Management Consultancy Finals

True/False
Indicate whether the statement is true or false.

__T__ 1. A CPA after presenting his report in a management services engagement may accept further
engagement to render advice and technical assistance in the implementation of his
recommendation.

___F_ 2. A non-CPA is prohibited under the revised accountancy law to engage in professional
management advisory services practice.

___F_ 3. Documentation is not as essential in an MAS engagement as it is in audit engagement.

__F__ 4. Due professional care may or may not be exercised in the performance of a management
advisory service engagement

__F__ 5. Before accepting an engagement, a practitioner is to inform his client of some if not all of the
significant matters related to the engagement

__T__ 6. Service delivery is the application of consulting skill and without this, even high levels of
knowledge and understanding cannot be put to effective use for clients.

__T__ 7. Management advisory services of an accounting firm may be rendered by a man who is
primarily an accountant or by a specialist.

___F_ 8. The effect of compensating balances is to decrease commercial paper is correct

___F_ 9. Cost Capital Determination Is about selecting projects in a way that helps a company
completing them within the given financial resources.

__F__ 10. Financial Leverage is the degree to which a firm uses fixed costs in its production processes.
Higher fixed costs are generally associated with more highly automated, capital-intensive
firms and industries.

___F_ 11. Capital rationing refers to a systematic approach to financing business activities through a
combination of equities and liabilities. Competing capital structure theories explore the
relationship between debt financing, equity financing and the market value of the firm.

__T__ 12. A requisite to the successful conduct of the problem-solving process is a harmonious relationship with the
client

__T__ 13. Community involvement offer professionals the opportunity to repay their communities and meet fellow
professionals and future business contacts.

Multiple Choice
Identify the choice that best completes the statement or answers the question.

__D__ 14. Which of the following statements is false?

a. New developments and transformations could result to management consulting becoming
more specialized.
b. It is predicted that a consultants orientation will be towards being an insight-provider,
creator and sharer of information.
c. As a consultant grows in number, they tend to develop more sophisticated means of
marketing their services.
d. Because of the more stringent and technical qualifications required in management
 consulting, more notso-bright graduates of accounting, management and business
schools will be attracted to careers in this area.

__C__ 15. Most definitions of consultancy would include such services related to the following except
a. Information Technology
b. Corporate Strategy
c. Legal Advisory
d. Systems and Operations Management

__C__ 16. Which of the following statements is incorrect?

a. A consultant is hired because generally he is considered independent, objective and
detached to the problems faced by the organizations.
b. An experienced management consultant possesses special knowledge, skills and a
variety of personal attributes that make him the most desirable candidate to undertake
management consulting engagement involving his area of expertise.
c. The use of consultants is generally much more expensive to the company than hiring full
time new managers and employees to provide professional advisory services.
d. A consultant is considered a catalyst for change that can assist management in the
administration of the business entity.

__D__ 17. The actual output of a consulting engagement centers on providing the business organization with the
following except
a. Valuable information
b. Support for internal argument
c. Support in acquiring a critical resource
d. Support for contesting tax assessments by the BIR

____B 18. Which of the following statements is false?

a. CPAs have historically been business consultants to their clients.
b. Management consultants are licensed and regulated by laws.
c. The primary purpose of management consultancy is to improve the firms use of its
capabilities and resources to achieve its objectives.
d. Management consultancy services are provided not only to big business enterprises but
also to mediumsize and small companies.

__D__ 19. Management consultancy services are provided not only to big business enterprises but also to mediumsize
and small companies.
a. Management consultancy
b. Income tax work
c. Accounting system design and installation
d. Technical Development

_D___ 20. It is a career structure in consulting firm where it needs to have 5-10 years of consulting experience.
a. Analyst
b. Consultants
c. Senior Consultants/Managers
d. Business Development Managers

__C__ 21. They are involved in some large, complex consulting projects, and they are the one responsible for building
relationship with their clients
a. Consultants
b. Analyst
c. Business Development Managers
d. Directors / Partners
__B__ 22. It is described as independent and objective advisory service provided by qualified persons to clients in order
to help them identify and analyze management problems or opportunities
a. Management Advisory Services
b. Management Consulting
c. Accounting Firms
d. Outsourcing Firms

