which of the following are examples of financial objectives that a company might choose to pursue?
which is not one of the 'three es' of value for money?
in the context of managing performance in not for profit organisations, which of the following definitions is incorrect?
what three broad types of decision does financial management involve? a.investment decisions b.financing decisions c.operating decisions d.dividend decisions
tick which are stakeholder groups for a company.
the definition of financial management is the management of the finances of an organisation in order to achieve the financial objectives of the organisation.
the main financial objective that the theory of company finance assume that a business organisation has is to maximise the wealth of the company's board directors and managers.
if earnings per share fall from one year to the next, so will the level of idends.
return on capital employed = profit after interest and tax / capital employed
goal congruence is accordance between the objectives of agents acting within an organisation.
which of the following factors can not influence the level of exchange rates?
what is the situation called when there is only one firm, the sole producer of a good, which has no closely competing substitutes?
what are likely to be the main aims of a government's economy policy?
what are the reasons for government intervention in markets？
a government's fiscal policy is concerned with taxation, borrowing and spending and their effects on the economy. monetary policy is concerned with money and interest rates
a high interest rate attracts foreign investment, thus increasing the demand for the currency. the exchange rate rises as a result.
externalities are positive effects on third parties resulting from production and consumption activities.
corporate governance is the system by which companies are directed and controlled.
which of the following is not a financial intermediary?
which of the following types of investment carries the highest level of risk?
for short-term borrowing, a company will go to the capital markets.
stock exchange is a money market.
if an indian company borrows us dollars in australia, the loan is known as an eurocurrency loan.
1 which of the following is the most likely to be a symptom of overtrading?
which of the following statements best defines the current ratio?
which is the working capital requirement of a company with the following average figures over a year? inventory 3,750 trade accounts receivable 1,500 cash and bank balances 500 trade accounts payable 1,800
that a company with excessive investment in working capital is over-capitalisation?
that company trying to support too large a volume of trade with the capital resources at its is disposalovertrading?
which of the following is a disadvantage to a company of using a factor for its accounts receivable?
which of the following does not determine the amount of credit offered by a supplier?
if a customer decided to pass up the chance of a cash discount of 1% in return for reducing their average payment period from 70 to 30 days, what would be the implied cost in interest per annum?
the basic eoq formula for inventory indicates whether bulk discounts should be taken advantage of.
pb co uses 2,500 units of component x per year. the company has calculated that the cost of placing and processing a purchase order for component x is $185, and the cost of holding one unit of component x for a year is $25. the economic order quantity (eoq) for component x is
which of the following is most likely to reduce a firm's working capital?
funds from the issue of share capital should be included in a cash flow forecast?
revaluation of a non-current asset should be included in a cash flow forecast?
receipts of idends from outside the business should be included in a cash flow forecast?
depreciation of production machinery should be included in a cash flow forecast?
if a machine with annual running costs of $100,000 was erted from producing output selling for $50,000 to producing a special order worth $70,000, what would be the relevant costs of what has happened?
if a machine with annual running costs of $100,000 was erted from producing output selling for $50,000 to producing a special order worth $70,000, what would be the net income
the return on capital employed method of investment appraisal uses accounting profits before depreciation charges.
the financial benefits of a new investment consist of the increased sales revenues it generates.
one reason that capital expenditure may be incurred is to maintain the earning capacity of existing non-current assets.
for a certain project, the net present value at a discount rate of 15% is $3,670, and at a rate of 18% the net present value is negative at ($1,390). what is the internal rate of return of the project?
which of the following items are not included in the cash flows when determining the net present value of a project?
the perpetuity formula is annual cash flow/discount rate.
the advantages of the dcf method of project appraisal over other appraisal methods include: taking account of the time value of money, using all cash flows relating to a project and allowing for the timing of cash flows.
the nominal cost of capital is 11%. the expected annual rate of inflation is 5%. what is the real cost of capital?
red co is considering the purchase of a machine for $2,190,000. it would be sold after four years for an estimated realisable value of $790,000. by this time tax-allowable depreciation of $1,450,000 would have been claimed. the rate of tax is 30%. what is the cash flow arising as a result of tax implications on the sale of the machine at the end of four years?
tax-allowable depreciation is used to increase taxable profits, and the consequent reduction in a tax payment should be treated as a cash payment arising from the acceptance of a project.
when the plant is eventually sold, the difference between the sales price and the reducing balance amount will be treated as a taxable profit if the sales price exceeds the reducing balance, and as a tax-allowable loss if the reducing balance exceeds the sales price.
the relationship between the nominal rate of return, the real rate of return and the rate of inflation is (1 nominal rate) = (1 real rate) ´ (1 inflation rate).
the examples of uncertain independent variables on which the npv of a project may depend include:
managers can reduce risk in which way ?
sensitivity ysis allows for uncertainty in project appraisal by assessing the probability of changes in the decision variables.
expected values can help an accountant evaluate the range of possible net present value outcomes.
the certainty-equivalent approach is where expected cash flows are converted to riskless equivalent amounts.
simulation models constructed by assigning a range of random number digits to each possible value of each of the uncertain variables.
