06 May 10 financial choice questions
QUESTION 1
1. The sources and uses of cash over a stated period of time are reflected on the
| income statement. | ||
| balance sheet. | ||
| shareholders’ equity statement. | ||
| cash flow statement. |
5 points
QUESTION 2
1. Noncash items refer to:
| sales which are made on a credit basis. | ||
| inventory items purchased using credit. | ||
| intangible assets such as patents. | ||
| expenses, like depreciation, which do not directly affect cash flows. |
5 points
QUESTION 3
1. The book value of a firm is:
| equivalent to the firm’s market value provided that the firm has some fixed assets. | ||
| based on historical cost. | ||
| generally greater than the market value when fixed assets are included. | ||
| more of a financial than an accounting valuation. |
5 points
QUESTION 4
1. The most popular yardstick of financial performance among investors and senior managers is the:
| profit margin. | ||
| return on equity. | ||
| return on assets. | ||
| times burden covered ratio. |
5 points
QUESTION 5
1. Which one of the following ratios identifies the amount of assets a firm needs in order to generate $1 in sales?
| current ratio | ||
| debt-to-equity | ||
| retention | ||
| asset turnover |
5 points
QUESTION 6
1. On a common-size balance sheet, all accounts are expressed as a percentage of:
| sales for the period. | ||
| the base year sales. | ||
| total equity for the base year. | ||
| total assets for the current year. |
5 points
QUESTION 7
1. The most common approach to developing proforma financial statements is called the:
| cash budget method. | ||
| financial planning method. | ||
| seasonality approach. | ||
| percent-of-sales method. |
5 points
QUESTION 8
1. Which one of the following statements is correct concerning the cash balance of a firm?
| Most firms attempt to maintain a zero cash balance at all times. | ||
| The cumulative cash surplus shown on a cash budget is equal to the ending cash balance plus the minimum desired cash balance. | ||
| Most firms attempt to maximize the cash balance at all times. | ||
| A cumulative cash deficit indicates a borrowing need. |
5 points
QUESTION 9
1. Steve has estimated the cash inflows and outflows for his sporting goods store for next year. The report that he has prepared summarizing these cash flows is called a:
| pro forma income statement. | ||
| sales projection. | ||
| cash budget. | ||
| receivables analysis. |
5 points
QUESTION 10
1. Financial planning:
| focuses solely on the short-term outlook for a firm. | ||
| is a process that firms employ only when major changes to a firm’s operations are anticipated. | ||
| is a process that firms undergo once every five years. | ||
| considers multiple options and scenarios for the next two to five years. |
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