Question 1

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Which is not a function of financial management?

Select one:

a. Personnel Management
b. Acquiring Necessary Capital
c. Forecasting Financial Requirements
d. Cash Management
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The correct answer is: Personnel Management

Question 2
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Which statement is false

Select one:
a. With the help of strong financial control devices such as budgetary control, ratio analysis and cost
volume profit analysis, financial management can improve the profitability position of the business
b. Effective financial management helps you promote and mobilize individual and corporate savings
c. Financial management is essential in the business especially in the corporate sectors.
d. Financial decision will affect the entire business operation because decisions have indirect

relationship with the various department functions.

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The correct answer is: Financial decision will affect the entire business operation because decisions
have indirect relationship with the various department functions.

Question 3
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What is the ultimate objective of Financial Management?

Select one:
a. Profit maximization
b. Revenue maximization

c. Wealth maximization
d. Expense minimization
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The correct answer is: Wealth maximization

Question 4
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It is the process of increasing the profit earning capability of the company.

Select one:
a. Financial Planning

b. Profit Maximization
c. Wealth maximization
d. Financial Management
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The correct answer is: Profit Maximization

Question 5
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Identify the function being described: The board of directors and finance manager decided to offer
stocks to the public so that they can have the resources for business expansion.

Select one:

a. Increasing the value of the firm

b. Acquiring necessary capital
c. Savings Promotion
d. Interrelation with other departments
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The correct answer is: Acquiring necessary capital

Question 6
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Identify what is being described. The company had a net profit after taxes worth Php
1,000,000. The board and the management decided not to distribute dividends to shareholders
instead, it retained its earnings for the year so that the business can have resources for future use.

Select one:
a. Savings Promotion
b. Improvement of profitability
c. Proper use of funds

d. Increasing the value of the firm

Feedback

The correct answer is: Increasing the value of the firm

Question 7
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This is concerned with the acquisition, financing, and management of assets with some overall goal
in mind. Its decision function includes areas such as investment, financing, and asset management
decisions

Select one:
a. Managerial Accounting

b. Financial Management
c. Financial Accounting
d. Financial Concern
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The correct answer is: Financial Management

Question 8
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Which of the following statements is true?

Select one:
a. One of the benefits of being a financial manager is that you can get funds in the business entity
without prior approval.
b. The finance manager must posses knowledge in the areas of accounting, finance, economics and

management.
c. A financial manager just delegates the responsibilities to his people and just wait for the results.
d. All of the statements are correct.
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The correct answer is: The finance manager must posses knowledge in the areas of accounting,
finance, economics and management.

Question 9
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This is concerned with the increase in revenue and decrease in expenses

Select one:
a. Wealth maximization
b. Expense minimization
c. Profit maximization

d. Revenue maximization
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The correct answer is: Profit maximization

Question 10
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Types of finance that concerns with the tax collection, revenue projection and disbursement of the
Government.

Select one:
a. Investment
b. Profit Maximization
c. Wealth maximization

d. Public Finance
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The correct answer is: Public Finance

It is the primary source of information in financial analysis.

Select one:

a. Ratio Analysis

b. Vertical Analysis

c. Financial Statement

d. Internal Analysis

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The correct answer is: Financial Statement

Question 2
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This measure a company’s ability to meet its debt obligations as they come using its
current assets.
Select one:

a. Activity Ratio
b. Liquidity ratio

c. Profitability Ratio

d. Efficiency ratio

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The correct answer is: Liquidity ratio

Question 3
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All else being equal, which of the following will increase a company’s current ratio?
Select one:

a. An increase in accounts payable.

b. An increase in accounts receivable.

c. None of the statements can increase the current ratio

d. An increase in net fixed assets.

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The correct answer is: An increase in accounts receivable.

Question 4
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Company A’s ROE is 20 percent, while Company B’s ROE is 15 percent. Which of the following
statements can be true?
Select one:

a. Company A and Company B have equal amount of Equity.

b. None of these

c. Company A and Company B have the same amount of Liability.

d. Company A and company B have equal amount of Assets

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The correct answer is: Company A and Company B have equal amount of Equity.

