BBA 6th FM

Bahawalnagar Campus
Department of Management Sciences

th
BBA 6 Semester Max. Marks: 20
Paper: Financial Management Time allowed: 25 mins
Name: ______________________ Roll #___________________
Encircle the right option
A project has the following cash inflows $34,444; $39,877; $25,000; and $52,800 for years 1 through
4, respectively. The initial cash outflow is $104,000. Which of the following four statements is
correct concerning the project internal rate of return (IRR)?
The IRR is less than 10%.

The IRR is greater than or equal to 10%, but less than 14%.
The IRR is greater than or equal to 14%, but less than 18%.
The IRR is greater than or equal to 18%.
A profitability index (PI) of .92 for a project means that

the project's costs (cash outlay) are (is) less than the present value of the project's benefits
the project's NPV is greater than zero
the project's NPV is greater than 1
the project returns 92 cents in present value for each current dollar invested (cost)
A project whose acceptance requires the acceptance of one or more alternative projects is referred
to as __________.
a mutually exclusive project
an independent project
a dependent project
None of the above are
To the nearest dollar, what is the net present value of a replacement project whose cash flows are -
$104,000; $34,444; $39,877; $25,000; and $52,800 for years 0 through 4, respectively? The firm has
decided to assume that the appropriate cost of capital is 10% and the appropriate risk-free rate is
6%.
$15,115
$26,798
$33,346
$48,121
A project whose acceptance precludes the acceptance of one or more alternative projects is referred
to as __________.
a mutually exclusive project.
an independent project.
a dependent project.
a contingent project.
Felton Farm Supplies, Inc., has an 8 percent return on total assets of $300,000 and a net profit
margin of 5 percent. What are its sales?
$3,750,000
$480,000
$300,000
$1,500,000
Which group of ratios relate profits to sales and investment?

Liquidity ratios.
Debt ratios.
Coverage ratios.
Profitability ratios.
Which of the following statements (in general) is correct?

A low receivables turnover is desirable.
The lower the total debt-to-equity ratio, the lower the financial risk for a firm.
An increase in net profit margin with no change in sales or assets means a weaker ROI.
The higher the tax rate for a firm, the lower the interest coverage ratio.
In conducting a common-size analysis every balance sheet item is divided by __________ and
every income statement is divided by __________
a) its corresponding base year balance sheet item; its corresponding base year income statement item
b) its corresponding base year income statement item; its corresponding base year balance sheet item
c) net sales or revenues; total assets.
d) total assets; net sales or revenues
Which of the following statements is most correct regarding the current ratio for a firm that
uses industry averages and a peer benchmark as their comparison?
a) Firms should attempt to maintain a current ratio that is below 0.5.

b) Firms should always exceed both the industry average and the peer benchmark current ratio.
c) Firms should strive to maintain a current ratio that seems reasonable when compared to an industry
average and a peer benchmark.
d) Firms should strive to maintain a current ratio of at least 2.0.
Which type of activitys answer should be negative is a healthy sign for business :
A) Operating B) Investing
C) Financing D) Non of the above
Purchase of marketable securities is an activity :

Loan made to borrowers is an activity :
Dividend paid is an activity :
Loan from the financial institutions is an activity :
Purchase of land and building is an activity :
SECP stands for_________________________________________
CDC stands for _______________________________________________
The current ratio is never larger than the quick ratio.
True
False
A firm's operating cycle is equal to its inventory turnover in days (ITD) plus its receivable turnover in days
(RTD).
True
False

BBA 6th FM

Uploaded by

Copyright:

Available Formats

BBA 6th FM

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

BBA 6th FM

Uploaded by

Copyright:

Available Formats

Bahawalnagar Campus

Department of Management Sciences

Encircle the right option

The IRR is less than 10%.

A profitability index (PI) of .92 for a project means that

Which group of ratios relate profits to sales and investment?

Which of the following statements (in general) is correct?

a) Firms should attempt to maintain a current ratio that is below 0.5.

C) Financing D) Non of the above

Purchase of marketable securities is an activity :

C) Financing D) Non of the above

C) Financing D) Non of the above

Dividend paid is an activity :

C) Financing D) Non of the above

Loan from the financial institutions is an activity :

C) Financing D) Non of the above

Purchase of land and building is an activity :

C) Financing D) Non of the above

SECP stands for_________________________________________

CDC stands for _______________________________________________

The current ratio is never larger than the quick ratio.

You might also like