Course Introduction
Managerial Finance
Final Exam Questions
Managerial Finance focuses on the principles and techniques used by managers to make informed financial decisions within organizations. The course covers fundamental topics such as financial planning, analysis, and control; capital budgeting; working capital management; cost of capital; risk analysis; and the time value of money. Students will learn how to interpret financial statements, assess investment opportunities, and apply financial theories to real-world business scenarios. Emphasis is placed on the role of financial management in achieving organizational goals and the use of quantitative tools to support strategic decision-making.
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) Prendle-Robinson Inc., has capital invested of $1,200,000 on 50,000 common shares outstanding. If the Company's net income for the year was $144,000, the company's EPS, Earnings Per Share, rounded to two decimal places is
A) $.12
B) $.35
C) $2.88
D) $8.33
E) $24
Answer: C
Q2) The company is performing the function of financial control when it
A) Raises funds from capital markets
B) Takes corrective action to achieve business goals
C) Assesses the riskiness of investment projects
D) Identifies possible sources of funds
E) Reinvests profits from operations
Answer: B
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) Trekker Trash & Recycling Ltd. bought a prefabricated building at a cost of $150,000 to house partially processed materials. The building was erected at the end of March, and it's expected lifetime is 15 years. Buildings have a 4% CCA rate. What is the maximum amount of CCA can Trekker Trash claim for the fiscal year at its end in December?
A) $4,500
B) $3,000
C) $10,000
D) $7,500
E) $6,000
Answer: B
Q2) If losses are to be carried forward the amount is
A) Multiplied by the expected future tax rate and is entered as a liability
B) Entered in its entirety as a deferred tax liability
C) Entered in its entirety as a prepaid tax under current assets
D) Entered in its entirety as an extraordinary gain
E) Multiplied by the expected future tax rate and entered as an asset
Answer: E
To view all questions and flashcards with answers, click on the resource link above. Page 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) Athabasca Inc. has a closing inventory of $1,501,610. The company's sales revenue is $5,460,400. It purchased $1,200,000 worth of goods. Starting inventory is $3,578,234. The amount of goods available for sale was
A) $4,778,234
B) $1,501,610
C) $1,200,000
D) $3,276,624
E) $3,958,790
Answer: A
Q2) Company XYZ makes insect repellent and pays $3000 for rent, $32,000 for raw materials, $70,000 for salaries, $12,000 for depreciation and $15,000 for spray bottles. Variable costs are
A) $15,000
B) $47,000
C) $70,000
D) $85,000
E) $117,000
Answer: B
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) The company's leverage ratio has moved from 15.2% to 32%. Its return on equity ratio has also moved up, from 20.5% to 45.3%. Its times interest earned ratio has dropped to 3.5. Which of the following is the best statement to describe the company?
A) Is not in a risky financial position
B) Is depending on debt to finance its expansion
C) Cannot pay the interest on its long-term debt
D) Is depending on equity to finance its expansion
E) Has a sizable cushion to pay the interest on its debt
Q2) Rattray Interiors and Design Ltd. has four managers and six support staff who generate $2,400,000 of revenue. If the company wants to expand its business and to hire 2 design technicians to assist the partners, how much more revenue must each manager bring in to maintain their current sales revenue per employee ratio?
A) $80,000
B) $120,000
C) $200,000
D) $240,000
E) $480,000
To view all questions and flashcards with answers, click on the resource link above.
Page 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) A bond with a term of 20 years, a coupon rate of 8% paid at the end of every year and a face value of $1,000 was purchased November 1. By November 2nd interest rates had dropped to 6%. What is the selling price of the bond on November 2nd?
A) $12,387
B) $11,495
C) $1,229
D) $771
E) $337
Q2) A large Ontario municipality signed a four-year lease on paving equipment where payments of $71,698 are made at the beginning of each year with an interest rate of 10% per year, compounded annually. By the end of the contract, what will be the total cost to the city?
A) $366,025
B) $332,750
C) $337,697
D) $371,467
E) $383,550
To view all questions and flashcards with answers, click on the resource link above. Page 7
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) A company can invest $20,000,000 for three years in Option A paying out $7,500,000, $8,500,000, and $9,500,000 respectively. For an investment of $1,500,000, Option B will pay out $650,000, $750,000, and $850,000. Where should the company invest its money given a hurdle rate of 9%?
A) Option A as it has the higher IRR.
B) Option B as it has the higher IRR.
C) The analysis does not indicate a better option.
D) Option A as it has the higher NPV.
E) Option B as it has the higher NPV.
Q2) Which of the following best describes the discount rate that when applied to the future cash flows makes them equal to the initial cash expenditures?
A) Payback Period
B) Internal Rate of Return
C) Marginal Rate of Return
D) Net Present Value
E) Accounting Rate of Return
To view all questions and flashcards with answers, click on the resource link above.
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) A company uses the Profitability Index to assess investment opportunities when:
A) The flows from the investment alternatives are unequal.
B) The investment alternatives are mutually exclusive.
C) Insufficient funding exists to invest in all the non-divisible projects.
D) A company is subject to capital rationing.
E) Risks from inflation impact projects individually.
Q2) If the coefficient of correlation between two projects is 0, it would indicate that
A) One project is cyclical and the other is somewhat less so
B) Both projects react in a similar manner to a change in interest rates
C) The factors that impact one project's success have no impact on the other project's success
D) The projects are not well diversified
E) The revenue from one project will equally offset the losses in the other
Q3) Which of the following may bias the NPV calculation upward?
