FINANCIAL MANAGEMENT FOR DECISION MAKERS ACTUAL TEST QUESTIONS AND SOLUTIONS COMPREHENSIVE REVIEW PACKAGE.pdf

FINANCIAL MANAGEMENT FOR DECISION
MAKERS ACTUAL TEST QUESTIONS AND
SOLUTIONS COMPREHENSIVE REVIEW
PACKAGE

●● Cash Flow from Operating Activities (CFO)
Answer: Cash flow that a company generates as a result of day-to-day
business operations. Deals with Current Assets and Current Liabilities.


●● Cash Flow from Investing Activities (CFI)
Answer: Cash flow that is generated from investments in long term
assets.


●● Cash Flow from Financing Activities (CFF)
Answer: Cash flow that is used to fund the company. Cash flow that is
generated from financing the business. Includes Debt & Equity.


●● How does an increase in Accounts receivable impact CFO?
Answer: An Increase in Accounts receivable will decrease CFO


●● How does an increase in Accounts payable impact CFO?
Answer: An Increase in Accounts Payable will increase CFO

, ●● What financial statement is prepared at a point in time
Answer: Balance Sheet


●● What financial statements are prepared for a period of time?
Answer: · Income Statement
· Retained Earnings Statement
· Statement of Cash Flows


●● Define Efficient Frontier
Answer: Maximizes expected return for a given level of risk


●● Where would a risk averse investor fall on the efficient frontier?
Answer: 100% Bonds


●● Where would a risk-taking investor fall on the efficient frontier?
Answer: 100% Stocks


●● What is a Beta?
Answer: A Measure of Risk - A Beta 1 is the average risk of all stocks.
Anytime a beta is below 1, it is less risk. If it is more than 1, it is high
risk.