__A__ 23. It consists of that form of management advisory or consulting service in which an analytical approach and
process is applied in a study or project.
a. Engagement
b. Technicality
c. Consulting
d. Processing Approach

_B___ 24. Most definitions of consultancy would include the following, EXCEPT
a. Corporate strategy
b. Strategic management
c. Consulting and System Integration
d. Outsourcing

___B_ 25. The following are classifications of problem, except:

a. Corrective
b. Service delivery area
c. Progressive
d. Opportunistic

__C__ 26. A problems that involves a situation in which conditions have worsened
a. Opportunistic
b. Progressive
c. Corrective
d. Techniques

___C_ 27. It refers to the location of the engagement

a. Industry or Nature of Organization
b. Application of the Analytic Process
c. Geographical Areas
d. Techniques and Methodologies

___B_ 28. A way of carrying out a particular task

a. Methodologies
b. Techniques
c. Geographical Areas
d. Industry or Nature Organizations

_D___ 29. The following are the types of consultancy, except:

a. Business planning and development (Project feasibility studies)
b. Internal audit services
c. Information systems consulting
d. Nature of the problem

__A__ 30. It is the complete redesign of a process with an emphasis on finding creative ways to accomplish an objective
a. Reengineering
b. Business process
c. Methodologies
d. Marketing Research
__A__ 31. A type of marketing research that provides answers to questions when those answers need to be expressed
in statistical or numerical form.
a. Quantitative Research
b. Qualitative Research
c. Secondary Research
d. Primary Research

B____ 32. A type of marketing research that provides answer to questions that do not demand a quantified answer.
a. Quantitative Research
b. Qualitative Research
c. Secondary Research
d. Primary Research

_B___ 33. An audit which is conducted to evaluate the effectiveness and efficiency of operations.
a. Internal
b. Operational
c. External
d. None of the above

___A_ 34. ________ Auditing is an independent, objective assurance and consulting activity design to add value and
improve an organizations operations.
a. Internal
b. Operational
c. External
d. None of the above

__B__ 35. The MAS engagement that involves providing assistance to management in relation to
planning, controlling and decision making is
a. Financial Management
b. Management Accounting
c. Taxation
d. Financial Accounting

__B__ 36. These involve services related to mergers, acquisitions, divestitures, joint ventures, spin-off
and strategic alliance.
a. Strategic risk management
b. Due diligence audit
c. Compliance risk management
d. Financial risk management

___D_ 37. The following are among the ground rules that a consultant should observe in providing
support for internal arguments in a client except
a. Introduce and explore options which reconcile different positions in a win-win way
b. Be sensitive to who is supporting different positions in the organization
c. Build rapport with the client about the strengths and weaknesses of his argument
d. Provide the client manager information and insights that will strengthen his position
against his adversaries in the organization

__D__ 38. The following are managerial accounting-related consultancy services that a CPA may\
provide except
a. Variance Analysis
b. Financial Statement Services
c. Cost Analysis for Managerial Decision
d. Evaluation of Working Capital Requirements of the Business Entity
__D__ 39. The following are areas of consideration in determining the scope of services that a CPA may
perform except
a. Independence
b. Competence
c. Requirements for specialization
d. Range of fees that the consultant will earn in each type of service

___C_ 40. These are enterprises involved in varied business endeavors such as merchandising,
manufacturing, financial services and are potential consultancy clients.
a. Professional association
b. Not-for-profit nongovernmental organizations
c. Privately-owned business firms
d. Government agencies

___D_ 41. Services rendered to troubled businesses by emphasizing on the implementation, rationalization
and recovery programs designed to rebuild value
a. Dispute analysis and investigation
b. Computer risk management
c. Valuation services
d. Business recovery services

_D___ 42. This engagement involves the review of compliance with regulatory requirement and ethical
conduct standards
a. Strategic risk management
b. Financial risk management
c. Operational and systems risk management
d. Compliance risk management

