MADDELA MARVELOUS GRACE CHRISTIAN SCHOOL INC.

National Hi-way, Buenavista, Maddela, Quirino

Email add: mgcs_maddela@yahoo.com
CP #: +63-906-186-0907

PRE-TEST
BUSINESS FINANCE
Grade-12

TABLE OF SPECIFICATION
2019-2020

Number Item Percentage

OBJECTIVES of Items Placement (%)

ACQUIRING KNOWLEDGE
Explain the major role of financial 3
management and the different
individuals involved
Identify the decisions of financial 3
managers
Compare and contrast the varied 3
financial instrument
Explain the flow of funds within an 3
organization through and from the
enterprise and the role of the financial
manager
Define measurement levels, namely 3
liquidity, solvency, stability and
profitability
Identify the steps in the financial 2
planning process
Explain tools in managing cash, 2
receivables and inventory
Cite bank and nonbank institutions in 2
the locality that would serve as
possible sources of funds for business
operations
Identify uses of funds 2
Explain the risk return trade-off 1
Compare and contrast the different 2
types of investments
Classify investment according to its 2
type and features, and advantages and
disadvantages
Enumerate money management 2
philosophies
Identify the features of basic 2
investment instruments particularly
their risks and return characteristics
Provide examples of sound practices 2
in earning, spending, saving and
investing money
Identify basic long-term financial 2
concepts
MAKING MEANING
Distinguish a financial institution 4
from financial instrument and
financial market
Analyze, compute and interpret 4
financial ratios such as current ratio,
working capital, gross profit ratio, net
profit ratio, receivable turnover,
inventory turnover, debt to equity
ratio and the like
Measure and list ways to minimize or 4
reduce investment risks in simple case
problems
Explain the risk-return trade-off 3
Explain basic personal finance 3
principle
TRANSFER
Perform vertical and horizontal 2
analyses of financial statements of a
single proprietorship
Calculate future value and present 2
value of money
Compute for the effective annual
interest rate 2
TOTAL 60 100%

Prepared: Checked by:

JEROME M. ALCANTARA LIRIO C. CONSOLACION

Teacher High School Department
Head

Noted:

