Sophia University – Principles of Finance Unit 1 Milestone

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Sophia University – Principles of Finance
Unit 1 Milestone
1

A potential investor in Cristian's company wants to know how much money was paid in
dividends in the last reporting period.

What type of financial statement should he look at?


Cash flow statement

Balance sheet

Income statement

Statement of changes in equity
CONCEPT
Introducing Financial Statements
2

What is finance?


The study of how to allocate assets to maximize returns

The process of communicating financial information about a business

The social science that analyzes the production, distribution and consumption of goods
and services

The study of a business's past financial decisions
CONCEPT
Introducing Finance
3

, Which of the following would explain a company’s inventory
turnover ratio rising from 2.5 to 3.5?


The company's total sales has decreased while the average inventory has increased.

The company's total sales has decreased while the average inventory has remained
constant.

The company's cost of goods sold has decreased while the average inventory has
remained constant.

The company's cost of goods sold has remained constant while the average inventory
has decreased.
CONCEPT
Asset Management Ratios
4

The pro forma balance sheet reflects the impact of a company's
strategic plan on its __________.


share price

revenue and expenses

revenue and expenses

assets and liabilities
CONCEPT
Forecasting the Balance Sheet
5

Tom and Wendy are launching a life coaching business. They plan to have an
equal say in any managerial business decisions and they plan to share any
profits or losses. They are concerned about their exposure to liability, so they
have purchased some professional insurance policies. However, they are