___A_ 43. A personal attribute of consultant that refers to his/her ability to view situations in perspective
and to take action needed on a calm and controlled basis without being diverted from a sound,
logical and ethical course by outside pressure.
a. Psychological maturity
b. Courage
c. Physiological equilibrium
d. Judgment

___B_ 44. Ability to define objectives and outcomes is an example of a consultants

a. Relationship-building skills
b. Project management skills
c. Analysis skills
d. Interpersonal skills

__D__ 45. Project management skills require the following except

a. Ability to define objectives and outcomes
b. Ability to develop formal plans
c. Ability to sequence and prioritize tasks
d. Ability to accept numerous clients that will enable him/her to generate more income \
thereby spreading himself/herself too thinly

__C__ 46. A personal attribute of a consultant that refers his/her ability to anticipate human reactions to
differing situations and establish friendly relations and mutual confidence with people at all
levels and to recognize and respect the rights of others.
a. Integrity
b. Capacity for logical thinking and reasoning
c. Empathy
d. Ambition
__B__ 47. Ability of the consultant to focus and direct the individuals in an organization in a way that
brings the whole organization benefits.
a. Ability to develop selling strategies
b. Ability to demonstrate leadership
c. Ability to work effectively as a team member
d. Ability to build rapport and trust with the client

___B_ 48. According to him, management consultant must possess the four broad areas of skills.
a. Professor J. Owen Cherringtonn
b. Professor J. Owen Cherrington
c. Professor J. Owen Cherington
d. Professor J. Owen Cherringtone

___C_ 49. One of the broad areas of skills that involve the ability to understand and use the following
approach in solving business problems.
a. Technical skills
b. Interpersonal skills
c. Consulting process skills
d. Consulting skillsa

_D___ 50. To attain the highest standards of professionalism, highest levels of performance and meet
public interest requirement, a CPA who provides management consultancy services should
meet the following basic requirements except:
a. Credibility
b. Professionalism
c. Confidence
d. Top of the line and world class facilities.

__D__ 51. To achieve the objectives of the accountancy profession, professional accountants including
those providing management advisory services should observe among others the following
principles except:
a. Integrity
b. Confidentiality
c. Knowledge of up-to-date technical and professional standards.
d. Careful selection of clients to include only those big and financially capable business
entities.

__C__ 52. It is a highly personal characteristic which ensures that practitioners statements of findings
and recommendation are free of intentional distortions or misstatements.
a. Objectivity
b. Independence
c. Integrity
d. Confidentiality

__A__ 53. It is the translation of engagement objectives into a structured set of activities and events
within a targeted time schedule.
a. Planning
b. Supervision
c. Control
d. Implementation

__C__ 54. The ability to identify and define client needs, to utilize the analytical approach and process, to
apply knowledge of the technical subject matter under consideration, to communicate
recommendations effectively and to assist in implementing the recommendations. It is
acquired and maintained through a combination of education and experience.
 a. Due care
b. Professionalism
c. Competence
d. Independence

___C_ 55. This individual is normally responsible for the successful completion of engagements, dealing
directly with the clients and for selling work of consultancy services.
a. Senior managers
b. Senior consultants
c. Partners
d. Supervisors

__D__ 56. Factors that must be considered when defining the target level of competence of management
consultants include the following except:
a. Scope of practice area
b. Client requirement
c. Service variety
d. Investment required

__C__ 57. Before entering a consulting practice, the prospective consultant should conduct market
research to identify opportunities in the market place. This will involve the following except:
a. Study of the listing of actively practicing management consultants
b. Survey of local CPA firms to determine which are offering consulting services
c. News release in Philippine Daily Inquirer about the opening of the consultancy firm
d. Identification of new services that may provide a competitive edge.

