Introduction to Financial Management
Final Exam Questions
Course Introduction
Introduction to Financial Management provides students with a foundational understanding of key financial principles and practices essential for effective business decision-making. The course covers core topics such as financial analysis, budgeting, time value of money, risk and return, capital budgeting, and working capital management. Students will learn how to interpret financial statements, assess an organizations financial health, and make informed financial decisions. Emphasis is placed on the role of financial management in maximizing firm value, ethical considerations, and the strategic implications of financial choices in both domestic and global contexts.
Recommended Textbook
Financial Management for Decision Makers 2nd Canadian Edition by Peter Atrill
Available Study Resources on Quizplus
14 Chapters
590 Verified Questions
590 Flashcards
Source URL: https://quizplus.com/study-set/1489 Page 2
Chapter 1: Introduction to Financial Management
Available Study Resources on Quizplus for this Chatper
42 Verified Questions
42 Flashcards
Source URL: https://quizplus.com/quiz/29560
Sample Questions
Q1) According to a Robert Half International Inc. survey, the most likely impact of increased corporate governance will be
A) increased staff turnover
B) better ethical environment
C) more deadline pressure
D) better opportunities
E) accounting/IT collaboration
Answer: E
Q2) Directors dealing in shares of a business on the basis of information that is not available to shareholders is called
A) Limited disclosure
B) Restrictive practice
C) Insider-trading
D) Restricted exchange
E) Illegal transfer
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Accounting - the Language of Business
Available Study Resources on Quizplus for this Chatper
42 Verified Questions
42 Flashcards
Source URL: https://quizplus.com/quiz/29561
Sample Questions
Q1) The current assets of KLM Inc. totalled $145,000 while its current liabilities were $200,000. Which of the following best describes KLM's situation?
A) KLM's cash sales were too low during the current year.
B) KLM's spending was too high during the current period.
C) KLM's financial viability is at risk for the current period.
D) KLM's inventory was too high during the current period.
E) KLM's accrued wages were too high during the current period.
Answer: A
Q2) The Matching Principle used in accounting is consistent with A) Cash based accounting practices
B) The timing of cash inflows and outflows
C) Calendar based accounting practices
D) Accrual based accounting practices
E) Standard credit and collections practices
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
4
Chapter 3: Financial Planning and Pro Forma Financial Statements
Available Study Resources on Quizplus for this Chatper
44 Verified Questions
44 Flashcards
Source URL: https://quizplus.com/quiz/29562
Sample Questions
Q1) Bennoit Legal Services Ltd. is expecting to accrue salaries of $37,725. Accumulated Depreciation for all capital assets will be $45,000. Bennoit will end the next year with a bank overdraft of a $26,365. Inventory is estimated at $19,000. The original cost for the building is $150,000 and for the furniture is $60,000. Accounts Payable is projected to be $21,350. Common shares are valued at $75,000. In reviewing the pro forma balance sheet, it can be concluded that the company is
A) In a stable financial position
B) Is depending heavily on long-term debt to grow
C) Experiencing a liquidity problem
D) Overinvested in current assets
E) Experiencing a high level of growth
Answer: A
Q2) A financing gap refers to
A) The undisclosed project for which a portion of retained earnings is reserved
B) Estimates included in pro forma statements which have no basis in hard data
C) Financing requirements not identified in the pro forma statements
D) A value added to liabilities to balance the pro forma balance sheet
E) A reserve for bad debt
Answer: D
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Analyzing and Interpreting Financial Statements
Available Study Resources on Quizplus for this Chatper
45 Verified Questions
45 Flashcards
Source URL: https://quizplus.com/quiz/29563
Sample Questions
Q1) Early recognition of sales revenue is consistent with A) Accrual basis accounting practices
B) Cash based accounting practices
C) The accounting Matching Principal
D) Calendar based accounting practices
E) Fraudulent accounting practices
Q2) Coronation Computers opened the fiscal year with a balance sheet showing retained earnings at $355,000, and common shares at $1.2 million. It added another $500,000 from the sale of 200,000 preferred shares, which paid $.35 a share in dividends in the last quarter of the fiscal year. If the Company's net income for the year was a $412,100 and there were no dividends paid to common shareholders, what was its return on equity?
A) 19.8%
B) 22.0%
C) 23.6%
D) 28.5%
E) 29.6%
To view all questions and flashcards with answers, click on the resource link above.
6
Chapter 5: The Time Value of Money
Available Study Resources on Quizplus for this Chatper
44 Verified Questions
44 Flashcards
Source URL: https://quizplus.com/quiz/29564
Sample Questions
Q1) Which of the following best describes the financial loss involved in choosing a less profitable option?
