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Finance MCQ's

The field of finance is closely related to the fields of:

S Finance

statistics and economics

statistics and risk analysis

economics and accounting

accounting and comparative return analysis

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Which of the following properly lists balance sheet items in order of liquidity, from most liquid to least liquid?

S Finance

Accounts receivable, inventory, marketable securities, cash.

Cash, marketable securities, accounts receivable, inventory.

Inventory, marketable securities, cash, accounts receivable.

Cash, inventory, accounts receivable, marketable securities.

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Amortization is considered a source of funds to the firm because:

S Finance

it is purely an accounting entry and doesn't involve a direct disbursement of funds, freeing up these funds for other investments

it represents a reduction in asset holdings

it represents an increase in an asset account

amortization is not a source of funds

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Profitability ratios measure:

S Finance

the speed at which the firm is turning over its assets

the ability of the firm to earn an adequate return on sales, total assets, and invested capital

the firm's ability to pay off short term obligations as they are due

the debt position of the firm in light of its assets and earning power

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Receivables turnover is:

S Finance

a profitability ratio

a debt utilization ratio

an asset utilization ratio

a liquidity ratio

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Financial ratios are used to:

S Finance

weigh and evaluate the operating performance of the firm

provide an absolute benchmark of industry performance

determine which firm will provide the highest return to investors

None of the above are correct

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The construction of the pro forma income statement is based on:

S Finance

the prior year's income statement

sales projections and the production plan

the cash budget

the cash budget and prior year's income statement

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The primary purpose of the cash budget is:

S Finance

to break the income statement down into monthly periods

to determine monthly cash receipts

to determine the collection pattern

to allow the firm to anticipate the need for outside funding

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Operating leverage may be defined as:

S Finance

the degree to which debt is used in financing the firm

the difference between price and variable costs

the extent to which capital assets and fixed costs are utilized

the difference between fixed costs and the contribution margin

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Financial leverage:

S Finance

reflects the firm's commitment to fixed, financial assets

has no impact on the earning of the firm

reflects the amount of debt used in the capital structure of the firm

primarily affects the left side of the balance sheet

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Finance MCQ's

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