___D_ 58. In developing MAS practice, goals and objective should include:
a. desired income level
b. potential clients
c. strategies to obtain clients
d. all of the above

___A_ 59. The primary source of MAS engagements of the CPA.

a. Audit client
b. Individuals
c. Senior Consultants
d. Private Sector

___D_ 60. An engagement program contains the following except

a. Engagement objectives
b. List of manpower required
c. Description of tasks to be accomplished
d. Amount of fees to be earned for each tangible output completed

___D_ 61. The objectives of an engagement program include the following except
a. To facilitate time and efficiency control over personnel assigned to the engagement.
b. To provide a means for arranging, distributing and assigning responsibility for various
segments of an engagement.
c. To provide a means for evaluating whether all segments of the engagement has in fact
been completed.
d. To provide a means of determining exactly how much and when to bill the client.

__B__ 62. Information about product pricing and costing could be easily make available by the
a. Marketing department
b. Production department
c. Personnel department
 d. Accounting department

_A___ 63. Information on types of new products or services with market possibilities are usually provided by the
a. Marketing department
b. Production department
c. Personnel department
d. Accounting department

__D__ 64. Which of the following is generally not considered an effective technique of gathering facts?
a. Interviews
b. Questionnaires
c. Observation
d. Cutoff procedures

__C__ 65. An analysis strategy whereby numbers are combined in order to understand how they relate to each other.
a. Categorization
b. Classification
c. Numerical analysis
d. Correlation

__A__ 66. An analysis strategy whereby data, facts or items are sorted into different groups by virtue of
their features thereby leading to identification of the significance of the information.
a. Categorization
b. Classification
c. Causation
d. Association

__C__ 67. In performing this analysis, the preferable procedure is to begin at the top level and then work
down to the lowest activity level.
a. Unstructured analysis
b. Input/output analysis
c. Structured analysis
d. Decision level analysis

__A__ 68. A fact gathering technique that provides a pictorial representation of a dimension of the clients organization or
of its activities.
a. Charting
b. Document gathering
c. Observation
d. Interview

__B__ 69. Stage where the CPA and the client discuss the proposed professional consulting services.
a. Engagement planning
b. Negotiating the engagement
c. Consulting assignment
d. Implementation

__B__ 70. Solution development phase of the problem-solving process involves the following steps

1. Detailed development of the selected solution.

2. Choice of the preferred solution alternative.
3. Evaluation of solution alternative.
4. Generation of solution alternative.

In what order should the above-listed activities be performed?

a. 1,2,3,4
 b. 4,3,2,1
c. 2,1,3,4
d. 4,3,1,2

__D__ 71. The following can generally conduct a post-implementation evaluation except
a. special audit team selected from among the managers of the client organization.
b. an internal audit team.
c. external team of consultants.
d. independent external audit team.

__B__ 72. What of the following is not belong in Generation of Alternative Solutions?
a. Delphi approach
b. Decision tree approach
c. Brainstorming approach
d. Pattern recognition and matching approach

__A__ 73. Which typically employs one of the mathematical techniques such as linear programming, integral
programming and dynamic programming.
a. Optimizing approach
b. Satisficing approach
c. Rationality approach
d. Delphi approach

___B_ 74. Which of the following is an example of Rationality approach?

a.

b.
 c.

d.

__A__ 75. This involves the determination if the alternative solution can be rendered operational by a specified time
and/or date in order to achieve certain objectives or avoide certain consequences.
a. Scheduling feasibility
b. Operational feasibility
c. Technical feasibility
d. Legal feasibility

_A___ 76. This approach emphasizes experience especially this having very similar characteristics to the problem
situation being investigated.
a. Pattern recognition and matching approach
b. Brainstorming approach
c. Delphi approach
d. SCAMPER approach

___D_ 77. Which of the following is not trie about the Expected Value Computation?
(A) weighting the outcomes for the states of nature by the probabilities of occurrence
(B) adding up the weighted outcomes to obtain the expected value of the payoff for each solution alternative.
(C) choosing the solution alternative having the maximum expected payoff.
a. B
b. C
c. A
d. All statements above are true

__B__ 78. A Project management tool used to schedule, organize, and coordinate tasks within a project
a. Gantt chart
b. Pert diagram
c. Schedule plan
d. Bubble charts
_A___ 79. It is commonly used in project management which is one of the most popular and useful ways of showing
activities (tasks or events) displayed against time.
a. Gantt chart
b. Pert diagram
c. Schedule plan
d. Bubble charts

__D__ 80. These are the important topics to be discussed in an engagement kick off meeting except:
a. Review of the engagement proposal
b. Discussion of the work objectives
c. Project completion date
d. Staffing and project costing

__D__ 81. The administrative framework would normally consist of:

a. One or more client management committees with representatives from the user areas.
b. The top (executive) management.
c. The information processing services department.
d. All of the above.

