12 Grade Quiz #3, October 24, 2013

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  • 1/9 Questions

    People were buying apartments, in 2008, not to live in, but to resale and make a profit.

    • True
    • False
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About This Quiz

12 Grade Quiz #3, October 24, 2013, evaluates understanding in business finance. Questions cover working capital, the work cycle, cash flow, financial ratios, and a quote from the movie Meltdown, providing a multifaceted view of corporate finance and liquidity management.

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  • 2. 

    Which is NOT a part of the Work Cycle?

    • Credit

    • Cash

    • Liquidation

    • Production

    Correct Answer
    A. Liquidation
    Explanation
    Liquidation is not a part of the work cycle. The work cycle typically refers to the sequence of activities involved in the production process, from the acquisition of raw materials to the manufacturing and delivery of finished products. Credit, cash, and production are all integral parts of the work cycle as they involve the financial and operational aspects of producing goods or services. Liquidation, on the other hand, refers to the process of winding up a business or selling off its assets, which is not directly related to the work cycle.

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  • 3. 

    Current Assets = Stocks + Debtors + Cash

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement "Current Assets = Stocks + Debtors + Cash" is true. Current assets are the assets that are expected to be converted into cash or used up within one year. Stocks, debtors, and cash are all examples of current assets. Stocks refer to the inventory or goods that a company holds for sale. Debtors are the amounts owed to the company by its customers or clients. Cash represents the amount of money or cash equivalents that the company has on hand. Therefore, the equation accurately represents the components of current assets.

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  • 4. 

    In the movie Meltdown, excess credit was showing in ‘sub-prime’ loans.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The movie Meltdown depicted the presence of excess credit in 'sub-prime' loans. This implies that there was an abundance of credit being given to borrowers who had a higher risk of defaulting on their loans. This situation is often associated with the financial crisis of 2008, where the housing market collapsed due to the high number of subprime loans that were issued. Therefore, the statement is true as the movie portrays the existence of excess credit in subprime loans.

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  • 5. 

    Below is the correct equation for Current Ratio: Current Assets - Stocks / Current Liabilities

    • True

    • False

    Correct Answer
    A. False
    Explanation
    The given equation for the Current Ratio is incorrect. The correct equation for the Current Ratio is Current Assets divided by Current Liabilities. The formula provided in the question, which subtracts Stocks from Current Assets, is incorrect. Therefore, the answer is False.

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  • 6. 

    Working Capital is the ability of a firm to be able to pay its short-term debts. 

    • True

    • False

    Correct Answer
    A. False
    Explanation
    Working capital refers to the difference between a company's current assets and its current liabilities. It represents the funds available to a company to meet its day-to-day operational expenses and short-term obligations. Therefore, the statement that working capital is the ability of a firm to be able to pay its short-term debts is incorrect. Working capital is a measure of a company's liquidity and its ability to manage its current financial obligations efficiently.

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  • 7. 

    The net monthly cash flow consist of opening and closing balance.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    The statement is false because the net monthly cash flow is calculated by subtracting the total cash outflows from the total cash inflows in a given month. It does not include the opening and closing balance as part of the calculation.

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  • 8. 

    What  person that stated the following quote in the movie Meltdown. “One day we had a firm, the next day we did not.”

    • Dick Fuld

    • Maxine Waters

    • Jim Flaherty

    • Hank Paulson

    Correct Answer
    A. Dick Fuld
  • 9. 

    Who is the man, in the movie Meltdown, known as “The Snake?”

    • Alex Brummer

    • Allen Greenspan

    • Hank Paulson

    • James Cayne

    Correct Answer
    A. Hank Paulson
    Explanation
    Hank Paulson is known as "The Snake" in the movie Meltdown.

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  • Dec 12, 2024
    Quiz Edited by
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  • Oct 24, 2013
    Quiz Created by
    Bayan2013

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