1. The cost of debt capital is calculated on the basis of _____________ .

 Net proceeds
 Annual Interest
 Annual Depreciation
 Capital
 View Answer
The cost of debt capital is calculated on the basis of Annual Interest.

2. What is Factoring ?

 Production Plan
 New Financial Service
 Cost of Sales
 all of the above
 View Answer
Factoring is a New Financial Service

3. Which of the following is the goal of financial management ?

 Maximise the wealth of Equity shareholders

 Maximise the wealth of Preference Shareholders
 Maximise the wealth of Debenture holders
 All of the above
 View Answer
the goal of financial management is maximise the wealth of Equity shareholders.

4. ____________________ is the limitation of Traditional approach of Financial Management

 More emphasis on long term problems

 Ignores allocation of resources
 One-sided approach
 All of the above
 View Answer
All of the above
5. Financial management mainly focuses on ________________ .

 Efficient management of every business

 Brand dimension
 Arrangement of funds
 All elements of acquiring and using means of financial resources for financial activities

Download Free : Financial Management MCQ PDF

 View Answer
Financial management mainly focuses on all elements of acquiring and using means of
financial resources for financial activities.

6. Heterogeneous cash flows can be made comparable by Discounting technique or

Compounding technique.

 true
 false
 View Answer
true
7. Which of the following is Capital market line ?

 Capital allocation line of a market portfolio

 Capital allocation line of a risk free asset
 Both 1 and 2
 All of the above
 View Answer
Both 1 and 2, Capital allocation line of a market portfolio and Capital allocation line of a risk
free asset is Capital market line.

8. A risk free security has __________ variance.

 0
 2
 4
 6
 View Answer
A risk free security has 0 variance
 A risk free security has 0 variance.

9. ________________ is called as Dividend Ratio Method.

 Debt Equity Method

 Dividend Yield Method
 Equity Method
 Asset Method
 View Answer
Dividend Yield Method is called as Dividend Ratio Method.

10. Ke = DPS/MP x 100, is used for -

 Reserve
 Calculating capital structure
 Depreciation
 calculating Cost of Equity Share Capital
 View Answer
Ke = DPS/MP x 100, is used for calculating Cost of Equity Share Capital.

11. Which of the following is Capital Employed ?

 Cash + Bank
 Assets + Cash
  Shareholders Funds + Long Funds
 All of the above
 View Answer
Capital Employed is Shareholders Funds + Long Funds.

12. The formula used to calculate current ratio is _______________ .

 Current liabilities / Current assets

 Current assets / Current liabilities
 Inventory / Current liabilities
 Current liabilities / Inventory
 View Answer
The formula used to calculate current ratio is Current assets / Current liabilities.

13. _____________ is an example of fixed asset.

 Value stock
 Live stock
 Income stock
 none of these
 View Answer
Live stock is an example of fixed asset.
14. Current assets are also referred to as _____________ .

 Inventory
 Working capital
 Livestock
 Investments
 View Answer
Current assets are also referred to as Working capital.

15. Which of the following is short term Sources ?

 Bank Credit
 Public Deposit
 Commercial Paper
 All of the above
 View Answer
All of the above

16. Investment is the employment of funds on assets to earn returns.

 true
 false
 View Answer
true
17. Which of the following is the primary goal of financial management ?

 To Maximize the return

 To Minimize the risk
 To maximize the wealth of owners
 To maximize profit
 View Answer
The primary goal of financial management is, to maximize the wealth of owners.

18. Which of the following are financial Assets ?

 Bonds
 Machines
 Stocks
 1 and 2
 View Answer
Financial Assets are Bonds & Machines.

19. Savings Account are ____________ , but are not __________________ .

 Negotiable, Liquid
 Liquid, Marketable
 liquid, Personal
 None of these
 View Answer
Savings Account are Liquid, but are not Marketable.

20. _________________ is not a characteristic of investments .

 Pooled investments.
 Reduced expenses
 manage portfolios
 All of the above
 View Answer
Reduced expenses is not a characteristic of investments .
21. What is Balance of Payment ?

 Foreign exchange inflow – Foreign exchange outflow

 Balance of trade + Net earnings on invisibles
 balance of current account + Balance of capital account + Statistical discrepancy
 Export of goods – Import of goods
 View Answer
Balance of Payment is Balance of current account + Balance of capital account + Statistical
discrepancy.

22. A capital investment is one that ___________ .

 applies only to investment in fixed assets

 has the prospect of long-term benefits.
 has the prospect of short-term benefits.
 is only undertaken by large corporations
 View Answer
A capital investment is one that has the prospect of long-term benefits.

23. In finance, "working capital" means the same thing as -

 fixed assets.
 total assets.
 current assets
 current assets minus current liabilities.
 View Answer
In finance, "working capital" means the same thing as current assets.

24. Liabilities varies inversely with profitability.

 true
 false
 View Answer
false
25. Net working capital means -

 total assets minus fixed assets.

 current assets minus current liabilities
 current assets minus inventories
 current assets.
 View Answer
Net working capital means current assets minus current liabilities.

26. The term "capital structure" indicates to _________________ .

 long-term debt, preferred stock, and common stock equity

 shareholders' equity
 total assets minus liabilities
 All of the above
 View Answer
The term "capital structure" indicates to long-term debt, preferred stock, and common stock
equity.

27. Reserves & Surplus are __________________ of financing.

 Security Financing
 Internal Financing
 Loans Financing
 International Financing
 View Answer
Reserves & Surplus are Internal Financing of financing.

