What are the objectives of financial management?

provide the business with people who have acquired skills

How does purchasing inventory on credit affect the financial equation?

Increase in liabilities and an increase in assets

A worker and a manager are using mediationto resolve a dispute. Which best describes mediation?

A neutral third party assisting both parties to resolve

Which one of the following is a disadvantage of using personal savings as a source of finance?

The amount available might not be sufficient

A gearing ratio of less than 1:1 indicates:

A business not using its capacity to borrow funds to expand

Two important aspects of fi nancial planning includ

profitability management and cash-flow management

The two main ways to calculate efficiency are:

Expense ratio and accounts receivable turnover ratio

A financial audit is the:

independent check of the accuracy of $ records & procedure

Depreciation is best described as:

The fall invalue of a fixed asset

Which of the following indicates the effectiveness of a firm’s credit policy?

Accounts Receivable Turnover Ratio

In what way is the concept of short-term different from long-term?

Short Term is within 12 months, Long Term is over a year

Current assets/current liabilities

Which three ratios determine profitability?

Gross profit ratio, net profit ratio and return on equity

the selling of accounts receivable for a discounted price

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HSC Finance

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Questions 28

Answers

1
Which of the following fi nancial ratios helps determine a business’s level of gearing?
Debt to equity ratio
Expense ratio
Return on owners’ equity ratio
Net profit ratio
2
What are the objectives of financial management?
provide the business with people who look good
provide the business with people who have acquired skills
provide the business with people to work for them
provide the business with people to solve conflict
3
How does purchasing inventory on credit affect the financial equation?
Increasing liabilities and a decrease in owner’s equity
Increase in liabilities and a decrease in assets
Increase in liabilities and an increase in owner’s equity
Increase in liabilities and an increase in assets
4
A worker and a manager are using mediationto resolve a dispute. Which best describes mediation?
A judge hearing the dispute incourt and making a decision
A neutral third party assisting both parties to resolve
The worker and manager meetingalone to resolve the dispute
Both parties attending a conference to reach an agreement
5
Which of the following financial ratios helps determine a business’s level of gearing?
Expense
Debt to equity
Return on owners equity
Net Profit
6
Which one of the following is a disadvantage of using personal savings as a source of finance?
The money will not have to be repaid
The money is instantly available
The amount available might not be sufficient
No interest will have to be paid
7
In acash flow statement the Net In/Out flow is calculated using the formula:Revenue – Payments
False
True
8
Liquidity is determined by
Debt to Equity Ratio
Working Capital Ratio
Accounts Receivable Turnover Ratio
Gross Profit Ratio
9
What is a budget?
Cheap Car Insurance
Financial plans for the future
Amount of money a business has
Certain amounts of money available to spend
10
Which of the following indicates the effectiveness of a firm’s credit policy?
Expense ratio
Current ratio
Accounts Receivable ratio
Net profit ratio
11
The break even point is where a firm ismaking zero profit
True
False
12
Two strategies for managing working capital include
factoring and selling
leasing and marketing
inventory control and selling
leasing and factoring
13
A gearing ratio of less than 1:1 indicates:
A business with liquidity issues.
A business with a cash flow problem
A business not using its capacity to borrow funds to expand
A business in trouble
14
Two important aspects of fi nancial planning includ
cash-flow management and accounts management
account management and staff management
profitability management and staff management
profitability management and cash-flow management
15
The two main ways to calculate efficiency are:
Net profit ratio and gross profit ratio
Return on owner’s equity and debt to equity ratio
Expense ratio and accounts receivable turnover ratio
Current ratio and debt to equity ratio
16
OzJuice has a contract with an overseassupplier for purchases at a set exchange rate for $US.
Hedging
Bill of exchange
Overseas borrowing
Insurance
17
What is not part of the income statement?
Gross Profit
Assets
Expenses
COGS
18
Which source of finance is most suitable forbuying property?
Share Issue
Mortgage
Bank Loan
Overdraft
19
A business employsexternal contractors to provide payroll services. Which term describes this?
Outsourcing
Diversification
Vertical Integration
Strategic Alliance
20
The price of one currency in terms of another is known as:
Capital
Income Tax
Cash Flow Forecast
Exchange Rate
21
A financial audit is the:
a stocktake of inventory
a review of all financial statements since it started
independent check of the accuracy of $ records & procedure
a review of the business’s fi nances by the govt
22
Depreciation is best described as:
The fall in share value
The fall invalue of a fixed asset
The same as appreciation
The rise in value of a fixedasset
23
Which of the following indicates the effectiveness of a firm’s credit policy?
Net Profit Ratio
Expense ratio
Accounts Receivable Turnover Ratio
Current Ratio
24
In what way is the concept of short-term different from long-term?
Short Term aims to make the business shorter
Short Term wants to make the business better quicker
Short Term isn't the same as Long term
Short Term is within 12 months, Long Term is over a year
25
The current ratio is
Debt/equity
Current assets/current liabilities
Accounts receivable/sales
Total assets/total liabilities
26
Which three ratios determine profitability?
Gross profit ratio, net profit ratio and return on equity
Return on equity, expense ratio, working capital ratio
Net profit ratio, acc rec turnover & workingcapital ratio
Net profit ratio, return on equity and debt to equity ratio
27
Which one of the following is an example of a short-term source of finance?
Overdraft
Venture capital
Share capital
Loan from bank
28
What is factoring?
the selling of accounts receivable for a discounted price
document ordering the payment of a certain amount of money
a loan secured by the property of the borrower
a loan for a set period of time

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