Finance for Managers
Question Bank
Course Introduction
Finance for Managers is a foundational course designed to equip non-financial managers with the essential concepts and tools necessary to interpret and utilize financial information in decision-making. The course covers key topics such as financial statement analysis, budgeting, forecasting, cost control, capital investment analysis, and cash flow management. Through practical case studies and real-world examples, students learn how to assess the financial health of a business, develop effective financial strategies, and contribute to organizational success. By the end of the course, participants will possess a solid understanding of financial principles, enabling them to communicate effectively with finance professionals and make informed managerial decisions.
Recommended Textbook
Analysis for Financial Management 10th Edition by Robert C. Higgins
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9 Chapters
220 Verified Questions
220 Flashcards
Source URL: https://quizplus.com/study-set/2717
Page 2
Chapter 1: Interpreting Financial Statements
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24 Verified Questions
24 Flashcards
Source URL: https://quizplus.com/quiz/54199
Sample Questions
Q1) Depreciation expense:
A) reduces both taxes and net income.
B) increases the net fixed assets as shown on the balance sheet.
C) reduces both the net fixed assets and the costs of a firm.
D) is a noncash item that increases net income.
E) decreases current assets, net income, and operating cash flows.
Answer: A
Q2) Which of the following statements concerning a firm's cash flows and profits is false?
A) Managers must be at least as concerned with cash flows as with profits.
B) A company that sells merchandise at a profit will generate cash soon enough to replenish cash flows required for continued production.
C) The cash flows generated in a given time period can differ from the profits reported.
D) Profits are no assurance that cash flow will be sufficient to maintain solvency.
E) Due to required cash investments in current assets, fast-growing and profitable companies can literally "grow broke".
Answer: B
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3
Chapter 2: Evaluating Financial Performance
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23 Verified Questions
23 Flashcards
Source URL: https://quizplus.com/quiz/54198
Sample Questions
Q1) Assume a 365-day year for your calculations.The collection period in days,based on sales,at the end of 2012 is:
A) 24.3
B) 219.6
C) 35.7
D) 28.8
E) None of the above.
Answer: D
Q2) The current ratio at the end of 2012 is:
A) 10.21
B) 2.31
C) 2.76
D) 10.30
E) None of the above.
Answer: C
Q3) Use Limited Brands,Inc.'s financial statements,above,to prepare common-size financial statements for Limited Brands,Inc.for 2006 - 2007.
Answer: 11ea6dd0_94ef_578a_9009_f1aa9d08a97e_TB2315_00
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Chapter 3: Financial Forecasting
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21 Verified Questions
21 Flashcards
Source URL: https://quizplus.com/quiz/54197
Sample Questions
Q1) 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:
A) pro forma income statement.
B) sales projection.
C) cash budget.
D) receivables analysis.
E) credit analysis.
F) None of the above.
Answer: C
Q2) Pro forma financial statements,by definition,are predictions of a company's financial statements at a future point in time.So,why is it important to analyze the historical performance of the company before constructing pro forma financial statements?
Answer: Historical analysis helps decide for which financial statement items a percent-of-sales forecast might be appropriate.For example,a stable trend in the collection period would tell you that,unless you expect changes in the management of the accounts receivable,future collection periods should continue along this trend.
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Chapter 4: Managing Growth
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24 Verified Questions
24 Flashcards
Source URL: https://quizplus.com/quiz/54196
Sample Questions
Q1) Why do financial managers need to understand the implications of the sustainable rate of growth?
Q2) Which of the following can affect a firm's sustainable rate of growth?
I.Asset turnover ratio
II.Profit margin
III.Dividend policy
IV.Financial leverage
A) III only
B) I and III only
C) II, III, and IV only
D) I, II, and IV only
E) I, II, III, and IV
F) None of the above.
Q3) Use the information from Boss's annual financial statements.What is the actual sales growth rate for 2010?
A) - 17.6%
B) - 7.9%
C) 8.51%
D) 21.4%
E) None of the above.
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Chapter 5: Financial Instruments and Markets
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22 Verified Questions
22 Flashcards
Source URL: https://quizplus.com/quiz/54195
Sample Questions
Q1) You bought a yen-denominated corporate bond at the beginning of the year for ¥100,000.The bond paid 3 percent annual interest and was trading for ¥110,000 at year-end.The exchange rate was $1 = ¥100 at the beginning of the year and $1 = ¥97 at year-end.What would be your U.S.dollar holding return on the bond?
