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FIN2603 - Assessment 01 Semester 02_Questions / Answers
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FIN2603 - Assessment 01 Semester 02 expected Questions / Answers
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FIN2603 – Finance for non-financial managersAssessment 1
1. Finance can be defined as the ...
a) science of the production, distribution and consumption of wealth.
b) art of merchandising products and services.
c) system of debits and credits.
d) art and science of managing money.
2. Any organisation that is managed in accordance with business principles should be able to ensure its survival
because it will ...
a) plan its cash inflows and outflows by means of a cash budget.
b) maximise its revenue from sales and control its expenses.
c) keep its cost of financing as low as possible.
d) undertake all the above-mentioned financial measures.
3. During periods where the consumer price index (CPI) is expected to decrease, a retail firm will have to ...
a) apply credit standards more strictly due to declining interest rates, increase in sales, but a slowdown of cash
inflow.
b) budget more conservatively as a result of rising interest rates, a decline in sales and an increase in bad
debts.
c) expand due to declining interest rates, an increase in sales and improved feasibility of investment
opportunities.
d) relax credit standards due to a decline in sales, a decrease in bad debts and a slowdown of cash outflow.
4. If the company's managers are NOT owners of the company, they are ...
a) traders.
b) outsiders.
c) agents.
d) dealers.
5. The primary short-term financial goal of the firm may be best achieved by ...
a) increasing expenses in order to reduce the firm’s tax liability.
b) accelerating cash inflows and delaying cash outflows.
c) maximising revenue and minimising expenses.
d) minimising the cost of capital and maximising the internal rate of return (IRR).
6. What is the main function of a financial manager?
a) To earn returns greater than those of the competitors.
b) To ensure liquidity and solvency.
c) To increase the value of ordinary shares.
d) To prevent bad debts.
7. Who is/are the true owner(s) of an organisation?
a) The creditors.
b) The board of directors.
c) The chief executive officer.
d) The shareholders.
8. A current ratio of 4,5:1 may indicate the firm has too much ...
a) inventory.
b) accounts receivable.
c) cash.
d) All of the above.
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