Free AIFA Corporate Finance & Valuation Questions and Answers

Question 1

What is the primary goal of corporate finance?

Accepted Answer

Maximize shareholder value

Answer

Increase company debt.

Answer

Minimize profits.

Answer

Avoid market competition.

Question 2

Which method is commonly used for company valuation?

Accepted Answer

Discounted Cash Flow (DCF)

Answer

Accrual basis accounting.

Answer

Historical cost method.

Answer

FIFO method.

Question 3

What is capital structure?

Accepted Answer

Mix of debt and equity financing

Answer

Inventory tracking system.

Answer

Revenue recognition policy.

Answer

Pricing strategy.

Question 4

What does WACC stand for in finance?

Accepted Answer

Weighted Average Cost of Capital

Answer

Wages and Corporate Charges.

Answer

Working Asset Control Chart.

Answer

Wealth and Credit Calculation.

Question 5

What does a high debt-to-equity ratio indicate?

Accepted Answer

Heavy reliance on debt

Answer

Strong liquidity position.

Answer

Efficient operations.

Answer

High earnings stability.

Question 6

What is net present value (NPV) used for?

Accepted Answer

Assess investment profitability

Answer

Estimate depreciation.

Answer

Calculate tax refunds.

Answer

Set interest rates.

Question 7

Which financial statement shows a company’s financial position?

Accepted Answer

Balance sheet

Answer

Income statement.

Answer

Cash flow forecast.

Answer

Audit report.

Question 8

What does ROI measure?

Accepted Answer

Profitability of an investment

Answer

Total operating expenses.

Answer

Risk of default.

Answer

Asset depreciation.

Question 9

What is free cash flow (FCF)?

Accepted Answer

Cash after capital expenditures

Answer

Revenue minus taxes.

Answer

Dividends issued to shareholders.

Answer

Net income before taxes.