Training test for current control 9

What are operating risks?

• Risks that may derive from the fixed costs and variable costs that the firm incurs in order to operate
• Risk which is related to future earnings of a firm
• Risks from both fixed and variable finance costs that come from firm's capital structure
• Risks which may come from both economic instability of the country that the firm is operating in and the changes in preferences of people

Which of the following are variable costs?

• Direct labour cost, direct cost of materials, costs for electricity associated with the production
• Direct labour cost, payment for the rent of warehouse, costs for electricity associated with the production
• Salary for the Director of the firm, direct material cost, payment for the rent of warehouse
• Direct labour cost, direct cost of materials, cost from paying for patents

If a firm's total fixed cost is $3000, the variable cost per product is $10 and the price of a product is $20, find the break-even quantity.

• 300
• 100
• 200
• 150

What are semivariable costs?

• Costs that are fixed for a while and then rise sharply to a higher level as a higher outcome reached, remain fixed then rise again
• Costs that do not vary in total amount as quantity of output changes
• Costs that vary in total as output changes
• The total amount of the enterprise's expenses on paying wages to workers

What is financial leverage?

• Results from the firm's use of sources of financing that require a fixed rate of return
• Results from operating costs that are fixed and do not vary with the level of firm sales
• The result of the combined effects of both operating and capital leverage
• The total amount of the enterprise's expenses on paying wages to financial managers

What is optimal capital structure?

• The capital structure that minimizes the firm's composite cost of capital (maximizes the common stock price) for raising a given amount of funds
• The mix of interest bearing short- and long-term debt plus equity funds used by the firm
• The mix of all sources of funding that appears on the right-hand side of the balance sheet
• The range of debt use in the firm's capital structure that yields the lowest overall cost of capital for the firm

If a firm's total fixed cost is $3000, the break-even quantity is 300, and the price of a product is $20, find the variable cost per product.

• $10
• $15
• $20
• $5

What type of enterprise assets does the enterprise's cash belong to?

• Liquid asset
• Non-current asset
• Direct costs
• Indirect costs

What do firms use cash inflow to measure for?

• Financial health of business
• Dividends
• Sale of products
• Sale of assets

What is money available for a business to pay for day-to-day operation?

• Working capital
• Net cash flow
• Free cash flow
• Financial reporting