A) 3.09%
B) 6.09%
C) 13%
D) 16.49%
E) 30%
F) None of the above.
Q2) Which one of the following statements is false?
A) Financial executives must design financial securities to meet the needs of the firm and its investors.
B) Financial instruments are subject to full disclosure requirements.
C) Financial instruments are greatly constrained by law and regulation.
D) Financial instruments are claims against a company's cash flows and assets.
E) None of the above.
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Chapter 6: The Financing Decision
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24 Verified Questions
24 Flashcards
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Sample Questions
Q1) Calculate Squamish's times interest earned ratio for next year assuming the firm raises $40 million of new debt at an interest rate of 7 percent.
A) 2.00
B) 3.09
C) 3.66
D) 4.35
E) None of the above. EBIT = [40/(1 - 0.36)] + 15 = $77.5. Interest = $15 + 0.07(40) = $17.8. Times interest earned = 77.5/17.8 = 4.35 times.
Q2) Can a company incur costs of financial distress without ever going bankrupt? Explain.What is the nature of these costs?
Q3) Calculate next year's times burden covered ratio and earnings per share if Nile sells 2 million new shares at $50 a share instead of raising new debt.
Q4) Calculate next year's earnings per share assuming Nile raises the $100 million of new debt.
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Chapter 7: Discounted Cash Flow Techniques
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25 Verified Questions
25 Flashcards
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Sample Questions
Q1) Sol's Sporting Goods is expanding,and as a result expects additional operating cash flows of $26,000 a year for 4 years.This expansion requires $39,000 in new fixed assets.These assets will be worthless at the end of the project.In addition,the project requires an additional $3,000 of net working capital throughout the life of the project; Sol expects to recover this amount at the end of the project.What is the net present value of this expansion project at a 16 percent required rate of return?
A) $18,477.29
B) $21,033.33
C) $28,288.70
D) $29,416.08
E) $32,409.57
F) None of the above.
Q2) At $1,000 par value,10 percent coupon bond matures in 20 years.If the price of the bond is $1,196.80,what is the yield to maturity on the bond? Assume interest is paid annually.
Q3) Ten years ago you invested $1,000 for 10 shares of Steeze,Inc.common stock.You sold the shares recently for $2,000.While you owned the stock it paid $10.08 per share in annual dividends.What was your rate of return on Steeze stock?
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9
Chapter 8: Risk Analysis in Investment Decisions
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30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/54192
Sample Questions
Q1) Use the above information to answer the following questions.
a.Estimate Costco's cost of equity capital.
b.Estimate Costco's weighted-average cost of capital.
Q2) Blue Diamond Equipment has 80,000 bonds outstanding that are selling at par.Bonds with similar characteristics are yielding 6.75 percent.The company also has 750,000 shares of 7 percent preferred stock and 2.5 million shares of common stock outstanding.The preferred stock sells for $53 a share.The common stock has a beta of 1.34 and sells for $42 a share.The U.S.Treasury bill is yielding 2.8 percent and the return on the market is 11.2 percent.The corporate tax rate is 38 percent.What is the firm's weighted average cost of capital?
A) 10.39 percent
B) 10.64 percent
C) 11.18 percent
D) 11.30 percent
E) 11.56 percent
F) None of the above.
Q3) Explain the difference between systematic and unsystematic risk,and why one of these types of risks is rewarded with a risk premium while the other type is not.
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Chapter 9: Business Valuation and Corporate Restructuring
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27 Verified Questions
27 Flashcards
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Sample Questions
Q1) Estimate BSL's value (in $ millions)at the end of 2010 assuming that in the years after 2015 the company's free cash flow grows 4 percent per year in perpetuity.Macklemore's WACC is 8.0 percent.BSL's WACC is 11.5 percent,and the average of the two companies' WACCs,weighted by sales,is 8.2 percent.
A) $4,297.25
B) $4,571.09
C) $4,686.78
D) $6,181.09
E) $5,351.19
F) None of the above.
Q2) Estimate the present value of BSL's free cash flow (in $ millions)for the years 20112015.Macklemore's WACC is 8.0 percent.BSL's WACC is 11.5 percent,and the average of the two companies' WACCs,weighted by sales,is 8.2 percent.
A) - $1.29
B) $628.24
C) $720.58
D) $726.68
E) $743.94
F) None of the above.
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