Question 5
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Amazona company wants to increase its debt to total assets ratio, which of the following
activities could make this possible?
Select one:

a. Buy equipment for manufacturing purposes

b. Receive donation

c. Make a loan

d. Buy merchandise on account

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The correct answer is: Make a loan

Question 6
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This ratio measures a company's ability to use its assets to generate income.
Select one:

a. Efficiency ratio

b. Liquidity ratio

c. Activity Ratio

d. Profitability Ratio

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The correct answer is: Efficiency ratio

Question 7
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Selzer Inc. has a net profit after taxes worth 62,195. It has a total assets worth 3 million, with a
debt-to-equity ratio of 0.64. What is the firm’s return on equity (ROE)?
Select one:

a. 71.0%

b. 3.4%

c. 7.1%

d. 33.4%

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The correct answer is: 3.4%

Question 8
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Stakeholders of the company that uses financial statement in analysis for Asset and
liability management and generate decision for business operations.
Select one:

a. Management of the company/ Management

b. Financial Statement

c. Creditors

d. Investors

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The correct answer is: Management of the company/ Management

Question 9
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Which of the following can increase net profit margin?

Select one:

a. Sell merchandise with 20% discount

b. Sell merchandise with 20% mark-up from the original price

c. Buy merchandise

d. none of these

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The correct answer is: Sell merchandise with 20% mark-up from the original price

Question 10
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Stennett Corp.’s CFO has proposed that the company made a new debt and used the proceeds
to buy equipment. Which of the following is likely to occur if this proposal is adopted?
Select one:

a. Return on Assets (ROA) will decline.

b. Gross profit margin will increase.

c. Inventory turnover will increase.

d. Income will decline.

Feedback

The correct answer is: Return on Assets (ROA) will decline.

Minden Co has current assets that consist of cash: Php20,000, receivables: Php70,000 and
inventory: Php90,000. Current liabilities are Php75,000. The current ratio is:
Select one:

a. 2

b. 2.4

c. 3.2

d. 2.2

Question 2
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Return on sales, return on assets and return on equity are examples of

Select one:

a. leverage ratios

b. profitability ratios

c. activity ratios

d. liquidity ratios

Question 3
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Total asset turnover, receivables turnover and inventory turnover ratios measure
Select one:

a. liquidity

b. profitability

c. efficiency

d. efficacy
Question 4
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Its objective is to provide information about the financial position and the financial
performance and cash flows of an entity that is useful to a wide range of users in making
economic decisions

Select one:

a. Financial Statements

b. Statement Corporate Taxes

c. Statement of Operational Performance

d. Fund Flow Statement

Question 5
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Return on equity is directly affected by

Select one:

a. net income, number of shares and dividends

b. number of shares and liabilities and non-accountable transactions

c. net income and equity

d. total assets and non-financial transactions

Question 6
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The quick ratio is defined as:

Select one:

a. current assets divided by current liabilities

b. current assets less inventory, less prepaid expenses. The resulting amount will then be
divided by current liabilities

c. current assets divided by total debt

d. assets less inventory, divided by total liabilities

Question 7
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Shepherd Enterprises has a debt-to-equity ratio of 40 percent. The company’s total assets is
equal to Php 800 million. What is the value of the company's total liabilities?
Select one:

a. Php 320,000,000

b. Php 2,400,000,000

c. Php 458,428,472

d. Php 228,571,429

Question 8
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FPL Company has cash and cash equivalents worth 10,000; equipment worth 20,000; accounts
receivable worth 15,000; notes receivable worth 12,000 ; accounts payable worth 10,000 and
notes payable worth 5,000 maturing after one month. What is the current ratio?
Select one:

a. 3.7

b. 2.5

c. 2.47

d. 1.67

Question 9
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The Merriam Company has determined that its return on equity is 15 percent. Management is
interested in the various components that went into this calculation. You are given the
following information: (total debt)/(total assets) = 0.35 and total assets = 1,000,000. What is the
net income?
Select one:

a. 23,333

b. 428,571

c. 52,500

d. 97,500

Question 10
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Current assets divided by current liabilities is the definition of the:

Select one:

a. Quick ratio

b. Debt ratio

c. Earnings per share

d. Current ratio

Question 11
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FPL Co. Statement of Financial Position has Total Assets worth 100,000 wherein 60,000 is non-
current. It also has Total Liabilities worth 200,000 wherein 80,000 is non-current. It was found
out that there was an unrecorded depreciation worth 20,000 and unrecorded purchase of
merchandise on account worth 15,000. What is the current ratio?
Select one:

a. 0.56

b. 0.26

c. 0.41

d. 0.50

Question 12
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Lone Star Plastics has the following data:

