Corporate Finance Technical Exam
Questions with Verified Answers
What are the parts of the cash flow statement? - ANSWER--Cash flow from Operating
Activities
-Cash flow from Investing Activities
-Cash flow from Financing Activities
What are cash inflows from financing activities? - ANSWER--debt issuance, common
stock, preferred stock
What are cash outflows from financing activities? - ANSWER--retirement of debt,
common stock/preferred stock
-payment of cash dividend
What are cash outflows from investing activities? - ANSWER--purchase of plants and
equipments
-long-term investments
What are the three financial statements? - ANSWER--balance sheet, income statement,
statement of cash flows
What are the three sources of sort-term finance used by a company? - ANSWER--trade
credit
-bank overdraft
-unsecured bank loan
What is trade credit? - ANSWER--agreement between buyer and seller of goods where
the buyer will buy the goods on credit and repay the amount of cash at a later date
What is a bank overdraft? - ANSWER--allowing firms to withdraw more cash than is in
the bank's account which is later repaid with interest
What is an unsecured bank loan? - ANSWER--bank loan where no collateral is required
by individual/business entity
What is net working capital? - ANSWER-Net Working Capital is current assets minus
current liabilities. It is a measure of a company's ability to
pay off its short-term liabilities with its short-term assets. A positive number means they
can cover their
short-term liabilities with their short-term assets. A negative number indicates that the
company may
have trouble paying off its creditors, which could result in bankruptcy if cash reserves
are insufficient.
Questions with Verified Answers
What are the parts of the cash flow statement? - ANSWER--Cash flow from Operating
Activities
-Cash flow from Investing Activities
-Cash flow from Financing Activities
What are cash inflows from financing activities? - ANSWER--debt issuance, common
stock, preferred stock
What are cash outflows from financing activities? - ANSWER--retirement of debt,
common stock/preferred stock
-payment of cash dividend
What are cash outflows from investing activities? - ANSWER--purchase of plants and
equipments
-long-term investments
What are the three financial statements? - ANSWER--balance sheet, income statement,
statement of cash flows
What are the three sources of sort-term finance used by a company? - ANSWER--trade
credit
-bank overdraft
-unsecured bank loan
What is trade credit? - ANSWER--agreement between buyer and seller of goods where
the buyer will buy the goods on credit and repay the amount of cash at a later date
What is a bank overdraft? - ANSWER--allowing firms to withdraw more cash than is in
the bank's account which is later repaid with interest
What is an unsecured bank loan? - ANSWER--bank loan where no collateral is required
by individual/business entity
What is net working capital? - ANSWER-Net Working Capital is current assets minus
current liabilities. It is a measure of a company's ability to
pay off its short-term liabilities with its short-term assets. A positive number means they
can cover their
short-term liabilities with their short-term assets. A negative number indicates that the
company may
have trouble paying off its creditors, which could result in bankruptcy if cash reserves
are insufficient.
