FINC 600 Week 7 Practice Quiz Corporate Finance Question 1 Assets are listed on the balance sheet in order of: I) Decreasing liquidity II) Decreasing size III) Increasing size IV) Relative life A.I only B.III and IV only C.II only D.IV only Question 2 The difference between Total Assets of a firm and its Total Liabilities is called. A.Net working capital B.Net current assets C.Net worth D.None of the above Question 3 The difference between Current Assets of a firm and its Current Liabilities is called. A.Net worth B.Net working capital C.Gross working capital D.None of the above Question 4 Which of the following is an example of leverage ratios? A.Debt-Equity ratio B.Quick ratio C.Payout ratio D.Return on equity Question 5 Which of the following is an example of liquidity ratios? A.Times interest earned (TIE) B.P/E ratio C.Return on equity D.Quick ratio Question 6 Given the following data: Current assets = 500 Current liabilities = 250 Inventory = 200 Account receivables = 200 Calculate the current ratio: A.2.0 B.1.0 C.1.5 D.None of the above Question 7 Given the following data: Sales = 3200 Cost of goods sold = 1600 Average total assets = 1600 Average inventory = 200 Calculate the asset turnover ratio: A.2.0 B.0.9375 C.1.33 D.None of the above Question 8 Efficiency ratios indicate: I) How productively is the firm utilizing its assets. II) How liquid is the firm. III) How profitable is the firm. IV) How highly is the firm valued by investors. A.I only B.II only C.III only D.III and IV only Question 9 Profitability ratios indicate: I) How productively is the firm utilizing its assets. II) How liquid is the firm. III) How profitable is the firm. IV) How highly is the firm valued by the investors. A.I only B.II only C.III only D.III and IV only Question 10 Given the following assets; I) Long-term assets II) Inventories III) Receivables IV) Marketable securities Which is the least liquid of these assets? A.I B.II C.III D.IV Question 11 Given the following data: Total current assets = $852 Total current liabilities = $406 Long-term debt = $442 Calculate the net working capital. A.$446 B.$852 C.$410 D.None of the above Question 12 The cash budget is the primary short-term financial planning tool. The key reasons a cash budget is created are: I) To estimate your investment in assets II) To estimate the size and timing of your new cash flows III) To prepare for potential financing needs A.I only B.II and III only C.II only D.III only Question 13 Net working capital is defined as: A.The current assets in a business B.The difference between current assets and current liabilities C.The present value of all short-term cash flows D.The difference between all assets and liabilities Question 14 Cash inflow in cash budgeting comes mainly from: A.Collection on accounts receivable B.Short-term debt C.Issue of securities D.None of the above Question 15 The firm’s internal growth rate is defined as: A.retained earnings/net income B.retained earnings/net assets C.retained earnings/total assets D.none of the above
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