Gross Sales 100,000
Gross profit margin 6.0% Tax rate 40%
What is Lone Star’s net income after taxes?
Select one:

a. 24,000

b. 4,500

c. 12,000

d. 3,600

Question 13
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This analysis is usually used to understand operational performance of the entity to help in
making their business decisions.
Select one:

a. Overall Analysis

b. External Audit

c. Internal Analysis

d. External Analysis

Question 14
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Minden Co has current assets that consist of cash: 20,000, receivables: 70,000 and inventory:
90,000. Current liabilities are 75,000. The quick ratio is
Select one:

a. 2.2

b. 1.2

c. 3.2

d. 2

Question 15
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In this type of analysis you may compare figures from several years, so you are comparing the
amounts in each account from the past up to the present.
Select one:

a. internal analysis

b. horizontal analysis

c. external audit
d. vertical analysis

Question 16
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The receivables turnover ratio is defined as

Select one:

a. receivables divided by sales

b. receivables plus bad debt allowances

c. none of these

d. sales divided by receivables

Question 17
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Fana’s American Bakery has a return on assets (ROA) of 10 percent and a return on equity (ROE)
of 14 percent. If total assets is 100,000, what is the value of its total equity?
Select one:

a. 1,400,000
b. 71,429

c. 7,143

d. 14,000

Question 18
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The current assets and current liabilities of FPL company is 10 and 20 respectively. Reviewing
the past transactions the company purchased merchandise worth 5 and it was immediately
paid. However, it was discovered that this transaction was mistakenly recorded as a purchase
on account. After adjusting the errors, what is the the current ratio?
Select one:

a. 0.33

b. 1

c. 0.5

d. 0.4

Question 19
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Question text

Ratios that measure the ability of the company to pay its short-term debts are called:
Select one:

a. profitability ratios

b. liquidity ratios

c. leverage ratios

d. activity ratios

Question 20
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Fama’s French Bakery has a return on assets (ROA) of 10 percent and a return on equity (ROE)
of 14 percent. If equity is equal to 100,000. What is the value of total assets?
Select one:

a. 1,400

b. 14,000

c. 140,000

d. 1,400,000

Question 1
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Which is considered as medium-term source finance?

Select one:

a. FPL Co. made trade credit from ABC Co. This is because the company has no enough
resources to pay the amount immediately.

b. Mr. P made a written promise to pay to Mr B the ammount of 1,000,000 within 1 medium
year.

c. FPL Co. had a net income after taxes worth 10,000,000. It decided to distribute 4,000,000 as
dividends and retained 6,000,000 for future business use.

d. FPL Co. Loaned an amount payable in 2 years.

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The correct answer is: FPL Co. Loaned an amount payable in 2 years.

Question 2
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Which of the following is not a classification of funds on the basis of period?

Select one:

a. Short term sources

b. External Sources

c. medium-term sources

d. Long term sources

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The correct answer is: External Sources

Question 3
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In this type of financing, the business entity which has already operated may get funds
internally from depreciation funds and retained earnings.

Select one:

a. Security Financing

b. Internal financing

c. Mixed Financing

d. Loan Financing

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The correct answer is: Internal financing

Question 4
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These are funds that are required to purchase fixed assets such as land, building, plant,
machinery, furniture and fixtures.

Select one:

a. Variable Capital

b. Working capital

c. Fixed Capital

d. Semi-variable Capital

Feedback

The correct answer is: Fixed Capital

Question 5
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Which is an example of owner's financing?

Select one:

a. lease financing

b. commercial papers
c. Retained Earnings

d. debentures

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The correct answer is: Retained Earnings

Question 6
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This type financing borrows money with interest from financial institutions such as banks and
credit-unions.

Select one:

a. Security Financing

b. Loan Financing

c. Mixed Financing

d. Internal financing

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The correct answer is: Loan Financing

Question 7
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This fund is used for daily operations

Select one:

a. Fixed Capital

b. Working capital

c. Semi-variable Capital

d. Variable Capital

Feedback

The correct answer is: Working capital

Question 8
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Which is an example of borrowed funds?

Select one:

a. none of these

b. debentures
c. equity shares

d. retained earnings

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The correct answer is: debentures

Question 9
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Analyze the given choices and identify which one is not included when these finances will be
classified on the basis of source of generation.
Select one:

a. Debentures

b. Public Deposits

c. Retained Earnings

d. Loans

Feedback

The correct answer is: Retained Earnings

Question 10
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This is a form of financing which is mobilized through the issuance of securities such as shares
and debenture

Select one:

a. Loan Financing

b. Mixed Financing

c. Security Financing

d. Internal financing

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The correct answer is: Security Financing

Question 1
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Which is considered as medium-term source finance?

