Financial Management Mock Exam

This system monitors an item from the point of purchase until its usage. The most effective methods involve maintaining detailed records of all materials to optimize inventory levels and guarantee availability across various channels.

• Inventory Planning

• Inventory Management

• Inventory Forecasting

• Inventory Storage

The measure of the degree to which the return on an asset deviates from its expected return, often used as a basic indicator of investment risk

• Liquidity

• Volatility

• Leverage

• Discounting

One of the following best describes the concept of diversification in investment

• Investing in high-risk assets to gain higher returns.

• Spreading investments across different asset classes to reduce risk.

• Focusing on a single successful stock to maximize returns.

• Allocating all funds to real estate for stability.

This refers to the projected rate of return on an asset based on its sensitivity to market movements that considers the risk-free rate.

• Agressive Funding Strategy (AFS)

• Bootstrap Financing

• Capital Asset Pricing Model (CAPM)

• Discounted Cash Flow (DCF)

The inventory management method that assumes the oldest stock item are sold first, thereby assigning the earliest costs in the cost of goods sold and leaving the most recent costs in ending inventory, best align with practices aimed at preventing spoilage of perishable goods.

• Last-In, First out (LIFO) Method

• ABC Analysis

• Economic Order Quantity

• First-In, First Out (FIFO) Method

A company's Cash Conversion Cycle (CCC) changes in the following way when it takes longer to pay suppliers

• The CCC gets shorter

• The CCC gets longer

• The CCC stays the same

• The CCC becomes negative

The cash budget is prepared by showing the following components to project the company's cash position over a specific period:

• Total Revenues, Total Expenses, and Net Revenue

• Cash Collections, Cash Disbursements and Ending Cash Balance

• Sales, Purchase Payments and Accounts Payable

• Cash Receipts, Cash Payments, and Operating Profit

Cash Conversion Cycle represents the time between the outlay of cash for raw material and the collection of cash from customers

• Cash Conversion Period

• Net Operating Cycle

• Cash Flow Interval

• Liquidity Loop

It is developed by the International Chamber of Commerce (ICC) to define the responsibilities of sellers and buyers in international and domestic trade contracts.

• Terms and Conditions

• Contract of Sale

• Incoterms

• Credit Terms

Statement 1: Creating a credit policy should be the same for all businesses, regardless of their specific goals;

Statement 2: A credit policy comprises the rules and procedures a business uses to extend credit and manage payment collections.

• Both statements are correct

• Both statements are incorrect

• Statement 1 is correct, and Statement 2 is incorrect

• Statement 1 is incorrect, Statement 2 is correct