FINAL EXAMINATION IN BUSINESS FINANCE

Name: __________________________________________________ Score: ___________

Grade & Section: _________________________________ Date: ____________________

I. Multiple Choice
Directions: Circle the letter of the correct answer. (1 point each)
1. This refers to the important aspect of the firm’s operations because it provides road maps for
guiding, coordinating, and controlling the firm’s actions to achieve its objectives.
a. Planning b. Financial Planning c. Long-term Goal d. Short-term Goal
2. The following are the roles of a Financial Planner, except ________.
a. Minimizing, controlling, and managing expenses
b. Overseeing the finances of the company
c. Assisting clients with creating personal budgets
d. Establishing objectives for saving
3. Trixie is planning to open her own business, but she has to compose a statement that will inform
the customers where her company wants to be after many years from now. What statement is
this?
a. Vision b. Budget c. Mission d. Sales
4. Cindy wished to start her business, she already thought of the goals but she is still planning to
come up with a statement that will inform her customers about the steps her business would
take in order to achieve its goals. What statement is this?
a. Vision b. Budget c. Mission d. Sales
5. The Big Boss mentioned that employees are the most valuable and important assets a company
possess. Employees are considered to be the ______________ of the company.
a. Human resources c. Management Team
b. Financial resources d. Equipment
6. Company de Yvone has a long-term plan to expand from Minglanilla to Talisay City. What do
you think is the time-period of the company’s plan?
a. One year or less c. Within the year
b. Two to ten years d. Less than two years
7. Cindy’s Company of Sweet Treats is starting an emergency fund as its’ short-term plan. What
do you think is the time period of the company’s plan?
a. One year or less c. Three years or more
b. Five to ten years d. Ten to twenty years
8. Mery owns an almost three-year Milktea business. What do you think shall be the focus of her
business?
a. Everyday functioning of the company c. Monthly gains of the company
b. Direction of the company d. Generating profit-related investments
9. This refers to the days required for a business to receive inventory, sell the inventory, and collect
cash from the sale of inventory.
a. Operating Cycle c. Cash Conversion Cycle
b. Average Inventory d. Profit Extending Cycle
10. This refers to the company’s investment in current assets such as cash, accounts receivables,
and inventories.
a. Withdrawing Capital c. Inventory
b. Working Capital d. Net Working Capital
11. This refers to the difference between current assets and current liabilities.
a. Average Inventory Turn-over c. Net Worth
b. Accounts Receivables d. Net Working Capital
12. This refers to the sum of days of inventory and days of receivables.
a. Cash Conversion Cycle c. Net Working Capital
b. Average Inventory d. Operating Cycle
13. This is also called the net operating cycle which is computed as the operating cycle less days of
payable.
 a. Beginning Inventory c. Finance Operating Cycle
b. Accounting Cycle d. Cash Conversion Cycle
14. This refers to the average number of days for the company to pay its creditors.
a. Days of Receivables Outstanding c. Days of Payables Outstanding
b. Days of Sales Outstanding d. Days of Inventory Turn-over
15. This refers to the length of time it takes for the initial cash outflows for goods and services
purchased to be realized as cash inflows from sales.
a. 365 days c. Cash Conversion Cycle
b. Average Inventory Turn-over d. Operating Cycle
16. This refers to the administration and control of the company’s working capital.
a. Financial Management c. Working Capital Management
b. Managing Working Capital d. Permanent Working Capital Management
17. This refers to the minimum level of current assets required by a firm to carry-on its business
operations given its production capacity or relevant sales range.
a. Permanent Working Capital c. Temporary Working Capital
b. Net working Capital d. Financing Capital
18. This refers to the excess of working capital over the permanent working capital given its
production capacity or relevant sales range.
a. Permanent Working Capital c. Financing Capital
b. Temporary Working Capital d. Net Working Capital
19. This policy states that all permanent working capital must be financed by long-term sources
while temporary working capital requirements should be financed by short-term sources.
a. Aggressive Working Capital Financing Policy
b. Conservative Working Capital Financing Policy
c. Maturity-Matching Working Capital Policy
d. Money Conversion Policy
20. This policy minimizes liquidity risk but also reduces the company’s profitability because long-
term sources of financing entail higher cost.
a. Money Conversion Policy
b. Aggressive Working Capital Financing Policy
c. Maturity-Matching Working Capital Policy
d. Conservative Working Capital Financing Policy

II. Problem Solving

Direction: Read and analyze the problems. Write your answers and solutions at the back
portion of the paper. (5 points each)
1. Harvy is given a task to discuss about the Net Working Capital. With the account titles below,
how can he solve to get the answer using the formula for Net Working Capital.

2. Calculate for the Average Inventory.

3. Dr. Dax Dental Suppliers sells dental supplies to practices in its area. The company has an
average inventory of P50,000 and a cost of goods sold of P250,000 for the year. What is its
inventory result for a one-year period?

4. Sanjey R Store is a grocery store that provides organic food products for its small town. The
average inventory for the year is P48,000, and the cost of goods sold is P123,000. What is the
store’s number of days in inventory for a one-year period?

5. Betty de Compañia posted P42,000 in beginning accounts payable and P53,000 in ending
accounts payable for the fiscal year ended 2018, along with P100,000 in cost of goods sold. The
DSO for the company would be?

6. Solve for the DSO.

Henrietta Molave Company
A/R balance at the end of Current Month: P7,000,000
Sales
Current Month: P6,000,000
1 month ago: P5,000,000
2 months ago: P2,000,000