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Financial Management
Contributed by: Pike
  • 1. Financial management involves the planning, organizing, directing, and controlling of a company's monetary resources. It encompasses a wide range of activities such as budgeting, forecasting, cash flow management, investment analysis, and risk management. Effective financial management is crucial for the success and sustainability of any organization, as it helps to ensure that resources are efficiently used to achieve the company's financial goals. By monitoring and analyzing financial data, decision-makers can make informed choices that drive growth, enhance profitability, and mitigate risks.

    Which financial statement reports a company's revenues and expenses over a specific period?
A) Balance sheet
B) Cash flow statement
C) Income statement
D) Statement of retained earnings
  • 2. What does ROI stand for?
A) Risk of Investment
B) Return on Investment
C) Rate of Income
D) Revenue Over Income
  • 3. What is the formula to calculate the current ratio?
A) Current assets / Current liabilities
B) Total assets / Total liabilities
C) Current assets - Current liabilities
D) Total assets * Total liabilities
  • 4. What is the purpose of a financial audit?
A) To develop new products
B) To ensure financial statements are accurate and reliable
C) To plan marketing strategies
D) To monitor employee performance
  • 5. What does the term 'working capital' refer to in financial management?
A) Difference between current assets and current liabilities
B) Difference between long-term assets and long-term liabilities
C) Total liabilities of a company
D) Total assets of a company
  • 6. Which financial statement shows a company's assets, liabilities, and equity at a specific point in time?
A) Income statement
B) Cash flow statement
C) Balance sheet
D) Statement of retained earnings
  • 7. What does the term 'liquidity' refer to?
A) Total value of a company's assets
B) Amount of debt a company has
C) Profit generated by a company
D) Ability to convert assets into cash quickly
  • 8. Which financial ratio measures a company's efficiency in managing its assets to generate revenue?
A) Return on investment
B) Asset turnover ratio
C) Debt ratio
D) Profit margin
  • 9. What is the formula to calculate the debt ratio of a company?
A) Total assets / Total equity
B) Total liabilities / Total assets
C) Total debt / Total equity
D) Total debt / Total assets
  • 10. What is the purpose of a cost of capital in financial management?
A) To assess employee performance
B) To determine market share
C) To evaluate the cost of funds for a company's projects
D) To calculate total revenue
  • 11. Which financial ratio measures a company's ability to generate earnings from its operations relative to its assets?
A) Debt-to-equity ratio
B) Return on assets
C) Current ratio
D) Quick ratio
  • 12. What is the purpose of financial reporting in financial management?
A) To communicate financial information to stakeholders
B) To develop new products
C) To manage employee schedules
D) To set marketing goals
  • 13. What does the term 'financial statement analysis' involve?
A) Designing new business strategies
B) Evaluating a company's financial performance using its financial statements
C) Predicting future marketing trends
D) Assessing employee satisfaction
  • 14. What is the formula to calculate the earnings per share (EPS) of a company?
A) Net income / Total assets
B) Net income / Total equity
C) Net income / Revenue
D) Net income / Number of outstanding shares
  • 15. Which of the following is a measure of a company's profitability?
A) Accounts payable
B) Inventory turnover
C) Operating expense
D) Gross margin
  • 16. Which financial market provides a platform for buying and selling stocks?
A) Stock market
B) Commodity market
C) Forex market
D) Bond market
  • 17. What is the formula for calculating Earnings Before Interest and Taxes (EBIT)?
A) Net Income / Sales
B) Gross Margin - Interest
C) Revenue - Operating Expenses
D) Total Expenses / Net Income
  • 18. Which type of financial risk arises from changes in interest rates?
A) Interest rate risk
B) Credit risk
C) Liquidity risk
D) Market risk
  • 19. Which of the following is an example of an internal source of finance?
A) Venture capital
B) Bank loan
C) IPO (Initial Public Offering)
D) Retained earnings
  • 20. Which financial concept refers to the value of an asset after deducting depreciation?
A) Market value
B) Liquidation value
C) Face value
D) Book value
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