BBM Financial Management 3

Question 1

What is the break-even point in business?

Accepted Answer

The point where total revenue equals total costs

Answer

The break-even point is where total revenue equals total costs, meaning the business neither earns a profit nor incurs a loss.

Question 2

Which term describes the minimum return required by investors for an investment?

Accepted Answer

Hurdle Rate

Answer

The hurdle rate is the minimum acceptable rate of return on an investment, used as a benchmark in capital budgeting decisions.

Question 3

What is 'accounts receivable' in financial management?

Accepted Answer

Money owed to the company by its customers

Answer

Accounts receivable represents money owed to a business by customers who have purchased goods or services on credit.

Question 4

Which type of analysis compares a company's financial ratios to industry benchmarks?

Accepted Answer

Benchmarking analysis

Answer

Benchmarking analysis compares a firm's performance metrics against industry standards or competitors to identify strengths and weaknesses.

Question 5

What is the purpose of a dividend policy in a corporation?

Accepted Answer

To determine how profits are split between retained earnings and shareholder distributions

Answer

Dividend policy determines how much of the company's earnings are distributed to shareholders versus retained for reinvestment in the business.

BBM - Business Management Degree Practice Test