Financial management final exam questions and answers

BAM 513 Text: Financial Management: Concepts and Applications 1st Edition, 2015 ISBN-13: 978-0-13-293664-4 Author(s): Stephen Foerster Publisher: Pearson 925 North Spurgeon Street, Santa Ana, CA 92701 Phone: 714-547-9625 Fax: 714-547-5777 www.calcoast.edu 06/16 Final Examination Financial Management All rights reserved. No part of this may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system without written permission, except for the inclusion of brief quotation in review. Copyright © 2016 by California Coast University BAM 513 Financial Management Final Examination Multiple Choice Questions (Enter your answers on the enclosed answer sheet) 1. The creation of value is driven by what factors? a. b. c. d. cash flow and growth growth and risk profitability and growth reducing risk 2. The cash flow cycle: a. b. c. d. describes the flow of cash through a company. illustrates that profits and cash flows are the same. reminds a financial manager that profits are important. focuses on financing activities only. 3. Which of the following goals are in the best long-term interest of shareholders? a. b. c. d. profit maximization risk minimization maximizing the market value of the existing shareholders’ common stock maximizing sales revenue 4. Operating activities are concerned with ______. a. b. c. d. determining whether a company’s assets should be financed with debt or equity managing a firm’s cash budgeting procedures managing a firm’s working capital planning sales of a corporation’s equity capital 5. Ensuring that there is adequate cash to pay the firm’s suppliers is an example of which cash-related activity in the cash flow cycle? a. b. c. d. operating activity profitability activity investing activity financing activity 6. Offering discounts to accelerate the collection of accounts receivables in an example of which cash-related activity in the cash flow cycle? a. b. c. d. 5 operating activity profitability activity investing activity financing activity BAM 513 Financial Management Final Examination 7. In general, financial managers are concerned with which of the following? a. b. c. d. creating economic wealth making investment decisions that optimize economic value making business decisions that optimize economic wealth all of the above 8. A corporate financial manager who is trying to create value for its shareholders ______. a. b. c. d. is not concerned with ethics but rather with writing iron-clad contracts can safely ignore ethics as long as no laws are broken must behave ethically to stay out of jail is concerned with ethics because unethical behavior destroys trust, and businesses cannot function without a certain degree of trust 9. The ability to analyze the company’s strengths and weaknesses is a fundamental concept that a nonfinancial manager should understand in order to ______. a. b. c. d. better better better better assess the current environment in which the firm operates assess future financing requirements understand the role of capital markets in raising long-term funds measure and create value for the shareholder 10. Although the firm has many important stakeholders, the ________ are most important because they are essentially the owners of the firm. a. b. c. d. shareholders investment bankers lenders managers 11. Which of the following statements is/are advantages of incorporation? a. b. c. d. 6 access to capital markets limited liability unlimited life all of the above BAM 513 Financial Management Final Examination 12. A comprehensive nonfinancial size-up should be done ______.