__B__ 82. These are necessary to keep the project within its time schedule and peso budget.
a. Administrative Control
b. Time Reporting and Analysis Procedures
c. Independent Quality Assurance Reviews

__A__ 83. A checklist that contain a series of questions concerning the quality of work performed
a. Quality Assurance Checklist
b. Independent Reviews
c. Preventive Controls
d. Feedback Controls

__C__ 84. These control establish benchmarks of expected performance

a. Quality Assurance Checklist
b. Independent Reviews
c. Preventive Controls
d. Feedback Controls

__D__ 85. These are generated by measuring actual performance and comparing it with the expected performance
a. Independent Reviews
b. Self-assessment
c. Administrative Controls
d. Feedback Controls

___C_ 86. Planning for the future is called

a. Capital budgeting
b. Working capital management
c. Financial forecasting
d. None of the above

__A__ 87. The first step in developing a pro forma income statement
a. Build a sales forecase
b. Determine the production schedule
c. Determine cost of goods sold
d. None of the above
___B 88. Pro forma statements are ________.
a. Actual
b. Projected
c. A previous years

__D__ 89. The percent of sales method of financial forecasting shoes us the relationship between ________ and
financing needs.
a. Changes in the level of liabilities
b. Changes in the level of assets
c. Changes in debt
d. Changes in the level of sales

___A_ 90. Net working capital is the difference between

a. Current Assets and Current Liabilities
b. Fixed Assets and Fixed Liabilities
c. Total Assets and Total Liabilities
d. Shareholders Investment and cash

___C_ 91. The primary concern of working capital management is the trade-off between
a. Financial risk and probability
b. Interest rate risk and profitability
c. Liquidity risk and profitability
d. Purchasing power risk and cash flow maximization

__A__ 92. Normally, permanent current assets should be financed with long term financing
a. Long term funds
b. Short term funds
c. Borrowed funds
d. Internally generated funds

__C__ 93. Ideally, which of the following types of assets should be financed with long term financing
a. Fixed Assets only
b. Fixed assets and temporary current assets
c. Fixed assets and permanent current assets
d. Temporary and permanent current assets

__C__ 94. Working capital management is primarily concerned with the management and financing of
a. Cash and inventory
b. Current assets and current liabilities
c. Current assets
d. Receivables and payables

_D___ 95. Harry Companys bank requires a compensating balance of 20% on a P100,000 loan. If the
stated interest on the loan is 7%, what is the effective cost of the loan?
a. 5.83%
b. 7.00%
c. 8.40%
d. 8.75%
7000/ (100K - 20K) = 8.75

__D__ 96. A company has just borrowed P2M from a bank. The stated rate of interest is 10%. If the
loan is discounted and is repayable in one year, the effective rate on the loan is approximately
a. 8.89%
b. 9.09%
c. 10.00%
 d. 11.11%
200K/ 2M - 200K = 11.11%

__D__ 97. On January 1, Solar Company received a P300,000 line of credit at an interest rate of 12%
from Standard Bank and drew down the entire amount on February 1. The line of credit
agreement requires that an amount equal to 15% of the loan be deposited into a compensating
balance account. What is the effective annual cost of credit for this loan arrangement?
a. 11.00%
b. 12.00%
c. 12.94%
d. 14.12%
12%/ 100% - 15% = 14.12%

__B__ 98. Is the degree to which a firm uses fixed costs in its production process.
a. Financial Leverage
b. Operating Leverage
c. Capital Structure
d. Contribution Margin

