FIN 326 Exam Chapters 1-2 Questions
with Correct Answers
What are the three main tasks of a financial manager? - Answer- Investment decisions,
financing decisions, and working capital management.
What is the primary goal of the financial manager? - Answer- Maximize shareholder
wealth
What is the agency problem? - Answer- Conflict between managers and shareholders
Who oversees management in a corporation? - Answer- The Board of Directors.
Which organization requires public firms to disclose financial information in the U.S.? -
Answer- U.S. Securities and Exchange Commission (SEC).
What is the difference between GAAP and IFRS? - Answer- GAAP is U.S.-based and
rule-based; IFRS is international and principle-based.
Which financial statement shows a snapshot at one point in time? - Answer- Balance
Sheet.
Which financial statement covers performance over a period of time? - Answer- Income
Statement.
Which statement shows actual cash inflows and outflows? - Answer- Statement of Cash
Flows.
What are the three sections of the cash flow statement? - Answer- Operating, investing,
and financing activities.
What is net working capital? - Answer- Current assets minus current liabilities.
What is the difference between book value and market value? - Answer- Book value is
accounting value; market value is based on stock price.
What does enterprise value represent? - Answer- Total value of the firm, including debt
and equity, adjusted for cash.
What does gross margin measure? - Answer- Profit after paying for goods sold.
with Correct Answers
What are the three main tasks of a financial manager? - Answer- Investment decisions,
financing decisions, and working capital management.
What is the primary goal of the financial manager? - Answer- Maximize shareholder
wealth
What is the agency problem? - Answer- Conflict between managers and shareholders
Who oversees management in a corporation? - Answer- The Board of Directors.
Which organization requires public firms to disclose financial information in the U.S.? -
Answer- U.S. Securities and Exchange Commission (SEC).
What is the difference between GAAP and IFRS? - Answer- GAAP is U.S.-based and
rule-based; IFRS is international and principle-based.
Which financial statement shows a snapshot at one point in time? - Answer- Balance
Sheet.
Which financial statement covers performance over a period of time? - Answer- Income
Statement.
Which statement shows actual cash inflows and outflows? - Answer- Statement of Cash
Flows.
What are the three sections of the cash flow statement? - Answer- Operating, investing,
and financing activities.
What is net working capital? - Answer- Current assets minus current liabilities.
What is the difference between book value and market value? - Answer- Book value is
accounting value; market value is based on stock price.
What does enterprise value represent? - Answer- Total value of the firm, including debt
and equity, adjusted for cash.
What does gross margin measure? - Answer- Profit after paying for goods sold.
