Course Code: FIN 004

Quiz #1

Name: Class number: _________________

__________________________________________ Date: _________________________
Section: _________ Schedule: ______________________

Lesson title: Quiz #1 Materials:

Lesson Objectives: SAS
At the end of this module, I should be able to: Pen
Assess my understanding on the following topics: Calculator
Financial Management; Types of Business Organizations; References:
Financial Statements; FS Analysis; Financial Ratios; Cash Module #1,#2, #3
Flow Statement

Productivity Tip:
A lot of students overestimate what they can do every day. They get frustrated when they don't manage
to achieve everything they expected. They lose the drive to research as a result. So be rational when
planning your day, and know there are going to be some unexpected interruptions.
INSTRUCTION: Strictly no form of erasures. Erasures will invalidate your answers.

I. Multiple Choice

1. It is concerned with allocating, raising, and controlling funds of the firm.

a. Budgeting
b. Financial management
c. Management accounting
d. Finance

2. The finance manager is responsible in maximizing the value of the utility owned by these
people.
a. Suppliers
b. Stockholders/investors
c. Board of directors
d. Creditors

3. He or she is the one responsible in making investment, financial, and dividend policy-making
decisions of a firm.
a. Creditor
b. Employee
c. Finance manager
d. Stockholder

4. Mr. A has just been hired as the finance manager of a company. His primary objective should
be ______________________________.

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 Course Code: FIN 004
Quiz #1

Name: Class number: _________________

__________________________________________ Date: _________________________
Section: _________ Schedule: ______________________

a. To eliminate the company’s competitors

b. To maximize the company’s price of common stock
c. To maximize profits
d. To maximize the company’s earnings

5. This is the basic guide for financial decision making.

a. Make decisions where the average benefits exceed the average costs.
b. Make decisions where the average benefits exceed the fixed costs.
c. Make decisions where the total benefits exceed the total costs.
d. Make decisions where the benefits exceed the costs.

6. Which of the following encourages managers to act in shareholders’ interests.

a. Bonus and higher compensation
b. Conducting regular audits
c. Threat of hostile takeovers
d. All of the above

7. Which of the following is/are the limitation/s of the profit maximization goal?
I. It lacks a time dimension.
II. It fails to consider risk.
III. The definition of profit is ambiguous.
a. I only
b. I and II only
c. II and III only
d. I, II, and III

8. It means that all partners are liable to the extent of their separate property.
a. General partnership
b. Industrial partnership
c. Limited partnership
d. None of the above

9. It includes the rules of action adopted by the corporation for its internal administration and for
the management of its officers, stockholders, or members.
a. By-laws
b. Articles of incorporation
c. Justice
d. Policy

10. Who has priority over partnership assets?

a. Suppliers

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 Course Code: FIN 004
Quiz #1

Name: Class number: _________________

__________________________________________ Date: _________________________
Section: _________ Schedule: ______________________

b. Creditors
c. Partners
d. Debtors

II. TRUE or FALSE

1. When preparing the operating activities section of the statement of cash flows using the
indirect method, a decrease in accounts receivable is subtracted from the net income.
2. Treasury stock purchases made with cash are cash outflows in the financing activities
section of the statement of cash flows.
3. A gain from selling equipment is reported under cash flows from investing activities
using indirect method.
4. Perfect Mo loaned P3,000,000 at 7% interest to Perfect Kho. Perfect Mo would report
this loan as an investing activity in the statement of cash flows.
5. If a company is to succeed over the long term, a positive cash flow from operating
activities is necessary.
6. A loss from selling equipment is reported under cash flows from operating activities
using the indirect method.
7. A purchase of bonds are reported under cash flows from financing activities using the
indirect method.
8. A statement of cash flow is prepared using the data for three consecutive years.
9. Interest taxes paid is presented in the statement of cash flow under investing activities
using the indirect method.
10. The statement of cash flows has four major activities.

III. MATCHING TYPE

1. A more stringent test as compared with current ratio a. acid-test ratio

2. Current assets less current liabilities b. current ratio
3. Shows comparative financial statements for two or more years c. vertical analysis
4. The portion of the total assets financed by liabilities d. horizontal analysis
5. Measures the capacity to pay fixed charges e. times interest earned ratio
6. Profit margin x asset turnover x equity multiplier f. working capital
7. Current assets divided by current liabilities g. profit margin
_8. Items in the financial statement is in proportion to a particular base h. debt ratio
for each statement.
9. Measures the percentage of net income over sales i. cash conversion cycle
10. Age of receivables + age of inventories – age of payables j. return on equity

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 Course Code: FIN 004
Quiz #1

Name: Class number: _________________

__________________________________________ Date: _________________________
Section: _________ Schedule: ______________________

IV. PROBLEM SOLVING (30 PTS.)

G Corporation’s sales, current assets, and current liabilities have been reported as follows over
the last five years (amounts in thousands):

2020 2019 2018 2017 2016

Sales P 10,800 P 9,600 P 9,200 P 8,640 P 8,000
Current assets 2,626 2,181 2,220 2,267 2,225
Current liabilities 475 450 350 325 250

Required: Express all the sales, current assets, and current liabilities on trend index. Round your
decimals up to 2 places.

a. Use 2016 as base year.

b. Use 2020 as the base year.

Write your solution here.

a. Base year = 2016

_2020 2019 2018 2017 2016

Sales
Current assets
Current liabilities

b. Base year = 2020

_2020 2019 2018 2017 2016

Sales
Current assets
Current liabilities

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