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MCQs

The document contains 20 multiple choice questions testing knowledge of key financial management concepts. These include calculating current ratio, examples of fixed assets, defining interest payments on borrowed funds, characteristics of capital budgeting decisions, examples of external cash sources, defining marginal cost, synonyms for current assets, objectives of financial management, factors considered in wealth maximization, the main focus of financial management, accepting or rejecting projects based on present value of cash flows, matching financial terms, ordering cash flows by present value, examples of principals and agents, what capital budgeting decisions involve, the benefit cash ratio method of capital budgeting, what working capital is used for, the form of financing reserves and surplus represent, and how liquidity varies with profitability

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679 views3 pages

MCQs

The document contains 20 multiple choice questions testing knowledge of key financial management concepts. These include calculating current ratio, examples of fixed assets, defining interest payments on borrowed funds, characteristics of capital budgeting decisions, examples of external cash sources, defining marginal cost, synonyms for current assets, objectives of financial management, factors considered in wealth maximization, the main focus of financial management, accepting or rejecting projects based on present value of cash flows, matching financial terms, ordering cash flows by present value, examples of principals and agents, what capital budgeting decisions involve, the benefit cash ratio method of capital budgeting, what working capital is used for, the form of financing reserves and surplus represent, and how liquidity varies with profitability

Uploaded by

Rk Bains
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1-The formula used to calculate current ratio is

a) Current assets / Current liabilities


b) Current liabilities / Current assets
c) Inventory / Current liabilities
d) Current liabilities / Inventory

2-An example of fixed asset is

a) Machine
b) Shares
c) Debentures
d) All of the above

3-The return which the company pays on borrowed funds is termed as

a) Dividend
b) Interest
c) Bonus
d) All of the above

4-The following is (are) the feature(s) of a capital budgeting decision

a) Long Term
b) Risky
c) Huge Funds required
d) All of the above

5-The following is (are) the external source(s) of cash

a) Long terms loans


b) Short term borrowings
c) Issue of debentures
d) All of the above

6-The total cost that arises when the quantity produced is increased by one unit is called

a) Average cost
b) Marginal cost
c) Fixed cost
d) Unit cost
7-Current assets are also referred to as

a) Gross Working capital


b) Investments
c) Inventory
d) Raw material

8-The only feasible purpose of FM is

a) Wealth Max.
b) Profit Max.
c) Sales Ma.
d) Asset Max.

9-Financial Management deals with

a) Lending Decisions
b) Financial Decisions
c) Both a and b
d) None of these

10-The objective of wealth maximization takes into account

a) Amount of returns expected


b) Timing of anticipated returns
c) Risk associated with uncertainty of returns
d) All of the above

11-Financial management mainly focuses on

a) Efficient management of every business


b) Brand dimension
c) Arrangement of Funds
d) All elements of acquiring and using means of financial resources for financial activities

12- If the Present Value of Cash Inflows are greater than the Present Value of Cash Outflows, the project would be

a) Accepted
b) Rejected
c) Considered

13-Match the following

a) Dividend 1. Portion of Current Assets

b) Stock 2. Charge against Profit

c) Reserve 3. Portion of Profit

d) Depreciation 4. Surplus
14-The Present Value of all inflows are cumulated in

a) Order of Cash
b) Order of Time
c) Order of Sales

15- A (n) __________ would be an example of a principal, while a (n)___________would be an example of an agent.

a) shareholder; manager
b) manager; owner
c) accountant; bondholder
d) shareholder; bondholder

16-Capital budgeting actually is a process of making investment decisions in

a) Sales Planning
b) Production Process
c) Fixed Assets
d) Current assets

17- Which method of capital budgeting called benefit cash ratio?

a) Pay Back Period


b) NPV
c) IRR
d) PI

18- Working capital refers to the capital mobilized for meeting

a) Long-term financial needs of the company


b) To meet day-to-day financial obligations of the company
c) To meet the future financial requirements of the company
d) None of the above

19- Reserves & Surplus are which form of financing?

a) Security Financing
b) Internal Financing
c) Loans Financing
d) International Financing

20- __________varies inversely with profitability.

a) Liquidity
b) Risk
c) Financing
d) Liabilities

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