MEM Financial Management for Engineers

Question 1

Which financial statement shows a company's revenues and expenses over a specific period?

Accepted Answer

Income statement

Answer

Balance sheet

Answer

Cash flow statement

Answer

Statement of retained earnings

Question 2

What does WACC stand for in corporate finance?

Accepted Answer

Weighted Average Cost of Capital

Answer

Working Asset Capital Calculation

Answer

Weighted Allocation of Corporate Cost

Answer

Working Average Capital Contribution

Question 3

A project has an IRR of 18% and the company's WACC is 12%. What should management do?

Accepted Answer

Accept the project because IRR exceeds WACC

Answer

Reject the project because IRR exceeds WACC

Answer

Reject the project because WACC is too low

Answer

Defer the project until IRR equals WACC

Question 4

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-to-equity ratio

Answer

Return on assets

Question 5

What is capital budgeting primarily concerned with?

Accepted Answer

Evaluating long-term investment decisions

Answer

Managing day-to-day operating expenses

Answer

Setting employee compensation budgets

Answer

Controlling short-term cash flows

Question 6

In the context of MEM financial management, what does 'leverage' refer to?

Accepted Answer

Using debt financing to amplify returns on equity

Answer

Using physical equipment to increase productivity

Answer

Negotiating better supplier contracts

Answer

Increasing workforce headcount