BCOR 2204 Finance Quiz 1 with Verified Answers
1. financial services concerned with design and delivery of advice
and financial products to individuals, busi-
nesses, and governments
2. managerial finance in-
volves...
3. profit maximization as the
"goal" of the firm is BAD be-
cause...
4....
BCOR 2204 Finance Quiz 1 with Verified Answers
1. financial services concerned with design and delivery of advice
and financial products to individuals, busi-
nesses, and governments
2. managerial finance in- tasks such as budgeting, financial forecast-
volves... ing, cash management, and funds procure-
ment
3. profit maximization as the profit maximization DOES NOT consider risk
"goal" of the firm is BAD be-
cause...
4. Pro-active ethics program is a positive corporate image and increased re-
expected to result in... spect, a reduction in risk, and enhanced cash
flow resulting in an increase in share price
5. The Board of Directors is re- approving strategic goals and plans
sponsible for...
6. The agency problem may re- job security
sult from a manager's con-
cerns about...
7. The profitability ratios are... primarily used as measures of return
8. current ratios are usually be- 1 and 2
tween -high current ratio: a lot of money
9. Inventory Turnover Ratio indicate firm is experiencing stockout and lost
may... sales
10. Inventory Turnover Ratio the activity, or liquidity, of a firm's stock of
measures... goods
11. Total Asset Turnover indi- the efficiency with which the firm uses its
cates... assets to generate sales
12. Example: Gross profit mar- the high cost of goods sold
gin is inferior to the industry GPM: sales-COGS
, BCOR 2204 Finance Quiz 1 with Verified Answers
standard. This may have re-
sulted from...
13. What is a cash inflow? a decrease in accounts receivable
14. An external sales forecast is the relationships between a firm's sales and
based on . certain key economic indicators such as
GDP and consumer confidence
15. The key input to the the sales forecast
short-term financial plan-
ning process is...
16. The key input to any cash the sales forecast
budget is...
17. If a firm expects short-term short-term investments
cash surpluses, it can plan
.
18. the primary purpose in for profit planning
preparing pro forma finan-
cial statements is...
19. Pro forma statements are... projected financial statements
20. the key inputs for prepar- sales forecast for the coming year and finan-
ing pro forma income state- cial statements for the preceding year
ments using the simplified
approaches are the...
21. the percentage-of-sales All costs are variable
method of preparing pro for-
ma income statements as-
sumes that
22. In a period of rising utilities UNDERSTATE retained earnings and OVER-
past cost and expense ratios STATE the financing needed
(percent-of-sales method),
when preparing pro forma fi-
, BCOR 2204 Finance Quiz 1 with Verified Answers
nancial statements and plan-
ning financing, will tend
to .
23. External financing required arrange for a loan
24. Finance the science and art of how individuals and
firms raise, allocate, and invest money
25. managerial finance concerns the duties of the financial manager
in a business
26. Earnings Per Share (EPS) The amount earned during the period on
behalf of each outstanding share of com-
mon stock, calculated by dividing the period's
total earnings available for the firm's com-
mon stockholders by the number of shares of
common stock outstanding.
27. risk the chance that actual outcomes may differ
from those expected
28. risk adverse requiring compensation to bear risk
29. Stakeholders groups such as employees, customers, sup-
pliers, creditors, owners, and others who
have a direct economic link to the firm but are
not owners
30. Business Ethics standards of conduct or moral judgment that
apply to persons engaged in commerce
31. investment decisions decisions that focus on how a company will
spend its financial resources on long-term
projects that ultimately determine whether
the firm successfully creates value for its
owners
32. capital budgeting
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