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.
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?
These are source of finances are those which are required for a period of more than five years.
Which of the following is not a classification of funds on the basis of period?
This is an investment made by a company from one country into a company from another country.
Which is not included in the group
This is concerned with the increase in revenue and decrease in expenses
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?
If the current ratio is equal to 2, and current liabilities is 100, how much is the current assets?
In this part, the financial manager concentrates on the principles of safety, liquidity and profitability while investing capital.
Which statement is false?
This is the required return on investment of the lenders of a company.
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.
The quick ratio is defined as:
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 is also considered as the evaluation of the ability of a company to pay its financial obligations
This is the amount of profit, or return, that an individual can expect based on an investment made.
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?
Which is not included in the group?
FPL Company's average profit is 1,000,000 and his average investment is 450,000. What is the Accounting rate of return?
Current assets divided by current liabilities is the definition of the:
This is a measurement of the degree to which a firm or project incurs a combination of fixed and variable costs
Ratios that measure the ability of the company to pay its short-term debts are called:
The planning committee approves the proposals, with the help of profitability, economic constituents, financial volatility and market conditions.
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.
This is a statistical measure of the variability of a distribution around its mean. It is the square root of the variance.
This is a metric that measures the degree to which a company uses fixed income securities such as debt and preferred equity.
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?
This refers to the variability of returns due to fluctuations in the securities market which is more particularly to equities market
The financial manager finds ways on how to obtain various capitalization for the business
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:
The payable turnover is equal to 60, what is the average payment period?
This is the process in which a business determines and evaluates potential expenses or investments that are large in nature.
This one measures and considers the cash inflows earned after pay-back period.
Which is not a process in capital budgeting?
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?
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:
Return on sales, return on assets and return on equity are examples of
This is a form of financing which is mobilized through the issuance of securities such as shares and debenture
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?
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?
This is the capital invested in total current assets of the business concern.
This is the use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment.
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
Which is not a motive of holding cash?
Which of the following statements is true?
This refers to the level of inventory at which the total cost of inventory comprising ordering cost and carrying cost.
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.
The difference between the present value of cash inflows and the present value of cash outflows.
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?
If you have a financial source that is required to be paid within ten years, this describes
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:
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)?
This refers to the unsecured deposits invited by companies from the people mainly to finance working capital needs.
Which of the following is not a form of special financing?
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?
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
This is the required return on investment of the common shareholders of the company.
Which statement is true?
This is the required rate of return on the various types of financing.
What is the ultimate objective of Financial Management?
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
These are sources of finances which have a required of payment for a period not exceeding one year.
This is concerned with the increase in revenue and decrease in costs and expenses
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
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 of the following can increase net profit margin?
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:
Which of the following alternatives could potentially result in a increase of current ratio?
Which of the following does not belong to the group?
All else being equal, which of the following will increase a company’s current ratio?
Which of the following alternatives could potentially increase current ratio?
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?
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.
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