Jigjiga University
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ACCOUNTING & FINANC
Course Title Financial Management-I Date:
March , 2019
Program: Degree (Evening) Time Allowed: 40mts Assessment Type:
Test 1, 15%
Name: ______________________________________________
ID. №: ………………………………… section: ________________________
Part One: Multiple Choice
1. The Modern Concept outlived its utility due to changed business situations since mid-
1950s.
2. A financial action resulting in negative net present value (NPV) should be Accepted
3. Working Capital Management is concerned with the management of the fixed assets.
4. The traditional concept view, the term financial management in a broad sense and provides a
conceptual and analytical framework for financial decision-making.
5. Bad production management and bad sales management have slay in hundreds, but fault
financial management has slain in thousands.
Multiple Choices (0.5 point each)
1. The objective of financial management is?
A. Maximize corporate profits. C. Maximize earnings
B. Minimize costs. D. Wealth Maximization
2. The finance function mainly deals with the following three decisions except:
A. Investment Decision. C. Management Decision
B. Financing Decision. D. Dividend Decision
3. The following points are to be considered while determining the appropriate capital structure of a
firm which one are not?
A. Factors which have bearing on the capital structure
B. Relationship between return on investment (ROI) and return on equity (ROE).
C. Relationship between earnings before interest and taxes (EBIT) and earnings per share
(EPS).
D. Relationship between earnings after interest and taxes (EAIT) and earnings per share
(EPS).
4. The profit maximization theory is based on one of the following important assumptions
A. This theory is bases purely on the rationality of the individuals and the firms.
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B. It promotes the use of resources to the best of their advantage of gain
maximum out of them.
C. It leads to the economic selection of the resources.
D. All the above
5. ________refers to the decision making process by which a firm evaluates the purchase of
major fixed assets, including buildings, machinery and equipment.
A. Financial Planning C. Capital budgeting
B. Financial analysis D. Decision making analysis
6. A ___________ is a business organization that is owned, and usually managed, by two or
more persons associate to conduct a non-corporate business.
A. Corporation. C. Partnership.
B. Sole proprietorship. D. Company
7. The ___________ is the most common form of business ownership.
A. Partnership. C. Corporation.
B. Sole proprietorship D. None of the above
8. The aspect of financial decision-making with reference to current assets or short-term assets
is designated as
A. Current asset and Liabilities
B. Fixed asset and long-term asset
C. Current asset and short-term asset
D. Long-term asset and short-term asset
9. The assets which can be acquired fall into two broad groups these are
A. Current asset and Liabilities
B. Fixed asset and long-term asset
C. Current asset and short-term asset
D. Long-term asset and short-term asset
10. Corporation Finance’ which was used in the traditional concept was replaced by the present
term
A. Financial Management
B. Financial decision
C. modern approach
D. Working Capital Management
Essay parts (3points)
1. Write at least three advantages and disadvantage of sole proprietorship?
2. Write the similarity and differences between sole proprietorship and partnership
3. The corporate form offers significant advantages over proprietorships and partnerships,
but it also has two disadvantages these are
1._____________________________________
2._____________________________________
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