Select one:

a. FPL Co. made trade credit from ABC Co. This is because the company has no enough
resources to pay the amount immediately.
b. Mr. P made a written promise to pay to Mr B the ammount of 1,000,000 within 1 medium
year.

c. FPL Co. had a net income after taxes worth 10,000,000. It decided to distribute 4,000,000 as
dividends and retained 6,000,000 for future business use.

d. FPL Co. Loaned an amount payable in 2 years.

Feedback

The correct answer is: FPL Co. Loaned an amount payable in 2 years.

Question 2
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Which of the following is not a classification of funds on the basis of period?

Select one:

a. Short term sources

b. External Sources

c. medium-term sources

d. Long term sources

Feedback

The correct answer is: External Sources

Question 3
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In this type of financing, the business entity which has already operated may get funds
internally from depreciation funds and retained earnings.

Select one:

a. Security Financing

b. Internal financing

c. Mixed Financing

d. Loan Financing

Feedback

The correct answer is: Internal financing

Question 4
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These are funds that are required to purchase fixed assets such as land, building, plant,
machinery, furniture and fixtures.

Select one:
a. Variable Capital

b. Working capital

c. Fixed Capital

d. Semi-variable Capital

Feedback

The correct answer is: Fixed Capital

Question 5
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Which is an example of owner's financing?

Select one:

a. lease financing

b. commercial papers

c. Retained Earnings

d. debentures

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The correct answer is: Retained Earnings

Question 6
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This type financing borrows money with interest from financial institutions such as banks and
credit-unions.

Select one:

a. Security Financing

b. Loan Financing

c. Mixed Financing

d. Internal financing

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The correct answer is: Loan Financing

Question 7
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This fund is used for daily operations

Select one:

a. Fixed Capital
b. Working capital

c. Semi-variable Capital

d. Variable Capital

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The correct answer is: Working capital

Question 8
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Which is an example of borrowed funds?

Select one:

a. none of these

b. debentures

c. equity shares

d. retained earnings

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The correct answer is: debentures

Question 9
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Analyze the given choices and identify which one is not included when these finances will be
classified on the basis of source of generation.
Select one:

a. Debentures

b. Public Deposits

c. Retained Earnings

d. Loans

Feedback

The correct answer is: Retained Earnings

Question 10
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This is a form of financing which is mobilized through the issuance of securities such as shares
and debenture

Select one:

a. Loan Financing
b. Mixed Financing

c. Security Financing

d. Internal financing

Feedback

The correct answer is: Security Financing

This is the use of various financial instruments or borrowed capital, such as margin, to increase
the potential return of an investment.

Select one:

a. efficacy

b. efficiency

c. leverage

d. capital efficiency

Feedback

The correct answer is: leverage

Question 2
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This is the required return on investment of the common shareholders of the company.
Select one:
a. Return on Equity

b. Return on Investment

c. Cost of Equity

d. Return on common share

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The correct answer is: Cost of Equity

Question 3
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Which of the following does not belong to the group?

Select one:

a. Earning price approach

b. dividend price approach

c. dividend price plus growth approach

d. dividend price minus growth approach

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The correct answer is: dividend price minus growth approach

Question 4
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This is the required return on investment of the preferred shareholders of the company.

Select one:

a. Return on Investment

b. Cost of preference share

c. Return on Preference share

d. Cost of capital

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The correct answer is: Cost of preference share

Question 5
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This is the mix or proportion of a firm’s permanent long-term financing represented by debt,
preferred stock, and common stock equity.
Select one:

a. Equity and Debt

b. Capital Structure

c. Retained earnings

d. Investment Mix

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The correct answer is: Capital Structure

Question 6
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This is the after tax cost of long-term funds through borrowing.

Select one:

a. Total return

b. Cost of debt

c. Cost of capital

d. Return on debt

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The correct answer is: Cost of debt

Question 7
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This is the required return on investment of the lenders of a company.

Select one:

a. Return on debt

b. Total return

c. Cost of debt

d. Cost of capital

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The correct answer is: Cost of debt

Question 8
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This is a measurement of the degree to which a firm or project incurs a combination of fixed
and variable costs

Select one:

a. Degree of Operating Leverage

b. Combined Degree of Leverage

c. Leverage

d. Degree of Financial Leverage

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The correct answer is: Degree of Operating Leverage

Question 9
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This is the required rate of return on the various types of financing.

Select one:

a. Return on debt

b. Cost of capital

c. Cost of debt

d. Total return

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The correct answer is: Cost of capital

Question 10
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This is a metric that measures the degree to which a company uses fixed income securities
such as debt and preferred equity.

