FIN2603 Assignment 1 Q&A

lOMoAR cPSD| 8423479




FIN2603 Assignment 1 Q&A


Financial Management

, lOMoAR cPSD| 8423479




- Section 1:Chapter 1


Question 1
Which stakeholders have the first claim on assets when a organisation enters bankruptcy?
A. Creditors
B. Top management
C. Debtors
D. Shareholders

Question 2
One method often used by companies to ensure that management decisions are in the best interest
of the shareholders is to ...
A. have a shareholder meeting once a year.
B. threaten to fire managers who do not performing adequately.
C. tie management compensation to the performance of the company share price.
D. tie management compensation to the level of earnings per share.




Question 3
West Wing Limited has total liabilities of R500 000 and owner’s equity of R250 000. The company’s
total assets are ...
A. R250 000.




B. R400 000.
C. R750 000.
D. R950 000.

Question 4
A current ratio of 4,5:1 may indicate the firm has too much ...
A. cash.
B. inventory.
C. accounts receivable
D. All of the above.

Question 5
In the past year a firm received cash from clients amounting to R10 500. The firm paid creditors and
employees an amount of R3 700. Interest paid amounted to R1 500. No dividends were paid out.
The firm paid normal tax amounting to R700. The cash flow from operations amount to ...