Professional Documents
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A. Unlimited liability
B. No time limit imposed on its existence
C. No legal requirements for starting the business
D. None of the above
A. bond holders
B. common stockholders
C. preferred stockholders
D. board of directors of the firm
A. Sole proprietors
B. General partner
C. Shareholders of the corporation
D. Both B and C
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BWFF2033 FINANCIAL MANAGEMENT
MATRIC NO.: ____________________
A. suppliers
B. managers
C. employees
D. shareholders
7. Which of the basic financial statements is best used to answer the question, How
profitable is the business?
A. Balance Sheet
B. Income statement
C. Statement of shareholders equity
D. Accounts receivable aging schedule
8. You are about to determine your corporations taxable income. Which of the
following is NOT a tax-deductible item?
9. Your firm has the following income statement items: sales of RM50,250,000; income
tax of RM1,744,000; operating expenses of RM10,115,000; cost of goods sold of
RM35,025,000; and interest expense of RM750,000. What is the amount of the
firms earnings before interest and tax (EBIT)?
A. RM4,630,000
B. RM5,110,000
C. RM15,552,000
D. RM58,000,000
10. Your firm has the following balance sheet statement items: total current liabilities of
RM805,000; total assets of RM2,655,000; fixed and other assets of RM1,770,000;
and long-term debt of RM200,000. What is the amount of the firms net working
capital?
A. RM25,000
B. RM80,000
C. RM325,000
D. RM770,000
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BWFF2033 FINANCIAL MANAGEMENT
MATRIC NO.: ____________________
12. Holding all other variables constant, which of the followings will decrease total
equity? An increase in__________.
A. net income
B. dividends paid
C. interest expense
D. common stock issued
13. Relationships determined from a firm's financial information and used for
comparison purposes are known as__________.
A. financial ratios
B. scenario analysis
C. solvency analysis
D. dimensional analysis
14. On the statement of cash flows, which of the followings are considered financing
activities?
I. Interest paid
II. Dividends paid
III. Increase in long-term debt
IV. Decrease in accounts payable
15. The cash coverage ratio directly measures the ability of a firm's revenues to meet
which one of its following obligations?
A. Payment to supplier
B. Payment to employee
C. Payment of interest to a lender
D. Payment of a dividend to a shareholder
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BWFF2033 FINANCIAL MANAGEMENT
MATRIC NO.: ____________________
16. A firm has sales of RM2,190, net income of RM174, net fixed assets of RM1,600,
and current assets of RM720. The firm has RM310 in inventory. What is the
common-size statement value of inventory?
A. 13.36 percent
B. 14.16 percent
C. 19.38 percent
D. 30.42 percent
17. The Glocal Enterprise has RM747,000 in sales. The profit margin is 4.1 percent and
the firm has 7,500 shares of stock outstanding. The market price per share is RM27.
What is the price-earnings ratio?
A. 6.61
B. 8.98
C. 13.15
D. 14.27
18. Langkasuka Toys has a profit margin of 9.6 percent, a total asset turnover of 1.71,
and a return on equity of 21.01 percent. What is the debt-equity ratio?
A. 0.22
B. 0.28
C. 0.46
D. 0.72
A. I and II only.
B. II and III only.
C. III and IV only.
D. I, III, and IV only.
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BWFF2033 FINANCIAL MANAGEMENT
MATRIC NO.: ____________________
22. Which of the following is used to finance a firm's external financing need?
A. Debt or equity
B. Net income and retained earnings
C. Net working capital and retained earnings
D. Owners' equity, including retained earnings
RM RM
Cash 930 Accounts payable 2,470
Accounts receivable 1,720 Long-term debt 8,800
Inventory 3,210 Common stock 10,000
Total current assets 5,860 Retained earnings 4,190
Net fixed assets 19,600
Total assets 25,460 Total liabilities & equity 25,460
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BWFF2033 FINANCIAL MANAGEMENT
MATRIC NO.: ____________________
23. Assume that Setia Bistari Berhad is operating at full capacity. Also assume that
assets, costs, and current liabilities vary directly with sales. The tax rate and dividend
payout ratio are constant. What is the external financing needed (EFN) if sales
increase by 4 percent?
A. -RM2,147.35
B. -RM1,214.48
C. RM201.16
D. RM525.38
24. What is the internal growth rate of Setia Bistari Berhad assuming the payout ratio
remains constant?