Select one:

a. Leverage

b. Combined Degree of Leverage

c. Degree of Financial Leverage

d. Degree of Operating Leverage

Feedback

The correct answer is: Degree of Financial Leverage

FPL Company plans to make Php50,000 loan with Php7,000 annual interest. If the cost incurred
related to this instrument is Php2,000 and the total tax rate is 30%, what is the cost of debt?
Select one:

a. 10.21%

b. 10.00%

c. 4.38%

d. 9.80%

Question 2
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These funds are obtained from banks and credit unions

Select one:

a. Long-term source

b. Owner's funds

c. Short-term source

d. borrowed funds

Question 3
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FLP Company has 1000 existing common shares. The market value of the share is Php 90 and
the net earnings is Php 1,000. What is the cost of Capital assuming that the new shares will be
issued at market price?
Select one:

a. 1.11%

b. 0.11%

c. 0.01%
d. 11.11%

Question 4
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These are sources of finances which have a required of payment for a period not exceeding one
year.

Select one:

a. Perpetual

b. Medium-term

c. Long-term

d. Short-term

Question 5
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Given:
Debt= 1,000,000 ; Common Shares = 10,000,000 ; Preference Shares = 5,000,000
Cost of Debt = 10% ; Cost of Preference Shares = 5% ; Cost of Equity = 3%
Find WACC
Select one:

a. 1,050,000

b. 1,250,000

c. 650,000

d. 750,000

Question 6
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If you have a financial source that is required to be paid within four years, you have a

Select one:

a. Long-term source

b. Medium-term source

c. Perpetual source

d. Short-term source

Question 7
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Which of the following does not belong to the group?

Select one:

a. Modigliani and Miller Approach

b. net operating income approach

c. Intermediate Approach

d. Net Income approach

Question 8
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In this approach, the mix of debt and equity capital can increase the value of the firm by
reducing overall cost of capital up to certain level of debt.

Select one:

a. Intermediate Approach

b. Modigliani and Miller Approach

c. net operating income approach

d. Net Income approach

Question 9
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A corporation is issuing 10% common stock that should be sold for Php 15 each. The business
will incur flotation costs of Php 5 per share. What is the cost of equity?
Select one:

a. 10%

b. 15%

c. 3%

d. 33.3%

Question 10
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These are source of finances are those which are required for a period of more than five years.

Select one:

a. Short-term
b. Perpetual

c. Medium-term

d. Long-term

Question 11
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If you have a financial source that is required to be paid within ten years, this describes

Select one:

a. Perpetual source

b. Long-term source

c. Short-term source

d. Medium-term source

Question 12
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According to this approach, the mix of debt and equity capital can increase the value of the firm
by reducing overall cost of capital up to certain level of debt.

Select one:

a. Classical Approach

b. Traditional Approach

c. Modern Approach

d. Medieval Approach

Question 13
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A corporation is issuing 10% common stock that should be sold for Php 15 each. The business
will incur flotation costs of Php 2 per share. With growth rate of 5% What is the cost of capital?
Select one:

a. 16.54%

b. 61.54%

c. 4.12%

d. 13.54%

Question 14
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This policy is usually used when the companies are facing constraints of earnings and
unsuccessful business operation

Select one:

a. Irregular Dividend Policy

b. Unstable Policy

c. Regular Dividend policy

d. Stable Dividend Policy

Question 15
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Identify what is being described. ABC manufacturing business purchases materials worth Php
1,000,000 from X company. the ammount is payable within 2 months.
Select one:

a. trade credit

b. notes

c. debentures
d. bank loan

Question 16
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Which of the following is not considered a capital component for the purpose of calculating the
weighted average cost of capital (WACC) as it applies to capital budgeting?

Select one:

a. Long-term debt

b. preferred Stock

c. Common Stock

d. Accruals

Question 17
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The objective of having a good _____________________ is to maximize the value of the firm and
minimize the overall cost of capital.

Select one:
a. Operations

b. Income

c. Capital structure

d. Business

Question 18
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This determines the amount of profit to be distributed among shareholders and amount of
profit to be treated as retained earnings for financing its long term growth

Select one:

a. Dividend Policy

b. Income Distribution Ratio

c. Share Issuance Policy

d. Net income sharing

Question 19
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Question text

Which does not belong to the classification of the sources of financing?

Select one:

a. based on period

b. based on ownership

c. based on interest

d. based on generation

Question 20
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Which does not belong to the group?

