FAC1502 Assignment 4 Semester 2 2024 (100%) October 2024
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Course
FAC1502 A
Institution
FAC1502 A
FAC1502 Assignment 4 Semester 2 2024 (100%)
October 2024
FAC1502
1. What is the primary goal of financial management?
o A) Maximizing sales
o B) Maximizing profit
o C) Maximizing shareholder wealth
o D) Minimizing costs
Answer: C
Rationale: The primary goal of financial management is to m...
FAC1502 Assignment 4 Semester 2 2024 (100%)
October 2024
FAC1502
1. What is the primary goal of financial management?
o A) Maximizing sales
o B) Maximizing profit
o C) Maximizing shareholder wealth
o D) Minimizing costs
Answer: C
Rationale: The primary goal of financial management is to maximize shareholder wealth.
2. Which of the following is considered a current asset?
o A) Land
o B) Inventory
o C) Bonds payable
o D) Accumulated depreciation
Answer: B
Rationale: Inventory is a current asset because it is expected to be converted to cash
within one year.
3. What does the debt-to-equity ratio measure?
o A) Company profitability
o B) Company liquidity
o C) Company leverage
o D) Company efficiency
Answer: C
Rationale: The debt-to-equity ratio measures a company's financial leverage.
4. Which financial statement provides information about a company’s revenues and expenses
over a specific period?
o A) Balance sheet
o B) Cash flow statement
, 2|Page
o C) Income statement
o D) Statement of shareholders' equity
Answer: C
Rationale: The income statement summarizes revenues and expenses to show profit or
loss.
5. What is the purpose of a cash flow statement?
o A) To show profitability
o B) To show changes in equity
o C) To show cash inflows and outflows
o D) To show financial position at a point in time
Answer: C
Rationale: The cash flow statement details cash inflows and outflows, helping assess
liquidity.
6. Which of the following is NOT a component of the working capital formula?
o A) Current assets
o B) Current liabilities
o C) Long-term debt
o D) Cash
Answer: C
Rationale: Long-term debt is not part of working capital, which is calculated as current
assets minus current liabilities.
7. What does the term 'liquidity' refer to?
o A) The ability to generate profit
o B) The ability to pay short-term obligations
o C) The ability to increase market share
o D) The ability to invest in long-term assets
Answer: B
Rationale: Liquidity refers to a company's ability to meet short-term obligations.
8. What is the time value of money?
o A) Money is more valuable in the future than now.
o B) Money available today is worth more than the same amount in the future.
o C) The value of money decreases over time.
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