A) Marginal Cost
B) Suboptimization
C) Opportunity Cost
D) Interest Loss
E) Terminal Loss
Q2) In three years time, the Company estimates that they will need $10 million to build and equip a new plant. To achieve this target amount with a one-time investment today, how much cash would the company have to invest if the return is 12% compounded annually?
A) $6,788,000
B) $7,118,000
C) $7,513,100
D) $8,242,000
E) $14,049,000
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Making Capital Investment Decisions
Available Study Resources on Quizplus for this Chatper
44 Verified Questions
44 Flashcards
Source URL: https://quizplus.com/quiz/29565
Sample Questions
Q1) Air Porters Inc. is considering acquiring an airplane with a new type of engine that requires more frequent maintenance. Cash flows starting now and for the first eight years are as follows: ($2,000,000); $500,000; $500,000; ($100,000); $450,000; $450,000; ($110,000); $400,000; $400,000. How many internal rates of return does this investment project have?
A) 1
B) 2
C) 3
D) 4
E) 5
Q2) The first trial of an IRR interpolation used an interest rate of 15% and produced a NPV of ($81,450) and the second trial of IRR at 6% produced an NPV of $56,000. Assuming a straight-line relationship between IRR and NPV, what percent reduction from 15% would result in the project's IRR?
A) 5.3%
B) 11.1%
C) 9.8%
D) 7.6%
E) 13.1%
To view all questions and flashcards with answers, click on the resource link above.
Page 8
Chapter 7: Making Capital Investment Decisions: Further Issues
Available Study Resources on Quizplus for this Chatper
42 Verified Questions
42 Flashcards
Source URL: https://quizplus.com/quiz/29566
Sample Questions
Q1) There are three projects to consider. Project A and B both have an expected return of $1,000,000. Project C has an expected return of $800,000. Which of the following statements best describes a risk-neutral investor?
A) An investor who would choose to do Project A because it is closer to home, even though it has a lower risk.
B) An investor who would choose to do Project B because it is closer to home, even though it has a lower risk.
C) An investor who would choose to do Project B because it is closer to home, even though it has a higher risk.
D) An investor who would choose to do Project C because it is closer to home, even though it has a lower risk.
E) An investor who would choose to do Project C because it is closer to home, even though it has a higher risk.
To view all questions and flashcards with answers, click on the resource link above.
9
Chapter 8: Financing a Business 1: Sources of Funds
Available Study Resources on Quizplus for this Chatper
43 Verified Questions
43 Flashcards
Source URL: https://quizplus.com/quiz/29567
Sample Questions
Q1) Great Systems Inc. (GSI), a publicly-traded company, needs $30 million additional financing to repair its balance sheet and to expand into the cloud computing infrastructure market. Somes of GSI's balance sheet classification amounts, in millions, are as follows: Current assets $10; Property, plant, and equipment $90; Current liabilities $30; Long term liabilities $35; retained earnings 10. How should GSI raise the needed $30 million?
A) Issue 15 year bonds
B) Issue preferred shares
C) Issue common shares
D) Issue a mortgage on the property
E) Issue a strip bond
Q2) To establish the credit ratings that are used in the financial industry to represent the level of default risk associated with a bond, what do credit rating agencies do?
A) Collaborate with governmental taxation and finance departments.
B) Operate within the provincial securities departments.
C) Assess multiple sources and institutions and work independently.
D) Cooperate with national stock exchanges and investment dealers.
E) Interact with the World Bank and International Monetary Fund to accurately assess all relevant risks.
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 9: Financing a Business 2: Raising Long-Term Funds
Available Study Resources on Quizplus for this Chatper
42 Verified Questions
42 Flashcards
Source URL: https://quizplus.com/quiz/29568
Sample Questions
Q1) The response that Fandango Co. Ltd. received to its tender offer was the following: 95,000 shares would be purchased at $35.00; 90,000 shares at $45.50; 80,000 at $50.50; 70,000 at $55.00; and 60,000 at $60.50. If Fandango would like to maximize the amount raised from the share issue, what should the the striking price be?
A) $35.00
B) $45.50
C) $50.50
D) $55.00
E) $60.50
Q2) Which of the following stock patterns would a technical analyst view as most bearish?
A) Cup and handle.
B) Channel.
C) Triangle.
D) Reverse head and shoulders.
E) Head and shoulders top.
To view all questions and flashcards with answers, click on the resource link above.
11
Chapter 10: The Cost of Capital and the Capital Structure
Available Study Resources on Quizplus for this Chatper
42 Verified Questions
42 Flashcards
Source URL: https://quizplus.com/quiz/29569
Sample Questions
Q1) How can dividends over the entire future life of a business be relevant to a short term investor?
