MANAGEMENT – FINAL
TEST WITH ALL
ANSWERS
StatementbofbCashbFlowsb-bcorrectbanswer-
Showsbthebchangebinbcashbbalancebforbabperiodbofbtime.bFocusesbonlybonbitemsbwh
erebcashbisbreceived,borbcashbisbpaid.
CashbFlowbfrombOperatingbActivitiesb(CFO)b-bcorrectbanswer-
Cashbflowbthatbabcompanybgeneratesbasbabresultbofbday-to-
daybbusinessboperations.bDealsbwithbCurrentbAssetsbandbCurrentbLiabilities.
CashbFlowbfrombInvestingbActivitiesb(CFI)b-bcorrectbanswer-
Cashbflowbthatbisbgeneratedbfrombinvestmentsbinblongbtermbassets.
CashbFlowbfrombFinancingbActivitiesb(CFF)b-bcorrectbanswer-
Cashbflowbthatbisbusedbtobfundbthebcompany.bCashbflowbthatbisbgeneratedbfrombfina
ncingbthebbusiness.bIncludesbDebtb&bEquity.
HowbdoesbanbincreasebinbAccountsbreceivablebimpactbCFO?b-bcorrectbanswer-
AnbIncreasebinbAccountsbreceivablebwillbdecreasebCFO
HowbdoesbanbincreasebinbAccountsbpayablebimpactbCFO?b-bcorrectbanswer-
AnbIncreasebinbAccountsbPayablebwillbincreasebCFO
, Whatbfinancialbstatementbisbpreparedbatbabpointbinbtimeb-bcorrectbanswer-
BalancebSheet
Whatbfinancialbstatementsbarebpreparedbforbabperiodbofbtime?b-bcorrectbanswer-
·bIncomebStatement
·bRetainedbEarningsbStatement
·bStatementbofbCashbFlows
DefinebEfficientbFrontierb-bcorrectbanswer-
Maximizesbexpectedbreturnbforbabgivenblevelbofbrisk
Wherebwouldbabriskbaversebinvestorbfallbonbthebefficientbfrontier?b-bcorrectbanswer-
100%bBonds
Wherebwouldbabrisk-takingbinvestorbfallbonbthebefficientbfrontier?b-bcorrectbanswer-
100%bStocks
WhatbisbabBeta?b-bcorrectbanswer-AbMeasurebofbRiskb-
bAbBetab1bisbthebaveragebriskbofballbstocks.bAnytimebabbetabisbbelowb1,bitbisblessbris
k.bIfbitbisbmorebthanb1,bitbisbhighbrisk.
Definebefficientbmarketbhypothesisbasbitbrelatesbtobabfirm?b-bcorrectbanswer-
Forbanybcompanybtobsurvive,btheybneedbtobmakebprofitablebdecisions.bOtherwise,bin
vestorsbwillbshunbtheirbbusiness.bThebfirmbneedsbtobinvestbwherebthebreturnbisbmore
bthanbthebcost.
Whatbisbthebintrinsicbvaluebofbabstockbunderbefficientbmarketbhypothesis?b-
bcorrectbanswer-
Thebintrinsicbvaluebofbstockbisbthebpresentbvaluebofbthebstock'sbafterbtaxbnetbcashbflo
ws.
Wheneverbthebquestionbstatesbthatbdividendbwasbpaidbrecentlyborbwasbjustbpaid,bwh
atbmustbbebcalculatedbfirst?b-bcorrectbanswer-ExpectedbDividend
ForbeverybBondbquestion,bwhatbmustbbebentered?b-bcorrectbanswer-
FVbmustbbebenteredbasb1000
PMTbmustbbebenteredbasb1000bxbCouponbRate
WhatbisbCapitalbBudgeting?b-bcorrectbanswer-
Refersbtoblongbtermbinvestmentbdecisionbmaking.
Refersbtobthebprocessbusedbinbmakingbinvestmentbdecisionsbinvolvingbprojectsbthatb
generatebcashbflowsboverbabmulti-yearbhorizon.
Whatbinformationbisbneededbforbcapitalbbudgeting?b-bcorrectbanswer-InitialbOutlay
(Howbmuchbmoneybthebcompanybisbgoingbtobinvestbinbthebcompanybrightbnow)
DifferentialbAnnualbCashbFlows
(Cashbflowbthatbthebprojectbwillbgeneratebyearbafterbyear)
TerminalbCashbFlow
(Cashbflowbgeneratedbatbthebendbofbthebproject)