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FIN 242 TEST 1

Quiz by mustafa mat

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11 questions
Show answers
  • Q1
    Which of the following is least likely to be considered short-term marketable security?
    Short-term corporate debt instruments with a 9-month original maturity.
    An original issue 30-year MGS bond with one-year remaining until final maturity.
    A 90-day Teasury bill.
    An original issue 30-year Telekom bond with one-year remaining until final maturity.
    120s
  • Q2
    Which asset-liability combination would most likely result in the firm's having the greatest risk of technical insolvency?
    Increasing current assets while incurring more current liabilities.
    Increasing current assets while lowering current liabilities.
    Reducing current assets, increasing current liabilities, and reducing long-term debt.
    Replacing short-term debt with equity.
    120s
  • Q3
    Short-term cash flow improvement may not be achieved by
    increasing trade payables
    reducing inventories
    reducing trade receivables
    reducing trade payables
    60s
  • Q4
    Compared to other firms in the industry, a company that maintains a conservative working capital policy will tend to have a
    Higher ratio of current assets to fixed assets.
    Greater risk of needing to sell current assets to repay debt.
    Greater percentage of short-term financing
    Higher total asset turnover
    60s
  • Q5
    Financing a long-lived asset with short-term financing would be
    an example of "low risk -- low (potential) profitability" asset financing.
    an example of "moderate risk -- moderate (potential) profitability" asset financing
    an example of the "hedging approach" to financing.
    an example of "high risk -- high (potential) profitability" asset financing.
    120s
  • Q6
    Actions taken by a firm in maximizing their wealth are the same as actions that most benefit the whole society. in order to achieve these objectives, the action that the firm may take is as follow. i). Firms must concentrate on their customer for better services, so they may increase their sales. ii). Produces products with low cost of production, then it will reach the customer at lower prices. iii). Firms may develop new technologies and products for better choices for consumers. Choose the BEST combination of an answer.
    i) and ii)
    i) and iii)
    i), ii) and iii)
    ii) and iii)
    120s
  • Q7
    Two (2) reasons why the maximization of shareholders' wealth is an appropriate goal for an organization.
    Profit maximization gives no consideration of the time value of money. Shareholders' wealth are aware of the risk factor that occurs in business operations.
    Profit maximization tends to give less consideration to risk in an attempt to maximize profits, and thus faces higher risks in operations. Note that higher risk means higher returns. Shareholder's wealth also focuses the same.
    Profit maximization tends to ignore the owner of the owner's wish to receives a return in the form of dividends. Shareholder wealth also considered the timing of its return for capital gains and dividends.
    Profit maximization tends to be a short-term approach, which is the focus to gain more profit. While shareholder wealth is focused on the impacts of long-term profits.
    120s
  • Q8
    Synergy TT Corporation has an average of inventories of 90 days, and an average collection period of 45 days, and an average payment period for raw materials and labor of 30 days. If the company's annual sales are 4 million and 75 percent of sales are on credit, what is the amount of account receivables?
    RM250,000.00
    RM375,000.00
    RM500,000.00
    RM333,333.33
    300s
  • Q9
    The minimum denomination for a negotiable certificate of deposit at most banks in Malaysia is
    RM10,000
    RM100,000
    RM50,000
    RM1,000,000
    45s
  • Q10
    MYPM Corporation's annual sales are RM200,000, an average of inventories of 40 days. MYPM always make payment to supplier and labor net 25. Their account receivable is RM25,000. Assume that there are 360 days in a year. Calculate the minimum operating cash.
    RM33,333.33
    RM40,000.00
    RM36,666.67
    RM45,000.00
    300s
  • Q11
    The statement of risks below may influence investment in marketable securities. Choose the NOT true statement. i). Default Risk – the issuer cannot pay the interest payment ii). Liquidity Risk – affect the return of assets iii). Inflation Risk – reduce the purchasing power
    ii) and iii)
    iii)
    ii)
    i)
    45s

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