Part 1: Section A

QUESTION 1 MARKS: 10

Multiple choice

1. Which of the following is a long-term financial goal of a firm?

a) Profit maximization.

b) Maximising the firm's solvency

c) Maximising shareholder's wealth

d) Maximising the firm's liquidity

2. Which one of the following is not the primary function of the Finance Manager?

a) Entering the company's transactions in the primary books of accounts.

b) Making investment decisions

c) Ensuring Profitability

d) Ensuring Solvency

3. Financial Management is base on which of the 3 principles:

a) Cost-benefit Principle, Profit maximisation principle and Time value of money principle

b) Wealth maximisation principle, Profit maximisation principle and Time value of money principle

c) Time value of money principle, Risk-return principle, and Cost-benefit principle.

d) Risk-return principle, Cost-benefit principle, and profit maximisation principle.

4. Which one is correct?

a) Assets = Liabilities + Owners Equity

b) Assets = Owners Equity - Liabilities

c) Liabilities = Assets - Owners Equity

d) Owners' Equity= Assets -Liabilities

5. Accounting entity refers to:

a) The universal accounting denominator used to express assets, liabilities, and owner's equity so as to describe the financial position of an entity.

b) The fact that the business entity will continue in operational existence for the foreseeable future.

c) The entry of the entity 's assets into account in the accounting process at the cost the entity incurred in acquiring them.

d) The entity to which the financial information pertains to.

6. Which of the following is not profitability ratio?

a) Return on equity

b) Earnings per share

c) Inventory turnover

d) Net working capital

7. What is the ideal current asset ratio?

a) 2:1

b) 1:1

c) 1:2

d) 1:3

8. Which cost classification is used for decision making?

a) Variable cost

b) Indirect cost

c) Direct Labour cost

d) Incremental cost

9. Breakeven point refers to:

a) The level at which total costs equal total revenues.

b) The level at which total fixed costs equal total costs

c) The level at which total sales equal total fixed costs

d) The level at which total costs exceed total revenue.

10. Marginal Income is equal to:

a) Selling price per unit - variable cost per unit

b) Sales - variable cost

c) Sales -variable cost - fixed cost

d) Sales - Fixed cost

Part 2: Section B

Question 1 5 marks

Describe what isagency problem and what causes it? (5)

Question 2 12 marks

Name 4 (four) key financial statements that are used for reporting to shareholders and give a brief explanation of each in your own words of what they measure .

Question 3 16 marks

a) How many groups can basic financial ratios be divided into? (1)

b) What are these 5 groups? (5)

c) Explain what each group measures and give and give an example of one ratio from each group. (10)

Question 4 7 marks

Tangi trading has annual sales of N$ 12 500 000. Its total cost are N$ 7 500 000 and its variable costs are N$ 4 500 000. The number of units sold per annum is 100 000.

From the above information calculate:

a) Fixed Costs (1)

b) Selling price per unit (1)

c) Variable cost per unit (1)

d) Break eve point (BEP) in units (4)

Total Marks Assignment 1 - 50 marks

End of Assignment 1