Select one:

a. trade credit

b. Commercial papers

c. preference shares

d. retained earnings

Question 1
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Examples of this outlay are the purchase of fixed assets such as land and building, plant and
machinery, expenses relating to improvement or renovation these fixed assets and costs
incurred for the research and development projects

Select one:

a. Working Capital

b. Fixed capital

c. Working Assets

d. Fixed Assets

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The correct answer is: Fixed capital

Question 2
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Which of the following has a wrong order based on the discussion in capital budgeting process
Select one:

a. Evaluation - Implementing - Performance Review

b. Identification of Proposals - Evaluation - Final Approval

c. Matching of Proposals- Performance Review - Final Approval

d. Screening pf Proposals - Fixing Properties- Performance review

Feedback

The correct answer is: Matching of Proposals- Performance Review - Final Approval

Question 3
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Which of the following has a wrong order based on the discussion in capital budgeting process
Select one:

a. Matching of Proposals - Final Approval - Performance Review

b. Identification of Proposals - Evaluation - Final Approval

c. Final Approval - Implementing - Fixing Properties

d. Evaluation - Implementing - Performance Review

Feedback

The correct answer is: Final Approval - Implementing - Fixing Properties

Question 4
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This is a statistical measure of the variability of a distribution around its mean. It is the square
root of the variance.
Select one:

a. Financial Tree Analysis

b. Squared variance analysis

c. Expected value

d. Standard deviation

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The correct answer is: Standard deviation

Question 5
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Which of the following has a wrong order based on the discussion in capital budgeting process

Select one:

a. Evaluation - Implementing - Performance Review

b. Identification of Proposals - Evaluation - Final Approval

c. Matching of Proposals- Performance Review - Final Approval

d. Identification of Proposals - Screening of Proposals - Evaluation

Feedback

The correct answer is: Matching of Proposals- Performance Review - Final Approval

Question 6
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This type of decision making applies when the projects proposed are independent from each
other. The acceptance or rejection of one proposal does not affect the decision on the other
proposals.

Select one:

a. none of the above

b. Mutually Exclusive

c. Capital Rationing

d. Accept-Reject

Feedback

The correct answer is: Accept-Reject

Question 7
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This is a decision support tool that uses a tree-like graph or model of decisions and their
possible consequences, including chance event outcomes, resource costs, and utility.
Select one:

a. Tree of Chances Analysis

b. Decision Tree Analysis

c. Financial Tree Analysis

d. Financial Tree Diagram

Feedback

The correct answer is: Decision Tree Analysis

Question 8
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These proposals are those that compete with other. Therefore, the acceptance of one proposal
will exclude the acceptance of the other proposals.
Select one:

a. Mutually Exclusive
b. none of the above

c. Accept-Reject

d. Capital Rationing

Feedback

The correct answer is: Mutually Exclusive

Question 9
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Which is not a part of capital budgeting process?

Select one:

a. Fixing property

b. Observation of proposal making

c. Performance Review

d. Screening proposals

Feedback

The correct answer is: Observation of proposal making

Question 10
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This is the process in which a business determines and evaluates potential expenses or
investments that are large in nature.

Select one:

a. Monetary Management

b. Capital Budgeting

c. Financial Capital

d. Investment-expense Analysis

Feedback

The correct answer is: Capital Budgeting

Question 1
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FPL Company has a gross working capital of 100,000 and the company has 200,000 total
liabilities of which 150,000 are long term debts. What is the net capital?

Select one:

a. 50,000
b. 150,000

c. 100,000

d. 250,000

Feedback

The correct answer is: 50,000

Question 2
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FPL Company has a total Assets worth 400,000 of which 250,000 are non current the company
also has 200,000 total liabilities of which 150,000 are long term debts. What is the gross working
capital?

Select one:

a. 100,000

b. 300,000

c. 200,000

d. 150,000

Feedback

The correct answer is: 150,000

Question 3
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This is the capital invested in total current assets of the business concern.
Select one:

a. Financial casipal

b. Net Woking Capital

c. Gross Working Capital

d. Fixed Capital

Feedback

The correct answer is: Gross Working Capital

Question 4
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FPL Company has a net working capital of 100,000 and the company has 200,000 total liabilities
of which 150,000 are long term debts. What is the gross capital?

Select one:

a. 300,000
b. 200,000

c. 150,000

d. 250,000

Feedback

The correct answer is: 150,000

Question 5
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This is a measure of both a company's efficiency and its short-term financial health.