28. What is an asset ?

 Inflow of funds
 Source of fund
 Use of fund
 All of the above
Vi A
 View Answer
An asset is use of fund.

29. Current ratio is 2:5.Current liability is Rs.30000.The Net working capital is __________ .

 Rs.18,000
 Rs.(-) 45,000
 Rs.(-)18000
 Rs.45,000
 View Answer
Current ratio is 2:5.Current liability is Rs.30000.The Net working capital is Rs.(-)18000.

30. What is The ideal quick ratio ?

 2:1
 1:1
 5:1
 2.2
 View Answer
The ideal quick ratio is 1:1 .

31. What is the focal point of financial management in a firm ?

 the creation of value for shareholders.

 the number and types of products or services provided by the firm.
 the dollars profits earned by the firm.
 investment, financing, and asset management
 View Answer
The focal point of financial management in a firm is investment, financing, and asset
management.

32. Long period of bond maturity leads to _________ .

 stable prices
more price change
  more price change
 standing prices
 mature prices
 View Answer
Long period of bond maturity leads to more price change.

33. The price per ratio is divided by cash flow per share ratio, is used for calculating
_________________ .

 Divided to Stock ratio

 Cash flow to price ratio
 sales to growth ratio
 price to cash flow ratio
 View Answer
The price per ratio is divided by cash flow per share ratio, is used for calculating price to cash
flow ratio.

34. The Companies that help to set benchmarks are classified as-

 Competitive Companies
 Benchmark Companies
 Analytical Companies
 Return Companies
 View Answer
The Companies that help to set benchmarks are classified as Benchmark Companies.

35. If the profit margin is equal to 4.5% and the total assets turnover is 1.8% then the return on
assets Dupont Equation would be ________.

 0.025
 0.023
 0.081
 None of these
 View Answer
If the profit margin is equal to 4.5% and the total assets turnover is 1.8% then the return on
assets Dupont Equation would be 0.081.
36. In Capital Budgeting, the positive net present value results in -

 Negative Economic Value Added

 Positive Economic Value Added
 Zero Economic Value Added
 Percent Economic Value Added
 View Answer
In Capital Budgeting, the positive net present value results in Positive Economic Value Added.

37. The Cash outflows are the costs of project and are represented by ___________ .

 Negative Numbers
 Positive Numbers
 Hurdle Numbers
 Relative Numbers
 View Answer
The Cash outflows are the costs of project and are represented by Negative Numbers.

38. The Cash inflows are the revenues of project and are represented by -

 Relative Number
 Negative Number
 Hurdle Number
 Positive Number
 View Answer
The Cash inflows are the revenues of project and are represented by Positive Number.

39. The Long period of bond Maturity lends to -

 Stable Prices
 More Price change
 Standing Prices
 Mature Prices
 View Answer
The Long period of bond Maturity lends to More Price change.
40. The bond issued by corporations and exposed to default risk are classified as _____________ .

 Default Bonds
 Corporation Bonds
 Risk Bonds
 Zero Risk Bonds
 View Answer
The bond issued by corporations and exposed to default risk are classified as Corporation
Bonds.

41. Which of the following is not a type of bank?

 Central Bank
 Savings Bank
 Commercial Bank
 Co-operative Bank
 View Answer

42. Which of the following is not an asset?

 Cash
 Inventory
 Investments
 Owner's Equity
 View Answer
Owner's Equity

43. Financial managers should primarily focus on the interests of .............

 Shareholders.
 Stakeholders.
 Board of directors.
 The vice president of finance.
 View Answer
Shareholders.
44. A characteristic of a fixed asset is that ............

 It can be depreciated

 It have a useful life of more than one year
 It is used in the ordinary operations of a business
 All of the above
 View Answer
All of the above

45. The complete portfolio refers to the investment in ...............

 the risky portfolio

 the riskfree asset
 the risky portfolio and the index
 The risk free asset and the risky portfolio combined
 View Answer
The risk free asset and the risky portfolio combined

46. which one of the following is a working capital management decision?

 determining whether or not a project should be accepted

 determining the amount of equipment needed to complete a job
 determining the amount of long-term debt required to complete a project
 determining whether to pay cash for a purchase or use the credit offered by the supplier
 View Answer
determining whether to pay cash for a purchase or use the credit offered by the supplier

47. The primary goal of the financial manager is to maximize ..............

 revenue
 societal benefit
 shareholder wealth
 earnings per share
 View Answer
 shareholder wealth

48. The ______ measure of returns ignores compounding.

 IRR
 dollar-weighted
 geometric average
 arithmetic average
 View Answer
arithmetic average

49. Which of the following represents a source of short-term funding?

 Common stock
 Corporate bonds
 Commercial paper
 Retained earnings
 View Answer
Commercial paper

50. Which of the following is not included in the computation of the quick ratio?

 Cash
 Prepaid expenses
 Accounts receivable
 Marketable securities
 View Answer
Prepaid expenses

51. Which of the following is not a characteristic of a liability?

 It must be payable in cash.

 It results from past transactions or events.
 It arises from present obligations to other entities.
 It represents a probable, future sacrifice of economic benefits.
 p p ,
 View Answer
It must be payable in cash.

52. Cash dividends become a liability of the corporation ..........

 Declaration Date
 Payment date
 Outstanding stock
 Date of Record
 View Answer
Declaration Date

53. Working capital management is primarily concerned with the management and financing of
..............

 current assets