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University of Miami Financial Analysis Multiple Choice Questions

University of Miami Financial Analysis Multiple Choice Questions

Question Description

I’m working on a writing multi-part question and need a reference to help me understand better.

Ch 9

1. Which of the following are steps in a capital investment financial analysis?

a. Estimate the project’s cash flows

b. Assess the project’s riskiness

c. Estimate the project cost of capital (discount rate)

d. Measure the financial impact

e. All of these choices

2. True or false: An NPV of zero ($0) signifies that the project’s cash inflows will (1) be sufficient to recover the project’s

costs and (2) earn a return equal to the project’s opportunity cost of capital.

a. True

b. False

3. True or false: An IRR of zero (0%) signifies that the project’s cash inflows will (1) be sufficient to recover the project’s

costs and (2) earn a return equal to the project’s opportunity cost of capital.

a. True

b. False

Ch 10

4. Which of the following is not a relevant cash flow when estimating the incremental cash flows for a new hospital

service?

a. The value of floor space needed for the project

b. Revenues from an existing service that would be lost as a result of the new service

c. Shipping and installation costs associated with the new service

d. The cost of a consultant’s report concerning the feasibility of the service that was completed (and paid for) in

the previous year

e. An increase in inventory costs that would result if the project is undertaken

5. Which of the following statements about capital rationing is most correct?

a. Capital rationing occurs when a business does not have the capital necessary to fund all acceptable projects.

b. Capital rationing occurs when a business has more capital available than needed to fund all acceptable

projects.

c. Under capital rationing, the typical approach is to accept all projects with negative NPVs.

d. Both a and b are correct.

e. All of these are correct.

Ch 11

6. Which of the following items are part of a business’s set of financial statements?

a. Income statement

b. Balance sheet

c. Statement of cash flows

d. Both a and b

e. All of these.

7. Which of the following statements concerning operating income is most correct?

a. Operating income is the “bottom line” of the income statement.

b. Operating income is reported only by for?profit businesses.

c. Operating income reports the profitability of a healthcare provider’s core activities.

d. Both a and b are correct.

e. All of these are correct.

Ch 12

8. Which of the following equations best describes the accounting identity?

a. Long?term assets = Short?term assets + Equity

b. Assets = Liabilities + Equity

c. Total claims = Liabilities + Equity

d. Short?term assets = Cash + Receivables

e. Long?term liabilities = Notes + Bonds

Ch 13

9. Which of the following statements about financial condition analysis is most correct?

a. Financial condition analysis focuses on whether an organization has the financial capacity to accomplish its

mission.

b. Financial condition analysis often results in a list of financial strengths and weaknesses.

c. Financial statement analysis uses data contained in an organization’s financial statements to assess financial

condition.

d. Operating analysis uses operating data to explain financial condition.

e. All of these statements are correct.

10. Which of the following statements about the limitations of financial condition analysis is most correct?

a. Comparison with industry averages is difficult if the organization operates in several different lines of

business.

b. Seasonal factors can distort ratios.

c. Inflation effects can distort ratios.

d. Both a and b are correct.

e. All of these are correct.

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