A Finance Survival Kit

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A Finance Survival Kit

• GEM2508

Frederick H. Willeboordse frederik_at_chaos.nus.edu.s
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Exercises for Test 1
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Important note The sample questions provided
here are for your reference only. The questions
asked during the test will be similar in style
but can be very different otherwise.
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Examples of MC questions
What does a Balance sheet balance A) Owners
Equity and Assets B) Owners Equity and
Liabilities C) Assets and Liabilities D) Assets
and Depreciation
Depreciation is similar to A)
Amortization B) Owners Equity C) Interest D)
Profit
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A A1 in an Excel formula means A) An
absolute reference to cell A1 B) A relative
reference to cell A1 C) The number in A1 refers
to money D) Nothing this syntax is invalid
The quick ratio is A) A quick way to
calculate a companies profit B) Not really a
ratio but a shortcut C) Multiplied by the
current liabilities equal to Current Assets
minus inventories D) Current Liabilities minus
Inventory divided by Current Assets
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The T in EBITDA stands for A) Total
Assets B) Transaction C) Taxes D) Treasury
Gross Profit Equals A) Sales minus cost of
Sales B) Net Profit C) The 144 profit
method D) EBITDA
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Examples of short questions
What is Golden Dragons Cost of Sales?
?
6,000.-
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True or false Owners Equity is an asset.
False. I set up a (wholly owned) company with
20,000 in cash. Since then, I made a profit of
562 and paid out 400 in dividends. What are the
retained earnings? 162.- Is it possible to find
the Net Cash Flow (which is the sum of the cash
flows in the Cash Flow Statement) from the
Balance Sheet(s) of a company. YES True or
False Dividends do not appear on the Income
Statement and hence not on the Cash Flow
Statement either. FALSE
?
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What is Aunt Petunias Gross Profit Margin?
It is (Sales Cost of Sales)/Sales 54.9
A company has sales of 300,000 and a gross
margin of 38. What should be the (average)
inventory level so that the company has an
inventory turnover ratio of 8? ANSWER
300,0000.62/8 23,250.-
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A company has sales of 123,000. Its cost of
sales is 52. The company pays 1,800 in rent a
month and has two employees earning 1,200 and
1,500 a month respectively. The company is
fairly cash rich having 391,000 in a savings
account earning 1.5 interest a year. This
company doesnt do much and its other expenses
are only 240 a year. Assuming that there are no
other relevant financial data for this
company, What is the Gross Profit of this
company? 59,040 What is the Net Profit of this
company? 10,665
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We have a company which has been and is growing
sales at 5 per month. 33 of the sales are paid
during the month following the sale. Except for
3 unrecoverables, the remainder is paid during
the second month after the sale. Manpower and
other costs are 21 of sales and inventory
purchases are 39 of the following months sales.
Assume that the company has sales of 9,901 in
April. There are no investing activities and the
company is assumed to have an unlimited 0 credit
line. What is the net cash flow in the month of
May if 1000 of dividends were paid in April?
2,862.- What is the ending Cash balance in May
if the starting cash balance is 2980 in the
beginning of April? 7,567.-