Financial Management

611. Financial decisions involve ______________.

1. Investment, financing and dividend decisions
2. Investment sales decisions
3. Financing cash decisions
4. Investment dividend decisions

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612. Greater the size of a business unit ______________ will be the requirements of working capital

1. larger
2. lower
3. no change
4. fixed

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613. Financial risk arises due to the

1. variability of returns due to fluctuations in the securities market
2. changes in prevailing interest rates in the market
3. leverage used by the company
4. liquidity of the assets of the company

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614. Retained earnings are

1. An indication of a company's liquidity
2. The same as cash in the bank
3. Not important when determining dividends
4. The cumulative earnings of the company after dividends

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615. Traditional approach confines finance function only to ______________ funds.

1. Raising
2. Mobilising
3. Utilising
4. Financing

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616. The statement of cash flows will not report the

1. amount of checks outstanding at the end of the period
2. sources of cash in the current period
3. uses of cash in the current period
4. change in the cash balance for the current period

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617. Investing activities include

1. collecting cash on loans made
2. obtaining cash from creditors
3. obtaining capital from owners
4. repaying money previously borrowed

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618. Of the items below, the one that appears first on the statement of cash flows is

1. Non cash investing and financing activities
2. net increase (decrease) in cash
3. cash at the end of the period
4. cash at the beginning of the period

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619. Which of the following would not be an adjustment to net income using the indirect method?

1. Depreciation Expense
2. An increase in Prepaid Insurance
3. Amortization Expense
4. An increase in Land

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620. Banks generally prefer Debt Equity Ratio at:

1. 1:1
2. 1:3
3. 2:1
4. 3:1

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