the net present value of the costs of operating a machine for the next three years is $10,724 at a cost of capital of 15%. what is the equivalent annual cost of operating the machine?
why hard capital rationing may occur?
hard capital rationing occurs when a restriction on an organization’s ability to invest capital funds is caused by an internal budget ceiling imposed by management.
the best way to find the optimal solution in a situation of single period rationing with inisible projects is to use trial and error and test the npv available from different project combinations.
an inisible project is a project that must be undertaken completely or not at all.
the lessee is responsible for the servicing of a leased asset in the case of an operating lease.
to rank the projects according to their profitability index is the best way to find the optimal solution in a situation of single period rationing with isible projects?
which of the following is least likely to be a reason for seeking a stock market flotation?
which of the following is not true of a rights issue by a listed company?
why a company may seek a stock market listing?
a company has 12% loan notes in issue, which have a market value of $135 per $100 nominal value. what is he coupon rate?
a company has 12% loan notes in issue, which have a market value of $135 per $100 nominal value. what is the amount of interest payable per annum per $100 (nominal) of loan note?
which of the following sources of finance to companies is the most widely used in practice?
a scrip idend is:
a company offers to pay a idend in the form of new shares which are worth more than the cash alternative which is also offered. this idend in the form of shares is called an enhanced scrip idend.
'signalling' in the context of idends policy is the use of idend policy to indicate the future prospects of an enterprise.
what are the main characteristics of all and medium-sized enterprises?
the returns on capital investment must exceed the interest payable on the extra debt used to finance the investment.this condition has to be fulfilled for increased financial gearing to result in increased earnings per share.
business angel financing is direct investment in es by iniduals or all groups of investors.
( ) gearing=total capital employed/prior charge capital
( ) gearing=contribution/profit before interest and tax
（ ）=profit before interest and tax/interest
debt ratio=
which of the following risks can be eliminated by ersification?
when calculating the weighted average cost of capital, which of the following is the preferred method of weighting?
unsystematic risk is measured by beta factors.
what are the main problems in using geared and ungeared betas to calculate a firm's equity beta?
the modigliani and miller theory is based on perfect capital markets which do not exist in the real world.
assuming debt is risk free ba =
which is the most realistic basis for valuing an asset that is to continue to be used in a business?
choose the circumstances in which the shares of an unquoted company might need to be valued.
p/e ratio = share price/eps
the role of the chartist or technical yst in stock markets is to identify shares that are under- or over-valued by calculating the present value of their expected future earnings stream.
the p/e ratio are used when a large block of shares, or a whole business, is being valued.
cum interest prices should always be used in calculations involving debt.
which theory of share price behaviour does the following statement describe? 'the ysis of external and internal influences on the operations of a company with a view to assisting in investment decisions.'
wharton fingers co has just made a public announcement that it plans to launch a new product on to the market that should reduce the volatility of its reported annual profits. on the same day saliva co, a food products manufacturer, has publicly announced that it has withdrawn substantial inventories of its product from its retail customers because of a reported food poisoning incident. if neither of these items of information had been made public before, what effect should they now have on the companies' share prices, assuming that the stock market has semi-strong form efficiency?
the efficient market hypothesis exists in a number of forms that relate to different levels of information processing efficiency. in the semi-strong form of the hypothesis, which one of the following types of information will not influence the share price?
which factors affect share price behavior?
random walk theory states that past share price patterns tend to be repeated.
fundamental ysis theory states that the value of a share is the discounted present value of all.
weak form efficiency states that share prices reflect all information in past share price record.
charti states that a share price can be expected to fluctuate around its 'intrinsic' value.
which of the following is not one of the types of currency risk?
which one of the following is not one of the methods of foreign currency risk management?
which one of the following is not one of the types of foreign currency derivative used to hedge foreign currency risk?
forward exchange rate is an exchange rate set for the exchange of currencies at some future date
the principle of purchasing power parity must always hold
which of the following is not an explanation for a downward slope in the yield curve?
which ones of the following are the types of interest rate derivative used to hedge interest rate risk?
shibor is the rate of interest that applies to wholesale money market lending between london banks
basis risk is where a company has assets and liabilities of similar sizes, both with floating rates but the rates are not determined using the same basis.
forward rate agreements hedge risk by fixing the interest rate on future borrowing
gap exposure is where a firm is exposed to interest rate risk form differing maturities of interest-sensitive assets and liabilities
the net present value of the costs of operating a machine for the next three years is $10,724 at a cost of capital of 15%. what is the equivalent annual cost of operating the machine?
which of the following is not true of a rights issue by a listed company?
which of the following sources of finance to companies is the most widely used in practice?
which of the following risks can be eliminated by ersification?
when calculating the weighted average cost of capital, which of the following is the preferred method of weighting?
which theory of share price behaviour does the following statement describe? 'the ysis of external and internal influences on the operations of a company with a view to assisting in investment decisions.'
which of the following is not an explanation for a downward slope in the yield curve?
which of the following are examples of financial objectives that a company might choose to pursue?
in the context of managing performance in not for profit organisations, which of the following definitions is incorrect?
what is the situation called when there is only one firm, the sole producer of a good, which has no closely competing substitutes?
