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FIN2603 ASSESSMENT 1 OF 2024 EXPECTED QUESTIONS AND ANSWERS

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THIS DOCUMENT CONTAINS FIN2603 ASSESSMENT 1 OF 2024 EXPECTED QUESTIONS AND ANSWERS. USE IT CORRECTLY AS A GUIDE TO OBTAIN ABOVE 80%

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  • August 2, 2024
  • 6
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
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questionStarted onFriday, 2 August 2024, 9:07 AM
StateFinished
Completed onFriday, 2 August 2024, 9:27 AM
Time taken19 mins 50 secs
Which source of the following funds are the most likely to be relayed on by small rms ?
a.Equity
b.Long-term debt
c.Preference shares
d.Short-term debt
The basic sources of capital for an organisation include the following except ...
a.preference shares.
b.long-term debt.
c.dividends.
d.retained earnings.
A current ratio of 4:1 may indicate that the rm has too much ...
a.cash.
b.all of the above.
c.accounts receivable.
d.inventory.
At the operating breakeven point, ... equals zero.
a.variable cost
b.xed cost
c.earnings before interest and tax (EBIT)
d.net prot after tax
Which one of the following is a major expense associated with issuing new ordinary shares.
a.Underpricing
b.Registration fees
c.Legal fees
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Question 10
Completed.Underwriting fees
In general, a lending institution would consider a decrease in which of the following ratios to be
positive news?
a.Interest coverage
b.Current ratio
c.Debt to total assets
d.Return on assets
... is dened as the difference between the costs of each alternative action that is considered
by the organisation.
a.Incremental cost
b.Indirect cost
c.Sunk cost
d.Direct cost
The primary short-term nancial goal of the rm may be best achieved by ...
a.increasing expenses in order to reduce the rm’s tax liability.
b.accelerating cash inows and delaying cash outows.
c.maximising revenue and minimising expenses.
d.minimising the cost of capital and maximising the internal rate of return (IRR).
A rm can best improve its return on equity (ROE) by increasing the ...
a.asset turnover and nancial leverage.
b.net prot margin, asset turnover and nancial leverage.
c.sales and decreasing expenditure.
d.net prot margin.
In the past year a rm received cash from clients amounting to R10 500. The rm paid creditors
and employees an amount of R3 700. Interest paid amounted to R1 500. No dividends were paid
out. The rm paid normal tax amounting to R700. The cash ow from operations amount to ...

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