A) The share price when the investor sells should reflect the present value of all future earnings streams of the company.
B) The share price when the investor sells should reflect the present value of all future dividends of the company.
C) The share price when the investor sells should reflect the present value of all future earnings per share of the company.
D) The share price when the investor sells should reflect the after-tax present value of all future earnings of the company.
E) The share price when the investor sells should reflect after-tax the present value of all future dividends of the company.
Q2) What is the cost of shares to the business is equivalent to?
A) The average year-over-year percent increase in share price.
B) The NPV of the return to the company from its investments.
C) The bank rate grossed up by a risk premium and the rate of inflation.
D) The IRR used to evaluate the company's investment projects.
E) The NPV of the future share prices.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Developing a Dividend Policy
Available Study Resources on Quizplus for this Chatper
40 Verified Questions
40 Flashcards
Source URL: https://quizplus.com/quiz/29570
Sample Questions
Q1) Which is the minimum assumption that must exist to support the Modernist view that dividend policy should have no effect on shareholder wealth?
A) No assumption about market efficiency needs to exist.
B) Weak form of capital market efficiency.
C) Semi-strong form of capital market efficiency.
D) Strong form of capital market efficiency.
E) Perfect capital market efficiency.
Q2) Brekker Company has 40 million common shares outstanding and has consistently paid out 25% of its earnings over the past seven years. Last year, it announced earnings of $600 million and paid out a 25% stock dividend in lieu of cash, retaining its earnings to fund its expansion into China. Share price was maintained on news of positive cash flows from the expansion. The company would like to retain all this year's $690 million in earnings to consolidate its overseas investment. What is the minimum dividend per share to ensure investor confidence?
A) $3.45 million.
B) $3.75 million.
C) $4.69 million.
D) $13.
E) $15.00.
To view all questions and flashcards with answers, click on the resource link above.
Page 13
Chapter 12: Managing Working Capital
Available Study Resources on Quizplus for this Chatper
40 Verified Questions
40 Flashcards
Source URL: https://quizplus.com/quiz/29571
Sample Questions
Q1) What does the materials requirement planning (MRP) system start with to determine inventory requirements?
A) Production scheduling.
B) Current inventory levels.
C) Projected budgetary allocation.
D) Sales forecasts.
E) Shipping rates and schedules.
Q2) Bowden Building Supply's opening inventory for the year was $810,000 and ending inventory was $625,000 on sales of $6,650,000 and cost of goods sold of $3,600,000.
What was Bowden Building Supply's Average Inventory Turnover Period?
A) 63.4
B) 72.8
C) 82.1
D) 343.0
E) 393.8
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Measuring and Managing for Shareholder Value
Available Study Resources on Quizplus for this Chatper
40 Verified Questions
40 Flashcards
Source URL: https://quizplus.com/quiz/29572
Sample Questions
Q1) Social Games Ltd. has a business value of $50 million, capital invested of $32 million, and annually generates returns that exceed investors required returns by $4 million. What is the percentage required return demanded by investors?
A) 8.0%
B) 12.5%
C) 18.0%
D) 22.2%
E) 64.0%
Q2) What is the total shareholder return (TSR) if Calico Clothing's share price over the past year increased from $25.40 to $28.50 and the company paid out dividends of $1.65 per share?
A) 18.7%
B) 16.7%
C) 5.7%
D) -5.1%
E) -5.7%
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Mergers, Acquisitions, and the Valuation of Shares
Available Study Resources on Quizplus for this Chatper
40 Verified Questions
40 Flashcards
Source URL: https://quizplus.com/quiz/29573
Sample Questions
Q1) Halifax Hatcheries Inc., an unlisted company, operates in the same sector, has common operational characteristics, and the same dividend payout policy, as Saleem Fingerlings Ltd. Saleem's payout ratio is 32%. Salem's year-end earnings were $12,150,000, at which time shares were priced at $10.80 per share with 2.4 million common shares outstanding. Using the dividend yield ratio method, what would be a reasonable estimation of the value of one Halifax Hatcheries Inc.'s common share if it has 1.5 million shares and earnings of $172,500,000?
A) $10.80
B) $77.54
C) $153.15
D) $200.29
E) $245.33
Q2) Which group most consistently benefits from the process of one business acquiring another business?
A) The shareholders of the company being taken over.
B) The shareholders of the bidding company.
C) The senior managers of the company being taken over.
D) The senior managers of the bidding company.
E) The customers/clients of the bidding company.
To view all questions and flashcards with answers, click on the resource link above. Page 16