which of the following types of investment carries the highest level of risk?
which of the following statements best defines the current ratio?
which of the following does not determine the amount of credit offered by a supplier?
which of the following is a disadvantage to a company of using a factor for its accounts receivable?
which of the following is most likely to reduce a firm's working capital?
if a machine with annual running costs of $100,000 was erted from producing output selling for $50,000 to producing a special order worth $70,000, what would be the relevant costs of what has happened?
for a certain project, the net present value at a discount rate of 15% is $3,670, and at a rate of 18% the net present value is negative at ($1,390). what is the internal rate of return of the project?
red co is considering the purchase of a machine for $2,190,000. it would be sold after four years for an estimated realisable value of $790,000. by this time tax-allowable depreciation of $1,450,000 would have been claimed. the rate of tax is 30%. what is the cash flow arising as a result of tax implications on the sale of the machine at the end of four years?
the share price at the beginning of the year 20x5 was $4.00 per share. at the end of the year 20x5, the share price is 4.60. the company just paid a idend of 20 cent per share.calculate the total shareholder return of the company?
zbg has an issued 12% bond, which can be redeemed at par in 6 years’-time. the bond current market price is $105. the company pay tax a rate of 25%.calculate the after tax cost of redeemable debt?
kv co has paid the following idends per share in recent years: year 20x4 20x3 20x2 20x1 dividend ($ per share) 0·360 0·338 0·328 0·311 the idend for 20x4 has just been paid and skv co has a cost of equity of 12%. using the geometric average historical idend growth rate and the idend growth model, what is the market price of skv co shares on an ex idend basis?
zbg plc has annual credit sales of 365million and related and related cost of sales of 260 million. trade receivable days 50days inventory days 60days trade payable days 45days what is the net asset of the company?
the following information has been calculated for a co: trade receivables collection period: 52 days raw material inventory turnover period: 42 days work in progress inventory turnover period: 30 days trade payable payment period: 66 days finished goods inventory turnover period: 45 days what is the length of the working capital cycle?
which of the following statements concerning working capital management are correct? (1) the twin objectives of working capital management are profitability and liquidity (2) a conservative approach to working capital investment will increase profitability (3) working capital management is a key factor in a company’s long-term success
zbg plc has 30 million ordinary shares in issue. the current earning per share is 48 cents. the earning yield is 12% per year. calculate the market value of the company?
4.which of the following are among the main goals of macroeconomic policy? 1.encouraging economic growth. 2.low and stable inflation. 3.achievement of a balance between and imports. 4.encouraging an equitable distribution of income.
what is the cost of $1 irredeemable debt capital paying an annual rate of interest of 7%, and having a current market price of $1.50?
the risk-free rate of return is 8%. average market return is 14%. a share's beta factor is 0.5. what will its expected return be?
a share has a current market value of 120c and the last idend was 10c. if the expected annual growth rate of idends is 5%, calculate the cost of equity capital.
the nominal cost of capital is 11%. the expected annual rate of inflation is 5%. what is the real cost of capital?
if a customer decided to pass up the chance of a cash discount of 1% in return for reducing their average payment period from 70 to 30 days, what would be the implied cost in interest per annum？
pb co uses 2,500 units of component x per year. the company has calculated that the cost of placing and processing a purchase order for component x is $185, and the cost of holding one unit of component x for a year is $25. what is the economic order quantity (eoq) for component x and, assuming a 52-week year,
tkq co has just paid a idend of 21 cents per share and its share price one year ago was $3.10 per share. the total shareholder return for the year was 19.7%. what is the current share price?
which of the following statements are correct? 1 maximising market share is an example of a financial objective 2 shareholder wealth maximisation is the primary financial objective for a company listed on a stock exchange 3 financial objectives should be quantitative so that their achievement can be measured
which of the following statements is correct?
which of the following statements are correct? (1) capital market securities are assets for the seller but liabilities for the buyer (2) financial markets can be classified into exchange and over-the-counter markets (3) a secondary market is where securities are bought and sold by investors
which of the following statements are correct? (1) if a capital market is weak form efficient, an investor cannot make abnormal returns by using technical ysis (2) operational efficiency means that efficient capital markets direct funds to their most productive use (3) tests for semi-strong form efficiency focus on the speed and accuracy of share price responses to the arrival of new information
on a market value basis, gfv co is financed 70% by equity and 30% by debt. the company has an after-tax cost of debt of 6% and an equity beta of 1·2. the risk-free rate of return is 4% and the equity risk premium is 5%. what is the after-tax weighted average cost of capital of gfv co?
which of the following financial instruments will not be traded on a money market?
which of the following are financial intermediaries? (1) venture capital organisation (2) pension fund (3) merchant bank
which of the following government actions would lead to an increase in aggregate demand? (1) increasing taxation and keeping government expenditure the same (2) decreasing taxation and increasing government expenditure (3) decreasing money supply (4) decreasing interest rates
drumlin co has $5m of $0·50 nominal value ordinary shares in issue. it recently announced a 1 for 4 rights issue at $6 per share. its share price on the announcement of the rights issue was $8 per share. what is the theoretical value of a right per existing share?