Financial Management Test 1

Which one of the following occupations best fits into the corporate area of finance? Mortgage broker Treasury bill analyst Chief financial officer Insurance risk manager Local bank manager

Chief financial officer

Working capital management includes which one of the following? Deciding which new projects to accept Deciding whether to purchase a new machine or fix a currently owned machine Determining which customers will be granted credit Determining how many new shares of stock should be issued Establishing the target debt-equity ratio

Determining which customers will be granted credit

Which one of the following forms of business organization offers liability protection to some of its owners but not to all of its owners? Sole proprietorship General partnership Limited partnership Limited liability company Corporation

Limited partnership

Margie opened a used bookstore and is both the 100 percent owner and the store's manager. Which type of business entity does Margie own if she is personally liable for all the store's debts? Sole proprietorship Limited partnership Corporation Joint stock company General partnership

Sole proprietorship

Uptown Markets is financed with 45 percent debt and 55 percent equity. This mixture of debt and equity is referred to as the firm's: capital structure. capital budget. asset allocation. working capital. risk structure.

capital structure.

Computing the present value of a future cash flow to determine what that cash flow is worth today is called: compounding. factoring. time valuation. simple cash flow valuation. discounted cash flow valuation.

discounted cash flow valuation.

Kendall is investing $3,333 today at 3 percent annual interest for three years. Which one of the following will increase the future value of that amount? Shortening the investment time period Paying interest only on the principal amount Paying simple interest rather than compound interest Paying interest only at the end of the investment period rather than throughout the investment period Increasing the interest rate

Increasing the interest rate

A sole proprietorship: provides limited financial liability for its owner. involves significant legal costs during the formation process. has an unlimited life. has its profits taxed as personal income. can generally raise significant capital from non-owner sources.

has its profits taxed as personal income.

The primary goal of financial management is most associated with increasing the: dollar amount of each sale. traffic flow within the firm's stores. the fixed costs while lowering the variable costs. firm's liquidity. market value of the firm.

market value of the firm.

The primary goal of financial management is to maximize: current profits. market share. current dividends. the market value of existing stock. revenue growth.

the market value of existing stock.

The daily financial operations of a firm are primarily controlled by managing the: total debt level. working capital. capital structure. capital budget. long-term liabilities.

working capital

Theo's BBQ has $48,000 in current assets and $39,000 in current liabilities. Decisions related to these accounts are referred to as: capital structure decisions. capital budgeting decisions. working capital management. operating management. fixed account structure.

working capital management.