Financial Management

171. Canadian exporters accounted for what percentage of Canada's total production of goods and services in 1997:

1. 15%
2. 25%
3. 35%
4. 50%

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172. The forward rate is:

1. unrelated to the foreign exchange rate
2. the rate of exchange for future delivery
3. the rate of exchange for immediate delivery
4. the "black market" exchange rate

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173. Political risk exposure may be minimized through all of the following except:

1. joint ventures with local entrepreneurs
2. joint ventures with firms from the countries
3. fully owned foreign subsidiaries
4. obtaining insurance in advance

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174. A main benefit to the corporate form of organization is:

1. double taxation of corporate income
2. simplicity of decision making and low organizational complexity
3. limited liability for the corporate shareholders
4. a major management role exists for the firm's owners

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175. The statement of cash flows:

1. measures changes in net income over time
2. the receipt and disbursement of funds of the firm
3. the assets of the firm and the means by which they are financed
4. emphasizes the critical nature of the firm's cash flows

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176. The current cost method of financial reporting takes inflation into account and has the greatest impact on:

1. the valuation of accounts receivable and marketable securities
2. inventory and plant and equipment
3. current assets
4. the determination of dividend policy

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177. To the banker/creditor, the most important ratio group is:

1. asset utilization
2. profitability
3. liquidity
4. debt utilization

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178. All of the following are primary considerations for cash payments except:

1. material costs
2. labour and overhead costs
3. receivable receipts
4. disbursements for general & administrative expenses

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179. If management of an aggressive firm is apprehensive about economic conditions:

1. a highly leveraged approach should be maintained
2. a conservative approach should be implemented
3. the use of leverage should be tailored to the desired level of risk
4. the attitude of the firm has no impact

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180. A high degree of financial leverage:

1. is a sign of astute financial management
2. will always decrease the cost of financing for the firm
3. will result in an increase of the firm's overall value in all cases
4. may increase the firm's risk and drive the price of the shares down

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