Financial Management – Test Bank

Choose the right answer

- The Financial Analysis Ratio that help the financial manager to assess the ability of
the company to pay its short term liabilities / Obligations.
A. Liquidity
B. Profitability
C. Debt Management
D. Asset Management

- Managers are generally defined as ___.

A. stockholders
B. Agents
C. creditors
D. suppliers

-Financial Manager is responsible for:

A. Book keeping financial data

B. Recording the ledgers
C. Analyzing the statements
D. None of the above

-Accountant’s role is to:

A. Manage the strategy of the company

B. Estimate the risk events
C. Manage the financial decisions
D. None of the above

-Cash flow from operating activities of the company preferred always to be :

A. Positive
B. Negative
C. zero
D. None of the above.
-Cash flow three activities are cash flow from :

A. Operating , financing & investment

B. Net income , operating
C. Operating , investing &Dividends
D. None of the above

-Which of the following balance sheet equations is false?

A. Assets - Liabilities = Shareholders' Equity

B. Assets =
Liabilities +
Shareholders'
Equity
C. C)
D.
E. Assets -
Current
Liabilities =
 Long Term
Liabilities
F. D)
G.
H. Assets -
Current
Liabilities =
Long Term
Liabilities +
Shareholders'
Equity
I. Assets =
Liabilities +
 Shareholders'
Equity
J. C)
K.
L. Assets -
Current
Liabilities =
Long Term
Liabilities
M.D)
N.
O. Assets -
Current
Liabilities =
 Long Term
Liabilities +
Shareholders'
Equity
B. Assets = Liabilities + Shareholders' Equity
C. Assets - Current Liabilities = Long Term Liabilities
D. Assets - Current Liabilities = Long Term Liabilities + Shareholders'
Equity

-Statement of financial position is called:

A. Balance sheet
B. Income statement
C. Cash flow
D. None of the above

-Reserves in the balance sheet means:

A. Funds set aside to pay any future obligations

B. Funds which are required by law
C. They are essential specially in the banks & insurance company
D. All the above

-Provisions in the finance means:

A. Amount of an expense
B. Represents the profit of the company
C. It can interchangeably used with the reserves
D. None of the above

-Balance sheet is always presented as follows:

A. ‘As of ’ the period

B. ‘End of ‘ the period
C. Middle of the period
D. None of the above
-Stakeholders that need to view the company financial statements.

A. Stock holders
B. Regulators
C. Tax Agency
D. All the above

-One of the Corporation advantages:

A. Ease in formation
B. Unlimited Life
C. No choices for financing
D. None of the above .

- Return on Assets can ( not must ) be replaced by :

A. ROA
B. ROI
C. Net Profit / Total Assets
D. All the above

-Commercial Bank plays the role of :

A. Intermediary that accept deposits and grant loan

B. Help the companies to issue Shares & Bonds
C. Bank who trade all his portfolio in risky products
D. Doesn’t deal with customers

- Investment Banks is:

A. Help the companies to issue shares & Bonds

B. Plays the role of market consultant
C. Render Brokerage Services
D. All The above

-Financial Products can be :

A. Banks Certificate of Deposits

B. Bonds
C. Shares
D. All the above
Put (True) or (false) with detailed justification to the false statement

1-Financial Management concerns with one type of business form. False

2-Balance sheet & Income statements are the main financial statements & both are
snapshot of firm’s financial position at one point of time. False

3- Net profit is (Retained earnings – dividends) + Current assets. False

4-Co-integration of the financial statements is to properly analyze each statement

solely. False

5- Bookkeeping of financial transactions & preparation of the statements is done by

the financial analyst not the Accountant. False

6-From the financial point of view, company Profitability are more important than its
Profits .True

7- Profitability analysis gives the same results of the liquidity analysis, False

8-Co-integration of the financial statements can be done without obtaining the income
statement. False

9- If a corporation declares the bankruptcy , this means that there is a personal .legal
and financial liability on its share holders. False

10-Technology has significant effects on finance True

11- Bond is a corporate debt issued by the company to be traded in the financial
markets. True

12- Stock is an ownership issued by the company to be traded in the financial

markets. True

13- Financial Managers don’t use the financial statements in analyzing the financial
position of the company. False
14- There is no relationship between the financial statements of the company. False

15- One of the main purposes of (Cash flow statement )is to calculate the Cash
amount of the company. True

16- Syndication loans for a bank is to grant the total amount of the facility to the
customer that has shortage and needs the money. True

17- Best way of financing the short term assets of the company is depending on the
mortgage financing. False

18- Working capital is the relationship between the long term assets and their
financing from long term sources. False

19- The Assets are the Usage of the finance of the company. True

20- Money market is the capital market. False

Complete the following:

 The long term debt and equity instruments are traded through …capital……
markets.

 It is financial institution that is licensed from the regulator to receive deposits

and grant loans and it is the main lifeblood of the economy, It is called …
commercial banks…

 When principle hires another party to act on his behalf, this is called ……
Agency Relation ship…..

 The main difference between …Common Stock….. and ……Preferred

Stocks…stocks that the first has voting power to shareholders and the second
has priority in taking his rights in case of bankruptcy
.
  The financial manager main target is increasing ……Value……….of the
company.

Best of Luck 

Mohamed EL Semary