Select one:

a. Fixed Capital

b. Net Capital

c. Working Capital

d. Financial Capital

Feedback

The correct answer is: Working Capital

Question 6
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This refers to the level of inventory at which the total cost of inventory comprising ordering cost
and carrying cost.
Select one:

a. Standard deviation

b. Cost Variance Analysis

c. Economic Order Quantity (EOQ)

d. ABC Analysis

Feedback

The correct answer is: Economic Order Quantity (EOQ)

Question 7
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Which is not a motive of holding cash?

Select one:

a. Transaction motive

b. Precautionary motive
c. Auto Motive

d. Speculative motive

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The correct answer is: Auto Motive

Question 8
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FPL Company has a gross working capital of 100,000 and the company has 200,000 total
liabilities of which 150,000 are long term debts. What is the total current assets?
Select one:

a. 100,000

b. 150,000

c. 250,000

d. 50,000

Feedback

The correct answer is: 100,000

Question 9
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FPL Company owes Php20,000 to supplier A, Php30,000 to Supplier B, 50,000 to Supplier C and
a long term bonds payable 10,000. After struggling in its operations, the company ended up
having Php20,000 cash on hand, Php30,000 worth inventories, Php40,000 Accounts receivable
and equipment worth Php50,000. What is the net working capital?

Select one:

a. Php 30,000

b. none of these

c. Php 40,000

d. Php 70,000

Feedback

The correct answer is: none of these

Question 10
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FPL company has machineries and equipment worth 150,000, land and building for business
1,000,000, Cash 150,000, Inventories 30,000 and accounts receivables 50,000. He also owes
200,000 to a bank. How much is the gross working capital?
Select one:

a. Php 1,180,000

b. Php 230,000

c. Php 1,380,000

d. Php 380,000

Feedback

The correct answer is: Php 230,000

Question 1
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This is the rise in inflation that leads to reduction in the purchasing power which influences only
few people to invest due to Interest Rate Risk which is nothing but the variability of return of
the investment due to oscillation of interest rates due to deflationary and inflationary
pressures.
Select one:

a. Business Risk

b. Market Risk

c. Inflation Risk

d. Financial Risk

Question 2
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This refers to a situation in which possible future events can have reasonable probabilities
assigned while uncertainty refers to situations in which there is no viable method of assigning
probabilities to future random events.
Select one:

a. Probability

b. Risk

c. Capital

d. Luck

Question 3
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This is the minimum amount of capital that must be maintained

Select one:

a. Permanent Working Capital

b. Net Working Capital

c. Gross Working Capital

d. Temporary Working Capital

Question 4
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These are goods which have not yet been committed to production in a manufacturing
business concern
Select one:

a. Goods in Transit

b. Work in Progress

c. Finished Goods

d. Raw materials

Question 5
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This is the amount of profit, or return, that an individual can expect based on an investment
made.
Select one:

a. Internal Rate of Return

b. Accounting Rate of Return

c. Payback Period

d. Post-Payback Profitability

Question 6
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This is the time required to recover the initial investment in a project.

Select one:

a. Internal Rate of Return

b. Post-Payback Profitability

c. Payback Period

d. Accounting Rate of Return

Question 7
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Question text

This refers to the variability of returns due to fluctuations in the securities market which is more
particularly to equities market
Select one:

a. Business Risk

b. Inflation Risk

c. Market Risk

d. Financial Risk

Question 8
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This is the excess capital over the minimum amount of working capital that must be
maintained.
Select one:

a. Net Working Capital

b. Permanent Working Capital

c. Temporary Working Capital

d. Gross Working Capital

Question 9
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In this decision type of decision making, there are more than one proposal to be chosen
however the firm has limited funds so that’s why they must ration these project proposals.
Usually, they select a group of projects that yield the highest total return given such limited
funds.
Select one:

a. none of the above

b. Capital Rationing

c. Mutually Exclusive

d. Accept-Reject

Question 10
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Which does not belong to the group?

Select one:

a. Goods in transit

b. Raw Materials

c. Finished Goods
d. Work in progress

Question 11
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Which is not an objective of inventory management?

Select one:

a. To avoid under stock of inventory and to let the entity have over stocks

b. To meet the seasonal demand of the products

c. To ensure the level and site of inventories required

d. To achieve efficient and smooth production process

Question 12
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This is essentially an accounting strategy with a focus on the maintenance of a sufficient

balance between a company’s current assets and liabilities
Select one:

a. Property Maintenance
b. Working Capital

c. Working Capital Management

d. Capital Budgeting

Question 13
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This one measures and considers the cash inflows earned after pay-back period.
Select one:

a. Net Present Value

b. Internal Rate of Return

c. Post-Payback Profitability

d. Accounting Rate of Return

Question 14
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This includes materials which have been put into production process but have not yet been
completed
Select one:

a. Goods in Transit

b. Raw Materials

c. Finished Goods

d. Work in Progress

Question 15
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This is also known as the benefit-cost ratio of a project.

