1
STFM Exam 1 Questions with Answers (100% Correct
Answers)
A successful firm manages its operations from:
a profit perspective
a cash flow perspective
a sales increase perspective
2 and 3
2 only
1 and 2
1 only
1 and 3 Answer: 1 and 2
A shorter cash conversion cycle generally implies a(n) ___________ in
firm liquidity.
Worsening
Cannot be determined from this information
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,2
Improvement
No change Answer: Improvement
As sales grow, some of the added current asset requirement is
provided by growth in inventory, which often results in what type of
funds?
arranged financing
spontaneous financing
plowback funding
retained earnings Answer: spontaneous financing
Which of the following job functions would most likely occur within
the Treasury Department of a firm?I. Cash managementII. Liquidity
forecastingIII. Cost accountingIV. Analysis of merger and acquisition
opportunities
I and III
I and II
III and IV
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, 3
I and IV
I only Answer: I and II
A firm that is unable to pay its suppliers on time would best be
characterized as:
Illiquid
Solvent
Liquid
Unprofitable Answer: Illiquid
The current economic crisis has _________________ interest in short-
term financial management.
increased
had no effect on
too soon to know for sure
decreased Answer: Increased
© 2025 All rights reserved
STFM Exam 1 Questions with Answers (100% Correct
Answers)
A successful firm manages its operations from:
a profit perspective
a cash flow perspective
a sales increase perspective
2 and 3
2 only
1 and 2
1 only
1 and 3 Answer: 1 and 2
A shorter cash conversion cycle generally implies a(n) ___________ in
firm liquidity.
Worsening
Cannot be determined from this information
© 2025 All rights reserved
,2
Improvement
No change Answer: Improvement
As sales grow, some of the added current asset requirement is
provided by growth in inventory, which often results in what type of
funds?
arranged financing
spontaneous financing
plowback funding
retained earnings Answer: spontaneous financing
Which of the following job functions would most likely occur within
the Treasury Department of a firm?I. Cash managementII. Liquidity
forecastingIII. Cost accountingIV. Analysis of merger and acquisition
opportunities
I and III
I and II
III and IV
© 2025 All rights reserved
, 3
I and IV
I only Answer: I and II
A firm that is unable to pay its suppliers on time would best be
characterized as:
Illiquid
Solvent
Liquid
Unprofitable Answer: Illiquid
The current economic crisis has _________________ interest in short-
term financial management.
increased
had no effect on
too soon to know for sure
decreased Answer: Increased
© 2025 All rights reserved
