Business Finance Third Quarterly Exam Reviewer

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23 Questions

What is the primary objective of cash management?

Maintaining an optimal level of cash for daily operations

Which aspect of a company is measured by the Cash Conversion Cycle?

Time to convert inventory into cash

What is the primary reason for prioritizing the collection of receivables?

Quickly collecting owed money without losing customers

How does an ABC Inventory system assist a company?

By prioritizing inventory safeguarding based on value

What does a positive Net Working Capital indicate about a company?

It has more current assets than current liabilities

What is the key aspect of accounts receivable management influenced by the use of credit scoring?

Credit selection process

What is the primary goal of financial management?

Maximize shareholder wealth

Who is directly responsible for overseeing a company's financial operations?

Financial Manager

What is the role of shareholders in financial management?

Electing the Board of Directors

Which market would a company most likely go to for issuing new securities to raise funds for a long-term project?

Capital market

What category do financial instruments fall into based on their types?

Debt Instruments and Equity Instruments

Which is NOT a step in the financial planning process?

Evaluating market trends

What is the primary objective of credit cooperatives according to the text?

To help improve the quality of life of its members through financial services.

Which type of financing does the text specifically recommend for business owners looking to purchase new machinery for expansion?

Long-term loans from banks or credit cooperatives.

What is the key reason entrepreneurs may prefer loans from credit cooperatives over commercial banks?

Credit cooperatives have more favorable terms, such as lower interest rates based on membership and community involvement.

Which of the following is not included in the Cash OutFlows section of the Simplified Cash Flow Statement for Tech Solutions?

Taxes Paid

What is the Net Cash Flow for Tech Solutions according to the Simplified Cash Flow Statement?

$90,000

What is the primary purpose of a sales budget in financial planning?

To estimate future sales revenue based on internal and external information

Which of the following is an example of determining contingency plans in financial planning?

Creating a plan in anticipation of a potential economic downturn

What is the most significant factor contributing to the change in the ending cash balance for Amelia's laundry shop, given a 25% increase in collections and no change in expenses?

Increase in collections from sales

If XYZ Merchandising expects a 10% increase in unit sales per quarter, and the forecasted sales for the 1st quarter are 400 bags, what is the expected number of bags to be sold in the 2nd quarter?

440

Which of the following is NOT a purpose of a sales budget in financial planning?

Determining the required production capacity

Which of the following financial planning activities involves 'evaluating whether to increase investment in new technology or allocate more funds to marketing'?

Understanding specific goals related to sales and technology

Prepare for your Business Finance exam with this comprehensive reviewer covering key concepts like shareholder wealth maximization, financial manager roles, shareholder influence, and financing decisions. Test your knowledge on financial management principles and investment evaluation.

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