A) Failure to adjust cash flows but not the discount rate for inflation.
B) Adjusting lease rates where there are long term agreements.
C) Increasing the income tax rate by the inflation rate.
D) Failure to expand working capital.
E) Adjusting wage expense if a union contract with a lower rate is in effect.
Page 9
To view all questions and flashcards with answers, click on the resource link above.
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) Emmilou's Designs, a Canadian exporter, operates in international currencies to transact business on both sides of the Atlantic and so, at a time when the Canadian dollar (CAN) was at $0.97 of the US dollar (USD) and the Euro was trading at .625USD, Emmilou Designs issued 5-year Eurobonds which provided them with the equivalent of $5,000,000CAN. At maturity, the Canadian dollar was worth $1.01USD and the Euro at 0.635USD. What was the financial impact of the exchange rates, in Canadian dollars, in the repayment of the face value of the Eurobonds at maturity?
A) Cost $50,000
B) Saved $192,756
C) Saved $121,188
D) Saved $2.9 million
E) Cost $4.6 million
Q2) Which of the following best describes the pecking order theory?
A) Dividend are preferable to capital gains.
B) Capital gains are preferable to dividends.
C) Retained earnings are preferable for long term financing.
D) Debt is preferable for long term financing.
E) Common shares are preferable for long term financing.
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) Assuming the share price did not change much, when would an investor be worse off?
A) An investor buys the rights shares.
B) An investor ignores the rights shares.
C) An investor sells the rights shares.
D) An investor receives a stock dividend.
E) An investor's stock has a stock split.
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.
Q3) Which of the following is an example of a primary capital market?
A) The government issues new securities to raise short term funds.
B) Forward contracts and derivatives are bought and sold.
C) Shares that have been previously purchased are offered for sale to others.
D) Equity shares held in another company are sold.
Page 11
E) Dealers trade in shares not listed on the stock exchanges.
To view all questions and flashcards with answers, click on the resource link above.
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 one strategy that a hedge fund uses to maximize shareholder wealth?
A) Investing exclusively in select exchange traded funds (ETFs).
B) Using correlation coefficients to create perfectly diversified portfolios.
C) Investing in low yield, government securities.
D) Investing exclusively in market indexes.
E) Levering itself by selling short (shares it does not yet own).
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 of the following is the most important factor influencing the level of dividends?
A) Investment opportunities.
B) Residual theory of dividends.
C) Loan covenants.
D) Market expectations.
E) Profit stability.
Q2) The management team of SoftWare Dreamworks Ltd. owns 35% of the outstanding shares of the company. the remainder are widely held by North American investors, with no on else owning more than 2% of the shares. However management is concerned about retaining control because there has been much takeover activity in the software industry recently. The firm's debt-Equity ratio sits at 60%. The current dividend payout ratio is 5%. How should management plan to obtain new funds for expansion into 4D research and development?
A) Issue new common shares.
B) Sell new bonds.
C) Issue new preferred shares.
D) Borrow long term from a bank.
E) Keep a high profit retention policy.
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) BB's Basement, a bargain retail outlet, purchases $4,000 of end of line clothing inventory from J&P Manufacturing and is granted credit terms of 45 days. BB sells out the inventory for $6,000 within two weeks. Proceeds from the sale after salaries, rent and other expenses, but before paying off accounts payable, is $4,500. If BB can make 3% per annum on a 30-day Guaranteed Investment Certificate (GIC), how much did BB make on the jeans and on managing its working capital?
A) $135
B) $500
C) $511
D) $620
E) $635
Q2) What is the risk in using a bank overdraft as a source of financing?
A) The company's indebtedness will grow beyond its ability to handle it.
B) Its cost exceeds that of the company's weighted average cost of capital.
C) It will negatively impact the credit rating of the company.
D) Interest costs cannot be deducted from income taxes.
E) It may have to be paid in full with little prior notice.
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) Grayson Scaffolding Inc. has a cost of capital of 9% and the following free cash flow projections over their five-year planning horizon: $3.4 million, 3.8 million, $4.5 million, $4.9 million, and $5.2 million. Using free cash flows, what is the total business value?
A) $28.4 million
B) $37.5 million
C) $54.2 million
D) $57.8 million
E) $74.4 million
Q2) Why may EVA be considered a better measure for rewarding managers than SVA?
A) EVA can be fine-tuned to measure an individual's performance.
B) EVA is not as easily manipulated by managers as SVA.
C) EVA values are more comparable from period-to-period than SVA.
D) EVA does not include estimates of future performance.
E) EVA focuses managers on current profits rather than long-term gains.
To view all questions and flashcards with answers, click on the resource link above.
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) Central Electric Ltd. (CEL), cost of capital of 9%, net income after tax of $140 million and 10 million common shares outstanding. It wishes to spin off its higher risk Wi-Fi business unit. Earnings from the business unit represent 20% of CEL net income. The Wi-Fi unit has a cost of capital of 12% and would issue one million common shares. To accomplish the spin-off, what will CEL most likely have to do?
A) Provide one share for every 10 shares they hold in CEL.
B) Sell the business to a new set of shareholders for cash. Cash may be retained or distributed as dividends to CEL shareholders.
C) Provide current shareholders with one share from the new business for each of the shares they hold in CEL.
D) Provide one share from the new business for every five shares they hold in CEL.
E) Provide one share from the new business for every four shares they hold in CEL to cover their increased risk.
To view all questions and flashcards with answers, click on the resource link above. Page 16