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