Finance Management & Corporate Finance Quiz Set 9

1. Net working capital refers to?

Correct! Wrong!

2. Marketable securities are primarily?

Correct! Wrong!

3. Which would be an appropriate investment for temporarily idle corporate cash that will be used to pay quarterly dividends three months from now?

Correct! Wrong!

4. Which of the following marketable securities is the obligation of a commercial bank?

Correct! Wrong!

5. The basic requirement for a firm's marketable securities?

Correct! Wrong!

6. A firm's inventory turnover (IT) is 5 times on a cost of goods sold (COGS) of Rs. 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?

Correct! Wrong!

7. Ninety-percent of X company's total sales of Rs. 600,000 is on credit. If its year-end receivables turnover is 5, the average collection period (based on a 365-day year) and the year-end receivables are, respectively:

Correct! Wrong!

8. Costs of not carrying enough inventory include?

Correct! Wrong!

9. Which of the following relationships hold true for safety stock?

Correct! Wrong!

10. Increasing the credit period from 30 to 60 days, in response to a similar action taken by all of our competitors, would likely result in?

Correct! Wrong!

11. The credit policy of Spurling Products is "1.5/10, net 35." At present 30% of the customers take the discount, 62% pay within the net period, and the rest pay within 45 days of invoice. What would receivables be if all customers took the cash discount?

Correct! Wrong!

12. An increase in the firm's receivable turnover ratio means that?

Correct! Wrong!

13. A single, overall cost of capital is often used to evaluate projects because?

Correct! Wrong!

14. The cost of equity capital is all of the following EXCEPT:

Correct! Wrong!

15. In calculating the proportional amount of equity financing employed by a firm, we should use?

Correct! Wrong!

16. In calculating the costs of the individual components of a firm's financing, the corporate tax rate is important to which of the following component cost formulas?

Correct! Wrong!

17. The common stock of a company must provide a higher expected return than the debt of the same company because?

Correct! Wrong!

18. A quick approximation of the typical firm's cost of equity may be calculated by?

Correct! Wrong!

19. Market values are often used in computing the weighted average cost of capital because?

Correct! Wrong!

20. Rank in ascending order (i.e., 1 = lowest, while 3 = highest) the likely after-tax component costs of a Company's long-term financing?

Correct! Wrong!

Finance Management & Corporate Finance Quiz Set 9
Below 12 is not good, 13-16 need some improvement, 16+ excellent

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