Select one:

a. Profitability Ratio

b. Net Present Value

c. Post-Payback Profitability

d. Internal Rate of Return

Question 16
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This is the completed products and is already final output of the production process
Select one:

a. Work in progress

b. Finished Goods

c. Goods in transit

d. Raw materials

Question 17
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Which is not an objective of inventory management?

Select one:

a. To avoid both over stock and under stock of inventory

b. To achieve efficient and smooth production process

c. To maintain optimum inventory to minimize the profitability

d. To meet the seasonal demand of the products

Question 18
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This is the discount rate that equates the present value of the expected net cash flows with the
initial cash outflow
Select one:

a. Post-Payback Profitability

b. Net Present Value

c. Payback Period

d. Internal Rate of Return

Question 19
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FPL Company has a total Assets worth 400,000 of which 250,000 are non current the company
also has 200,000 total liabilities of which 150,000 are long term debts. What is the net working
capital?
Select one:
a. 300,000

b. 100,000

c. 150,000

d. 200,000

Question 20
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The difference between the present value of cash inflows and the present value of cash
outflows.
Select one:

a. Post-Payback Profitability

b. Internal Rate of Return

c. Net Present Value

d. Payback Period

This is one of the fee based financial services which includes underwriting, consultancy and
other allied services to the business concern.

Select one:

a. mutual fund

b. venture capital
c. merchant banking

d. factoring

Feedback

The correct answer is: merchant banking

Question 2
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Which statement is false?

Select one:

a. Foreign direct investment can provide the receiving firm with the investment, new
technologies, capital, processes, products, organizational and management technologies which
can help in economic development

b. Mutual funds are operated by money managers, who invest the fund's capital and attempt
to produce capital gains and income for the fund's investors

c. A Factoring portfolio is structured and maintained to match the investment objectives stated

in its prospectus.

d. Lease may be defined as a contractual arrangement in which a party owning an asset

provides the asset for use to another, the right to use the assets to the user over a certain
period of time, for consideration in form of periodic payment, with or without a further
payment.

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The correct answer is: A Factoring portfolio is structured and maintained to match the
investment objectives stated in its prospectus.

Question 3
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Which statement is false?

Select one:

a. Merchant banking is basically a service banking which provides non financial services such as
issue management, portfolio management, asset management, underwriting of new issues, to
act as registrar, share transfer agents, trustees, provide leasing and project consultation.

b. Factoring is financing method in which a business owner sells accounts receivable at a

discount to a third-party funding source to raise capital.

c. Lease may be defined as a contractual arrangement wherein the lesor makes periodic

payment to the lessee.

d. In foreign direct investment, institutions invest in equities listed on the national stock
exchange

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The correct answer is: Lease may be defined as a contractual arrangement wherein the lesor
makes periodic payment to the lessee.

Question 4
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This is the selling of accounts receivable at a discount to a third-party funding source to raise
capital.

Select one:

a. mutual fund

b. merchant banking

c. lease financing

d. factoring

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The correct answer is: factoring

Question 5
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This is an industry for borrowers with a limited or tainted credit history.

Select one:

a. Special Finance
b. Business Finance

c. Personal Finance

d. International Finance

Feedback

The correct answer is: Special Finance

Question 6
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Which of the following is not a form of special financing?

Select one:

a. Merchant banking

b. Factoring

c. Mutual Funding

d. Online Bankng

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The correct answer is: Online Bankng

Question 7
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It is contractual agreement between the owner of the assets and user of the assets for a
specific period by a periodical rent.

Select one:

a. mutual fund

b. venture capital

c. lease

d. factoring

Feedback

The correct answer is: lease

Question 8
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This is an investment made by a company from one country into a company from another
country.

Select one:

a. mutual fund
b. International Funding

c. Public-private Partnerships

d. Foreign Direct Investment

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The correct answer is: Foreign Direct Investment

Question 9
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This is an investment vehicle for investors who pool their savings for investing in diversified
portfolio of securities with the aim of attractive yields and appreciation in their value.

Select one:

a. factoring

b. mutual fund

c. venture capital

d. merchant banking

Feedback

The correct answer is: mutual fund

Question 10
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This is the money provided by investors to startup firms and small businesses with perceived
long-term growth potential

Select one:

a. factoring

b. merchant banking

c. venture capital

d. mutual fund

Feedback

The correct answer is: venture capital