BBM Financial Management 2

Question 1

What does IRR stand for in capital budgeting?

Accepted Answer

Internal Rate of Return

Answer

Initial Rate of Return

Answer

Incremental Rate of Revenue

Answer

Integrated Revenue Ratio

Question 2

Which ratio measures a company's ability to meet short-term obligations using its most liquid assets?

Accepted Answer

Quick Ratio

Answer

Current Ratio

Answer

Debt Ratio

Answer

Asset Turnover

Question 3

What is the concept of 'leverage' in financial management?

Accepted Answer

Using borrowed funds to increase potential return on investment

Answer

Using equity exclusively to finance assets

Answer

Selling assets to raise capital

Answer

Distributing profits to shareholders

Question 4

Which of the following is NOT a component of the cost of capital?

Accepted Answer

Cost of goods sold

Answer

Cost of debt

Answer

Cost of equity

Answer

Cost of retained earnings

Question 5

What does 'depreciation' represent in financial accounting?

Accepted Answer

The allocation of an asset's cost over its useful life

Answer

An increase in asset value over time

Answer

A cash expense paid annually

Answer

A method to increase reported profits

Question 6

Which financial strategy involves a company buying back its own shares?

Accepted Answer

Share repurchase

Answer

Stock split

Answer

Rights issue

Answer

Dividend reinvestment