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Question 20: What is an important advantage of budgeting?

a) it improves communication

b) it sets corporate plans

c) it pin-points managerial objectives

d) it determines planning guidelines

Question 21: The 3 most common ways. of determining value potential in an investment are...

a) NPV, Break Even, cash flow maximization

b) IRR, NPV, net book value

c) Payback, IRR, and Net Present Value

d) Return on assets, IRR and Break Even

Question 22: What are the components of working capital?

a) current revenues and current expenses

b) long term operating assets and operating expenses

c) current assets and current liabilities

d) current assets and long term borrowings

Question 23: Which of the following statements is false?

a) return on total assets is calculated by dividing profit for the year by total assets

b) horizontal analysis is also called common-size statement analysis

c) the higher the inventory turnover is, the better it is

d) return on revenue is considered a profitability ratio

Question 24: What two key concepts are involved in investment decisions?

a) receipts and cash inflow

b) disbursements and cash outflow

c) net cash inflow and net cash receipts

d) time value and cash

Question 25: What is the term for payments made for which services have not yet been recieved?

a) deferred liabilities

b) prepaid expenses

c) accrued liabilities

d) accrued expenses

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