STIHL Q. JUANITO
Principal
 PRE-TEST

NAME:__________________________________ SCORE:________
ENCIRCLE THAT CORRESPOND TO YOUR BEST ANSWER.
1. They elect the Board of Directors, and each share held is equal to one voting right.
a. Shareholders b. Creditors
c. Board of Trustee d. Owner
2. Primary responsibility is to ensure that the corporation is operating to serve the best
interest of the stockholders
a. President b. Shareholders
c. Board of Directors d. VP for marketing
3. Overseeing the operation of a company and ensuring that the strategies as approved
by the board are implemented as planned.
a. VP for Administration b. Board of Directors
c. Shareholders d. President
4. Making decisions on how to fund long term investments and working capital which
deals with the day to day operations of the company
a. Operation decision b. Financing decision
C. Investing decision d. Dividend policies
5. Decisions are needed when the company is in an excess cash position
a. Short term investment b. Dividend policies
c. Financing decision d. Long term investment
6. Supported by a capital budgeting analysis which is among the responsibilities of a
financial manager
a. Financing decision b. Operation decision
c. Long term investment d. Short term investment
7. Use the deposited funds to provide commercial loans to firms and personal loans to
individuals and purchase debt securities issued by the firms or government agencies.
a. Insurance companies b. Commercial banks
c. Money markets d. Mutual funds
8. Individuals purchase insurance (life, property and casualty, and health) protection
with insurance premiums
a. Commercial banks b. Mutual funds
 c. Insurance companies d. Money markets
9. Owned by investment companies which enable small investors to enjoy the benefits
of investing in a diversified portfolio of securities purchased on their behalf by
professional investment managers.
a. Mutual funds b. Money markets
c. GSIS D. SSS
10. Intermediaries that channel the savings of individuals, businesses and governments
into loans or investments.
a. Public offering b. Private placements
c. Financial instruments d. Financial institutions
11. The sale of new security directly to an investor or group of investors
a. Public offering b. Financial institution
c. Private placement d. Financial instrument
12. Organized forums in which the suppliers and users of various types of funds can
make transactions directly.
a. Private placement b. Financial market
c. Public market d. Public offering
13. Measures a company’s ability to meet its financial obligations.
a. Solvency b. Stability
c. Profitability d. Liquidity
14. The ability of a business to produce a return on an investment based on its resources
in comparison with an alternative investment
a. Liquidity b. Profitability
c. Solvency d. Stability
15. Investigates how much debt can be supported by the company and whether debt
and equity are balanced
a. Profitability b. Solvency
c. Liquidity d. Stability
16. When all the other functions of management come into play and plan is put into
action to achieve the objectives of the organization.
a. Formulating supporting plan b. Implementation of the plan
c. Selecting the alternative d. Examining alternate course of action
17. It involves setting goals of the company and then managing the resources to achieve
such goals.
a. Setting objectives b. Selecting alternatives
c. Planning process d. Formulating supporting plan
18. Denotes to make decisions relating to the investment in the current assets as vital
part of operating process, the objectives being maximization of return on investments in
receivables.
a. Inventory management b. Cash management
 c. Payable management d. Management of receivable
19. The operational objective is to uphold enough inventories, to meet demand for
product by efficiently organizing the firms’ production and sales operations.
a. Management of receivable b. Cash Management
c. Inventory management d. Inventory Operation
20. Typically offer higher rates on deposits and charge lower rates on loans in
comparison to commercial banks
a. Banking institution b. Credit unions
c. Shadow banks d. Savings and loans
21. Collection of investment banks, hedge funds, insurers and other non-bank financial
institutions that replicate some of the activities of regulated banks, but do not operate in
the same regulatory environment.
a. Shadow banks b. Savings and loans
c. Banking institution d. Credit unions
22. Lending funds in the federal funds market
a. Federal funds b. Public funds
c. Bank loans d. Deposits
23. Collateral requirements on business loans such as important to service-oriented
firms
a. Bank loans b. Deposits
c. Federal funds d. Public funds
24. Individuals associate low levels of uncertainty with low potential returns, and high
levels of uncertainty or risks with high potential returns.
a. Risk b. Return
c. Risk return trade-off d. Return on investment
25. Unique items that are relatively rare or highly valued (artwork, baseball trading
cards, coins, automobiles, antiques).
A. Real estate B. Mutual funds
C. Certificate of deposits D. Collectibles
26. An investment that represents ownership in a company or corporation.
A. Bonds B. Stocks
C. Real estate D. Mutual funds
27. Fall under the category of debt securities and most of them are also classified as
fixed income instruments. Through the Bureau of Treasury issues debt known as
Treasury bills and Treasury bonds.
A. Equity securities B. Government securities
B. Pooled funds D. Corporate debt securities
28. Long-term debt instruments issued by corporation for their immediate needs
provide fixed coupon payments although there are already variable-rate corporate
securities.
 A. Corporate debt securities B. Equity securities
C. Pooled funds D. Government securities
29. Work to be free from the reigns of money, not simply to retire.
A. Automate everything B. Net worth
C. Net vs. Gross D. Financial independence
30. When it comes to budgeting and financial problems many people spend too much
time obsessing over the past.
A. Focus on what matters B. Focus on what you can control
C. Focus on your future D. Focus on what you need
31. An investments depends on the following factors, maturity period, the lower credit
worthiness and nature of the investments.
A. Risks B. Tax shelter
C. Liquidity D. Safety
32. Implies the certainty of return of capital without loss of money or time. Every
investor expects to get back his/her capital on maturity without loss and without delay.
A. Risks B. Liquidity
B. Tax shelter D. Safety
33. Managing a career effectively: finding the right job, learning how to ask for a raise ,
and so on.
A. Developing discipline in spending B. Mastering the art of earning
C. Discovering the secret of saving D. Diversification
34. Make logical decisions instead of succumbing to emotion. Successful savers don’t
make decisions based on breathless media pundits.
A. Discovering the art of saving B. Diversification
C. Developing discipline in Spending D. Mastering the art of earning
35. The interest rate on a loan or financial product restated from nominal interest rate as
an interest rate with annual compound interest payable in arrears.
A.Time value of money B. Future value of money
C. Present value of money D. Effective annual interest rate
36. The current value of a future sum of money or stream of cash flows given a specified
rate of return.
A. Effective annual interest rate B. Present value of money
C. Time value of money D. Future value of money
37. Intermediaries that channel the savings of individuals, business and governments
into loans or investments.
a. Private placement b. Financial institution
c. Public offering d. Financial market
38. Debt securities like corporate bonds or equity like shares of stock.
a. Private placement b. Financial institution
c. Financial instrument d. Financial market
39. Issued by publicly listed companies
a. Corporate bonds b. Preferred stock
c. Common stock d. Treasury bonds