A. 5.20 percent
B. 6.55 percent
C. 7.49 percent
D. 8.77 percent
25. Assume that Setia Bistari Berhad is operating at 88 percent of capacity. All costs and
net working capital vary directly with sales. What is the amount of maximum
capacity of sales?
A. RM19,600
B. RM20,406
C. RM21,500
D. RM26.818
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BWFF2033 FINANCIAL MANAGEMENT
MATRIC NO.: ____________________
b) You have the choice of two equally risky annuities, each paying RM8,000 per year for eight
years. One is an annuity due and the other is an ordinary annuity. Which annuity would you
choose to maximize your wealth? (State the reason for your choice)
(2 marks)
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BWFF2033 FINANCIAL MANAGEMENT
MATRIC NO.: ____________________
c) Indera would like to accumulate RM100,000 by the end of three years from now to buy a
sports car from his friend, Jamaludin. He has RM50,000 now and would like to save equal
annual end-of-year deposits to pay for the car. How much should he deposit at the end of each
year in an account paying 8 percent interest to buy the car?
(5 marks)
d) Haris has opened a retirement fund account which pays 7 percent interest and requires
RM5,000 annual deposits. Haris will retire in 15 years and expects 10 years of retirement life.
What is the maximum end of year annual retirement benefits Haris can get during his
retirement years?
(5 marks)
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BWFF2033 FINANCIAL MANAGEMENT
MATRIC NO.: ____________________
Stock X and Y have risk premiums of 8 percent and 4 percent respectively. Both stocks are in the
same market and the risk-free rate is 6 percent, while the market risk premium is 5 percent.
Based on the given information, answer the following questions.
a) What are the betas of Stocks X and Y?
(3 marks)
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BWFF2033 FINANCIAL MANAGEMENT
MATRIC NO.: ____________________
c) If Stock Xs expected rate of return is 9 percent and Stock Ys expected rate of return is
13 percent, are Stock X and Y fairly valued, undervalued or overvalued? Show your
answer by using security market line (SML) graph.
(6 marks)
d) What is the difference between systematic and nonsystematic risk? Provide an example for
each type of risk.
(3 marks)
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BWFF2033 FINANCIAL MANAGEMENT
MATRIC NO.: ____________________
a) In the preparation of a monthly cash budget, the following revenue and cost information have
been compiled. Prepare a cash budget for the month of October based on the information
given below.
(10 marks)
The firm collects 60 percent of monthly sales in cash and 40 percent of sales one month later.
. The firm pays cash for 40 percent of its monthly purchases, and 60 percent in the following
month.
Salaries and wages amount to 15 percent of the previous month's sales.
Sales commission amount to 2 percent of the previous month's sales.
Lease payments of RM100,000 must be made each month.
Depreciation expense each month is RM45,000.
The firm has a beginning cash balance in October of RM100,000 and maintains a minimum
cash balance of RM200,000.
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BWFF2033 FINANCIAL MANAGEMENT
MATRIC NO.: ____________________
b) The XYZ company generally receives 4 checks a month. The check amounts and the
collection delay for each check are shown below. Given this information, what is the
weighted average delay (days), and what is the amount of the average daily float?
Assume every month has 30 days.
(3 marks)
c) State and explain any TWO (2) motives for corporations to hold cash.
(2 marks)
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BWFF2033 FINANCIAL MANAGEMENT
MATRIC NO.: ____________________
i) Perform an analysis to show whether or not Bhuvana Enterprise should adopt the new policy?
(5 marks)
ii) Assuming other factors are constant, what is the minimum needed unit of sales per month
for the adoption of the new policy?
(6 marks)
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BWFF2033 FINANCIAL MANAGEMENT
MATRIC NO.: ____________________
b) Annai Corporation wants to offer credit to customers during the coming festival season.
Resulting additional sales are expected to be 400 units one unit per customer. The
average price and cost per unit are RM400 and RM360 respectively. There is a 10
percent chance that a customer will default. Annai Corporation is considering subscribing
to a credit agency, for a fixed fee of RM500, plus RM10 per individual customer credit
report. The credit report is expected to reduce the customer chance of default to 2
percent. Should Annai Corporation subscribe to the credit agency?
(4 marks)
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BWFF2033 FINANCIAL MANAGEMENT
MATRIC NO.: ____________________
END OF QUESTIONS
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