NAME: _____________________________________________ FIN 081 – FINANCIAL MANAGEMENT

COURSE & SECTION: __________________________________ LONG QUIZ # 1

DATE & TIME: _______________________________________ Duration: 45 minutes

I. Multiple Choice (Concepts) – Introduction to Financial Management, Financial Statement Analysis, Forecasting
(20 points)

_______1. This refers to 2 or more persons binding themselves to contribute money, property or industry to a
common fund with the intention of dividing profits between or among themselves.
a. partnership c. corporation
b. sole proprietorship d. none of the above

_______2. One of the disadvantages of a corporation is

a. unlimited liability c. limited life
b. difficulty in raising capital d. double taxation

_______3. What could potentially mitigate stockholders and managers conflict?

a. threat of termination for poor performance c. bonus for hitting the monthly target sales
b. shutting down the company d. all of the above

_______4. This assesses the trend over time when a line item is compared as a percentage of a prior period
amount
a. vertical analysis c. inventory turnover
b. time interest earned d. horizontal analysis

_______5. Which of the following tells us that a company is monitoring its inventory turnover ratio
a. excessive level of inventory c. storage cost is kept at a minimum
b. lost opportunity to sell d. none of the above

_______6. They would prefer riskier projects because they could receive more of the upside if the project succeeds
a. employees c. creditors
b. stockholders d. managers

_______7. It is a company’s attitude and conduct towards its employees, customers, community and stockholders
a. business ethics c. philanthropy
b. business policy d. corporate culture

_______8. To arrive at a meaningful analysis, ratios are often compared to the following
a. historical data c. industry average
b. intracompany ratio d. all of the above

_______9. Which of the following is not a quantitative approach to forecasting

a. naïve model c. trend projection
b. Delphi model d. moving average

_______10. It focuses on decisions relating to how much and what types of assets to buy, how to raise the capital
needed to buy assets, and how to run the firm so as to maximize its value
a. forecasting c. financial analysis
b. financial management d. investing