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Could you be a BDC Account Manager?
Are you able to identify intangible assets on a balance sheet? Do you know what can affect a company's cash flow? Complete the following exercise to determine the level of your financial background. This is a self-assessment tool, and the results will be known only to you. To get an accurate scoring, you should complete the exercise from beginning to end.

For questions 1-4, consider that all current assets and current liabilities on the balance sheet remain unchanged.

 
1. An increase in a company's inventory turnover will ____________ its working capital requirement.
increase  
decrease  
have no effect on  
 
2. A decrease in the aging of a company's accounts payable will have a ______________ effect on cash flow.
positive  
negative  
neutral  
 
3. An increase in depreciation expense will have a ______________ effect on cash flow.
positive  
negative  
neutral  
 
4. An increase in a company's working capital ratio generally indicates an ______________ financial position.
improved  
worsening  
stable  
 5. From the list, choose two balance sheet items that would be considered intangible assets on a balance sheet.
 
Deferred taxes
 
Patents
 
Trademarks
 
Leasehold improvements
 
Incorporation costs
 
Due from shareholders
 
Research and development
 
Computer software
 
Computer hardware
 
Amortization
 
Goodwill
 6. From the list, choose two examples of sources of funds found on the statement of changes in financial position (or statement of cash flows).
 
Decrease in term debt
 
Net income
 
Depreciation and amortization
 
Prepaid expenses
 
Increase to shareholder loans
 
Increase to capital leases
 
Decreasing accounts payable
 
Increasing accounts receivable
 
Share redemption
 
Decrease bank overdraft
 
7. Which of the following is generally not considered part of the company's net worth:
Retained Earnings  
Advances to Shareholders  
Advances from Shareholders  
Share Capital  
 
8. In the majority of companies, a change to which of the following expense items would affect gross profit margin:
bank charges  
legal fees  
travel costs  
material costs  
 
9. Which item does not appear on a company's income statement but is included in its cash flow budget?
term debt repayments  
depreciation expenses  
income taxes  
labor costs  
 
10. A term debt to equity ratio of 3:1 indicates a company:
has 3 times as much debt as equity  
has 3 times as much equity as debt  
has the cash flow necessary to borrow 3 times more debt than equity  
needs to have 3 times more equity than debt to operate  
 11. Consider the following company:
 
Sales     $ 2 300 000        Bank     $ 100 000
Cost of goods     $ 1 800 000        Accounts payable     $ 150 000
Net profit     $ 175 000        Long term debt     $ 275 000
Net worth     $ 200 000
Accounts receivable     $ 175 000
Inventory     $ 150 000
Fixed assets     $ 400 000
 Determine the following, using only the information provided: (all answers must be NUMERIC)
 Term debt equity ratio
 Accounts receivable (days)
 Your inventory turnover:
 Return on assets (%)
 
    


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