40. Securities with long term maturities are sold in?

a. Secondary market b. Capital market
c. Primary market d. Money market
41. This measures how much of each dollar collected as revenue translate into profit.
a. Gross profit margin b. Operating profit margin
c. Pretax margin d.Net profit margin
42. This reflects the effect on profitability of leverage and other non-operating income
and expense
a. Gross profit margin b. Operating profit margin
c. Pretax margin d.Net profit margin
43. Indicate improvements in controlling operating costs, such as administrative
overheads.
a. Gross profit margin b. Operating profit margin
c. Pretax margin d.Net profit margin
44. This measures the return earned by a company on its assets.
a. Return on assets b. Return on total capital
c. Return on equity d. Return on common equity
45. Research your investments before you make them. Check out the investments
history, earnings growth, management team and debt load.
A. Diversify your investment portfolios B. Determine your tolerance to risks
C. Do your own due diligence D. Monitor your investment regularly
46. Diversification reduces your overall risk by spreading it over a variety of products
A. Do your own due diligence B. Monitor your investment regularly
C. Determine your tolerance to risks D. Diversify your investment portfolios
47. The proper allocation of your investments depends on such factors as your age, how
long you have to invest and your investment temperament.
A. Monitor your investments regularly B. Take advantage of investment
products
C. Determine your tolerance to risks D. Diversify your investment portfolios
48. While there are still market risks and early withdrawal penalties if you have to
access your money prior to maturity, the principal and interest of these investments are
as safe as you can get held to maturity.
A. Determine your tolerance to risks B. Take advantage of investments
products
C. Monitor your investment regularly D. Diversify your investment portfolios
49. Associated with political and economic uncertainty of a particular business
environment.
A. Country risk B. Liquidity risk
C. Financial risk D. Liquidity risk
50. Refers to the risk created by the choice of capital structure- the financing mix of the
issuing company.
A. Business risk B. Financial risk
C. Liquidity risk D. Country risk
51. Exists if the investment is denominated in another currency different from that of
the local currency of the investor.
A. Country risk B. Financial risk
C. Liquidity risk D. Exchange rate risk
52. Do not forget to select the best investments alternative by determining first a
common valuation date, today for example, then comparing its value before deciding
which offers the most attractive proposition.
A. Nothing happens without plan B. The time value of
money
C. Stuff happens, or the importance of liquidity D. The best protection is
knowledge
53. Passive income is also subject to taxes and this must be incorporated in the analysis
before making any investments decision.
A. The time value of money B. The best protection is
knowledge
C. Taxes affect personal finance decisions D. Just do it
54. Provide the financial literacy to understand basic finance concepts applicable to both
businesses and individuals.
A. The best protection is knowledge B. Just do it
C. The time value of money D. Mind games and your money
JOSHUA CORPORATION
BALANCE SHEET
FOR THE YEAR ENDED DECEMBER 31

ASSET 74,000
CURRENT ASSET 99,000
PPE 27,000
INTANGIBLES 200,000
TOTAL ASSETS
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABLITIES 42,000
LONG TERM LIABILITIES 143,000
 STOCKHOLDERS EQUITY 15,000
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY 200,000

JOSHUA CORPORATION
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31
2019 2020
NET SALES 600,000 500,000
COST OF GOODS SOLD 483,000 420,000
GROSS PROFIT 117,000 80,000
OPERATING EXPENSES 57,200 44,000
NET INCOME 59,800 36,000

55. What is the percentage of net sales if you perform horizontal analysis on income
statement?
a. 20% b. 15%
c. 30% d. 46.3%
56. What is the percentage of total assets if you perform vertical analysis on income
statement?
a. 100% b. 21%
c. 71.5% d. 13.5%
57. Mary puts 100 pesos in the bank for five years at five percent interest. Compute for
future value of money?
a. 126.62 b. 127.62
c. 125.63 d. 128.72
58. If Mark needs 20,000 in 10 years and can invest what he has for 5 percent. Compute
present value of money?
a. 12,278 b. 13,000
c. 12,500 d. 13,500alue
59. Let’s assume you buy a certificate of deposit with a 12% stated annual interest. If the
bank compounds the interest every month, Compute for effective annual interest rate?
a. 12.683% b. 13.683%
c. 11.68% d. 11. 86%
60. What is the effective period interest rate for nominal annual interest rate of 5%
compounded monthly?
a. 0.4167% b. 0. 567%
c. 0.67% d. 0.4617%