__D__ 99. Which of the following is characteristic of leverage buyouts?

a. Buyouts are usually financed by debt.
b. Some corporate assets are often sold after the buy-out is completed
c. Funds for the buy-out are raised through securities markets
d. All the above are characteristics

__C__100. Which of the following statements is true?

a. Harmonious relationship with the client is not essential in successfully conducting the
problem-solving process in a consultancy engagement
b. There is no need to prepare a written announcement to the clients employees on the
appointment of the consultant as well as the terms of the consulting engagement if a
contract has already been drawn and signed by the clients representative and the
consultant
c. Continuing to take on every consulting opportunities could mean that the consultants
growth in expertise and reputation are not advancing
d. A consultant can simply dump or abandon a client when the same does not promise to be
financially rewarding to the practice anymore

__D__101. All of the following could justify abandonment of some clients except
a. Overly specialized
b. Beneath the growing fee structure
c. Unchallenging
d. A competitor can simply dump or abandon a client when the same does not promise to be
financially rewarding to the practice anymore

__D__102. The following are ways through which the consultant can establish an attitude of helpfulness towards the
client staff except
a. Maintain an open-door policy
b. Welcoming questions and communication with anyone at any time
c. Arrange meetings for discussion of the problem and provide written summaries of the
meetings
d. Require employees to submit to him a written memo on matters they want to be clarified
about
___C_103. The following are ways of abandoning a client gracefully except
a. Explaining to the client that certain assignments cannot be cost- effectively handled any
more
b. Providing the client with advance notice that the consultant will be accepting lesser
assignments, workshops and appearances
c. Sending the client a written communication of the higher rates the firm will be charging
due to its higher operating costs and the apprehension that the client cannot afford to pay
the consultant any more
d. Offer to transfer the skills to the client, if appropriate

__C__104. The following are types of written presentation except:

a. Formal letters
b. Discussion outlines
c. In-person presentation
d. Prospectus and Manuals

__A__105. This is a type of written presentation which is difficult to write, expensive to produce and almost never read in
their entirety by anyone other than the consultants proof-reader.
a. Formal letters
b. Discussion outlines
c. In-person presentation
d. Prospectus and Manuals

__A__106. The art of saying things properly and effectively; it touches on grammar, style, and construction.
a. Wordsmithing
b. Editing
c. Communication
d. Paraphrasing

_B___107. The following are essential in preparing in-person presentation except

a. Timing
b. Place
c. Dress
d. Atmosphere

__D__108. The following are essential tips for making good presentation except
a. Command your audience
b. Make eye contact (one person at a time); avoid panning the audience
c. Pause periodically
d. Look to the ceiling from time to time to remember the details of your presentation

__C__109. _____ is one of the considerations that the consultants must put focus on. It answers the question, How long
does the consultant need to get his/her points across, and how much time is the client willing to make
available?
a. Length of time for the presentation
b. Timing
c. Size of Audience
d. Composition of audience

__D__110. The following are the common mistakes to avoid during the presentation except
a. Answering the right questions but failing to provide enough background on the basis for
 the conclusions.
b. Failing to address the clients primary concerns, key issues, or pet peeves.
c. Trying to sell future services via the presentation.
d. Allowing adequate time to prepare the presentation.

Essay

111. Give the 4 traditional areas of expertise in CPA Firms

AUDITING
MANAGEMENT CONSULTANCY
INCOME TAX / TAX ADVISORY SERVICES
ACCOUNTING SYSTEM DESIGN AND INTALLATION
AMIA
112. Broad areas of skills of a management consultant
Technical skills
Interpersonal skills
Consulting process skills
TIC

113. Give atleast 3 fields of technical consultation in developing MAS practice

Engineering
Industrial management
Marketing
Business management
Financial areas
. FIMEB
114. It serves as the nucleus of a consulting engagement and provides a guide to staff assignment and
completion dates.
Project plan

115. This will play a key role in establishing the tenor of the project and should be carefully orchestrated to cover
significant points in the project process
Engagement kick off meeting

