Fall Semester 2026 D076 – Finance Skills for Managers Exam Study
Guide PDF | Financial Analysis and Interpretation, Budgeting and
Forecasting, Cost Management Techniques, Decision-Making with
Financial Data, Resource Allocation, Risk Assessment and Mitigation,
Profitability and Performance Metrics, and Leadership Application in
Business Finance | Comprehensive Preparation Resource for Business
and Healthcare Management Students
, 1. Which of the following is the primary purpose of financial management?
a) To maximize income
b) To minimize costs
c) To maximize shareholder value
d) To manage cash flow
Correct Option: c) To maximize shareholder value
Rationale: The primary purpose of financial management is to maximize shareholder
value, which involves making investment decisions that provide the highest return to
investors, promoting overall corporate health and growth.
2. What does the term "liquidity" refer to in finance?
a) The ability to convert assets into cash quickly
b) The total amount of assets owned
c) The profitability of the company
d) The long-term financial obligations
Correct Option: a) The ability to convert assets into cash quickly
Rationale: Liquidity refers to how easily assets can be converted into cash without
significantly affecting their price. High liquidity indicates a firm can meet its short-term
obligations effectively.
3. Which financial statement provides a snapshot of a company's financial position
at a specific point in time?
a) Income Statement
b) Balance Sheet
c) Cash Flow Statement
d) Statement of Equity
Correct Option: b) Balance Sheet
Rationale: The balance sheet shows a company’s assets, liabilities, and equity at a
specific moment, providing insight into its financial stability and capital structure.
4. When calculating the net present value (NPV) of an investment, what is primarily
considered?
a) Only the initial investment cost
b) Future cash flows only
c) The difference between present value of cash inflows and outflows
d) The rate of profit
Correct Option: c) The difference between present value of cash inflows and outflows
Rationale: NPV calculates the profitability of an investment by determining the present
Guide PDF | Financial Analysis and Interpretation, Budgeting and
Forecasting, Cost Management Techniques, Decision-Making with
Financial Data, Resource Allocation, Risk Assessment and Mitigation,
Profitability and Performance Metrics, and Leadership Application in
Business Finance | Comprehensive Preparation Resource for Business
and Healthcare Management Students
, 1. Which of the following is the primary purpose of financial management?
a) To maximize income
b) To minimize costs
c) To maximize shareholder value
d) To manage cash flow
Correct Option: c) To maximize shareholder value
Rationale: The primary purpose of financial management is to maximize shareholder
value, which involves making investment decisions that provide the highest return to
investors, promoting overall corporate health and growth.
2. What does the term "liquidity" refer to in finance?
a) The ability to convert assets into cash quickly
b) The total amount of assets owned
c) The profitability of the company
d) The long-term financial obligations
Correct Option: a) The ability to convert assets into cash quickly
Rationale: Liquidity refers to how easily assets can be converted into cash without
significantly affecting their price. High liquidity indicates a firm can meet its short-term
obligations effectively.
3. Which financial statement provides a snapshot of a company's financial position
at a specific point in time?
a) Income Statement
b) Balance Sheet
c) Cash Flow Statement
d) Statement of Equity
Correct Option: b) Balance Sheet
Rationale: The balance sheet shows a company’s assets, liabilities, and equity at a
specific moment, providing insight into its financial stability and capital structure.
4. When calculating the net present value (NPV) of an investment, what is primarily
considered?
a) Only the initial investment cost
b) Future cash flows only
c) The difference between present value of cash inflows and outflows
d) The rate of profit
Correct Option: c) The difference between present value of cash inflows and outflows
Rationale: NPV calculates the profitability of an investment by determining the present
