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This set of Financial Management Multiple Choice Questions & Answers (MCQs) focuses on Financial Management Set 18

Q1 | Which of the following is not a Source of Fund?
  • Issue of Capital
  • Issue of Debenture
  • Decrease in working capital
  • Increase in working capital
Q2 | Determinants of credit policy relates to:
  • Credit standards
  • Credit terms
  • Collection Procedures
  • All of the above
Q3 | The following is not a Discounted Cash Flow Technique:
  • NPV
  • PI
  • Accounting of Average rate of return
  • IRR
Q4 | β (Beta) of a security measures its:
  • Diversifiable risk
  • Financial risk
  • Market risk
  • None of above
Q5 | Following method is also known as ‘Benefit Cost Ratio.’
  • NPV
  • IRR
  • ARR
  • PI
Q6 | ROI (Return on Investment) can be decomposed into the following ratios:
  • Overall Turnover Ratio and Current Ratio
  • Net Profit Ratio and Fixed Assets Turnover
  • Working Capital Turnover Ratio and Net Profit Ratio
  • Net Profit Ratio and Overall Turnover Ratio
Q7 | Which one of the following activities is outside the purview of dividend decision infinancial management?
  • Identification of the profit after taxes
  • Measurement of the cost of funds
  • Deciding on the pay-out ratio
  • Considering issue of bonus shares to equity shareholders
Q8 | Which of the following does not help to increase Current Ratio?
  • Issue of Debentures to buy Stock
  • Issue of Debentures to pay Creditors
  • Sale of Investment to pay Creditors
  • Avail Bank Overdraft to buy Machine
Q9 | Which of the following statements is correct?
  • A higher Receivable Turnover is not desirable.
  • Interest Coverage Ratio depends upon Tax Rate.
  • Increase in Net Profit Ratio means increase in Sales
  • Lower Debt Equity Ratio means lower Financial Risk
Q10 | “Shareholders Wealth” in a firm is reflected by:
  • the number of people employed in the firm
  • the book value of the firm’s assets less the book value of its liabilities
  • the amount of salary paid to its employees
  • the market price per share of the firm
Q11 | The excess of Current Assets over Current Liabilities is called:
  • Net Current Assets
  • Net Working Capital
  • Working Capital
  • All of the above
Q12 | Profit Maximization is the main objective of business because:
  • Profit acts as a measure of efficiency and
  • It serves as a protection against risk
  • Both
  • none
Q13 | Stock holder’s wealth = ____________
  • No. of shares owned x Current stock price per share
  • No. of shares owned x Current stock price per share
  • No. of shares owned x Current stock price per share
  • none
Q14 | Working Capital Management refers to a Trade-off between _____________andProfitability.
  • Liquidity
  • Risk
  • Both of the above
  • None of the above
Q15 | Which one of the following is a medium term source?
  • Public Deposits
  • Lease Financing
  • Euro Debt Issue
  • All of the above
Q16 | The lease period in such a contract is less than the useful life of asset. Here we aretalking about _______.
  • Operating or Service Lease
  • Service Lease
  • Financial Lease
  • None of the above
Q17 | Which one is the Benefit(s) of Factoring?
  • Better Cash Flows
  • Better Assets Management
  • Better Working Capital Management
  • All of the above
Q18 | Find the present value of Rs. 1,000 receivable 6 years hence if the rate of discount is10 percent.
  • 564.5
  • 554.5
  • 574.5
  • 600
Q19 | The term _______means manipulation of accounts in a way so as to conceal vital facts and present the financial statements in a way to show a better position than what it actually is.
  • window dressing
  • creative accounting
  • window accounting
  • modified accounting
Q20 | Collateralized borrowing and lending obligation (CBLO) is a discounted instrumentavailable in electronic book entry for the maturity period ranging from __________.
  • 1 day to 19 days
  • 1 day to 15 days
  • 1 day to 30 days
  • None of the above
Q21 | IPO refers to ____________; the first time a company comes to public to raise money.
  • Immediate Public Offer
  • Immediate Public Offering
  • Initial Public Offer
  • Initial Public Offering
Q22 | SPO refers to ________, the second and subsequent time a company raises moneyfrom the public directly.
  • Second Public Offering
  • Subsequent Public Offering
  • Subsequent Public Offer
  • Seasonal Public Offering
Q23 | Liquid Liability = Current Liability – Bank Overdraft – ___________
  • Cash Credit
  • Trade Credit
  • Both of the above
  • None of the above
Q24 | Ratio analysis is the process of determining and interpreting numerical relationshipsbased on _______.
  • Financial values
  • Financial statements
  • Financial numerical information
  • All of the above
Q25 | Ratio analysis is based on __________ measure.
  • relative
  • absolute
  • Both of the above
  • None of the above