116. This serves as the blueprint for execution of the engagement

Detailed workplan

117. It is the process of taking the task estimates and dependencies as well as the project team assignments
and availability and matching them against a calendar
Scheduling

118. It means planning , executing, scheduling and controlling activities to provide solutions to the identified
problems
Project management

119. Its purpose is to enable the project leader to present to the team members the engagement background
and objective and to outline clearly the roles that each person will play in the project
Team briefing

120. Planning is not just about defining a course of action. It is about building in the ________ to respond to the
unexpected.
Flexibility

121. Give five attributes essential to successful consultants.

 Good physical and mental health
Professional etiquette and courtesy
Stability of behavior
Self-confidence
Personal effectiveness and drive
Integrity
Independence
Intellectual competence
Good judgment
Strong analytical or problem solving ability
Creative imagination
Ability to communicate and persuade
Psychological maturity
Skill in interpersonal relationship
Technical knowledge
SIPSIP
122. Types of Training Methods
Formal Training
Ongoing Training
Informal Training
IFO
123. Process of Group Formation
Formation
Brainstorming
Emergence of Consensus
Performance
FBEP
124. The way we do things here happens before or during _________________.
Initial Assignment

125. The higher the management position the lesser chance to perform ____________.
Technical Skills

126. Process of group formation whereas members meet for the first time?
Formation
127. C
alculate the forecasted Sales level.

Express Inventory as percentage of sales

Find the Pro-Forma balance for Accounts Payable

600 x 1.27= 762

700/600= 116.67

140/600x762=177.8

128. Give the 2 methods in estimating the external financing required.

Projected or pro forma financial statement method
Formula method

129. What is formula in getting the ADDITIONAL FINANCING REQUIRED?

130. It is sometimes referred to as gross working capital simply refers to current assets.
Working Capital

131. Is the excess of current assets over current liabilities.

Net Working Capital

132. Involves the determination of the level, quality and maturity of each major current asset and current liability.
Working capital management

133. This approach uses permanent or long-term financing source to finance all permanent assets
Conservative approach

134. This is a policy that is between the relaxed and restricted approach.
Moderate Policy
135. What are the Reasons for Holding Cash.
Transaction Motive
Precautionary Motive
Speculative Motive
Contractual Motive
TPSC

136. Given the following inventory information and relationships for the Baguio Corporation:

Orders can be placed only in multiples of 100 units.

Annual unit usage is 300,00 (Assume a 50-week year in your calculations.)
The carrying cost is 30 percent of the purchase price of the goods.
The purchase price is P10 per unit.
The ordering cost is P50 per order.
The desired safety stock is 1,000 units. (This does not include delivery time stock.)
Delivery time is two weeks.

Requirement:
What is the optimal EOQ level?
Total ordering cost
Average inventory
Total carrying cost
Total inventory cost
Reorder point

EOQ = Square root of 2 x 300,000x 50 all over 10 x 30% = 3,162 or 3,200

Total Ordering Costs = 300.00/3,200 x 50 = 4,687.5

Average inventory = 3,200/2 = 1,600

Total Carrying costs = 1600 x 3 = 4800

Total Inventory cost = 4,687.5 + 4800 = 9,487.5

Reorder Point = ((1600/2) x 2) + 1000 = 13,000

137. Factors in selecting source of short-term fund

effective cost of credit,
availability of credit
influence of the use of a particular credit
additional covenants of the loans

138. ___________ include all those sources that have as their security only the lenders faith in
the ability of the borrower to repay the funds when due.
Unsecured Credit

139. ____________ is an unsecured short-term promissory note sold in the money market by
highly credit-worthy firms.
Commercial Paper

140. Four Factors Influencing Capital Structure Decisions

Business Risk
The firms tax position
FInancial flexibility
Managerial Aggressiveness
141. 4 major areas of selling of consulting services
PRESENT CLIENT ACTIVITIES
NON CLIENT RELATIONSHIPS
PUBLIC RELATIONS OR PROMOTIONAL ACTIVITIES
POTENTIAL CLIENT ACTIVITIES

142. Two points a consultant must address before making the presentation
What to say
How to say it