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This set of Financial Management Multiple Choice Questions & Answers (MCQs) focuses on Financial Management Set 3

Q1 | The appropriate objective of an enterprise is;
  • Maximisation of sale
  • Maximisation of owners wealth.
  • Maximisation of profits.
  • None of these.
Q2 | The job of a finance manager is confined to
  • Raising funds
  • Management of cash
  • Raising of funds and their effective utilization.
  • None of these.
Q3 | Financial decision involve;
  • Investment ,financing and dividend decision
  • Investment ,financing and sales decision
  • Financing , dividend and cash decision
  • None of these.
Q4 | Net Profit Ratio Signifies:
  • Operational Profitability
  • Liquidity Position
  • Solvency
  • Profit
Q5 | Working Capital Turnover measures the relationship of Working Capital with:
  • Fixed Assets
  • Sales
  • Purchases
  • Stock.
Q6 | Dividend Payout Ratio is:
  • PAT Capital
  • DPS ÷ EPS
  • Pref. Dividend ÷ PAT
  • Pref. Dividend ÷ Equity Dividend
Q7 | Inventory Turnover measures the relationship of inventory with:
  • Average Sales
  • Cost of Goods Sold
  • Total Purchases
  • Total Assets
Q8 | The term 'EVA' is used for:
  • Extra Value Analysis
  • Economic Value Added
  • Expected Value Analysis
  • Engineering Value Analysis
Q9 | Return on Investment may be improved by:
  • Increasing Turnover
  • Reducing Expenses
  • Increasing Capital Utilization
  • All of the above
Q10 | In Current Ratio, Current Assets are compared with:
  • Current Profit
  • Current Liabilities
  • Fixed Assets
  • Equity Share Capital
Q11 | There is deterioration in the management of working capital of XYZ Ltd. What does itrefer to?
  • That the Capital Employed has reduced,
  • That the Profitability has gone up,
  • That debtors collection period has increased,
  • That Sales has decreased.
Q12 | Debt to Total Assets Ratio can be improved by:
  • Borrowing More
  • Issue of Debentures
  • Issue of Equity Shares
  • Redemption of Debt.
Q13 | Ratio of Net Income to Number of Equity Shares known as:
  • Price Earnings Ratio
  • Net Profit Ratio,
  • Earnings per Share
  • Dividend per Share.
Q14 | A Current Ratio of Less than One means:
  • Current Liabilities < Current Assets
  • Fixed Assets > Current Assets
  • Current Assets < Current Liabilities
  • Share Capital > Current Assets
Q15 | A firm has Capital of 10,00,000; Sales of 5,00,000; Gross Profit of . 2,00,000 andExpenses of . 1,00,000. What is the Net Profit Ratio?
  • 20%
  • 50%
  • 10%
  • 40%
Q16 | Suppliers and Creditors of a firm are interested in
  • Profitability Position
  • Liquidity Position
  • Market Share Position
  • Debt Position
Q17 | Which of the following is a measure of Debt Service capacity of a firm?
  • Current Ratio
  • Acid Test Ratio
  • Interest Coverage Ratio
  • Debtors Turnover
Q18 | Gross Profit Ratio for a firm remains same but the Net Profit Ratio is decreasing. Thereason for such behavior could be:
  • Increase in Costs of Goods Sold
  • If Increase in Expense
  • Increase in Dividend
  • Decrease in Sales.
Q19 | 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.
Q20 | Debt to Total Assets of a firm is .2. The Debt to Equity boo would be:
  • 0.80
  • 0.25
  • 1.00
  • 0.75
Q21 | Which of the following helps analysing return to equity Shareholders?
  • Return on Assets
  • Earnings Per Share
  • Net Profit Ratio
  • Return on Investment.
Q22 | In Inventory Turnover calculation, what is taken in the numerator?
  • Sales
  • Cost of Goods Sold,
  • Opening Stock
  • Closing Stock.
Q23 | Financial Planning deals with:
  • Preparation of Financial Statements
  • Planning for a Capital Issue
  • Preparing Budgets
  • All of the above
Q24 | Financial planning starts with the preparation of:
  • Master Budget
  • Cash Budget
  • Balance Sheet
  • None of the above.
Q25 | Process of Financial Planning ends with:
  • Preparation of Projected Statements
  • Preparation of Actual Statements
  • Comparison of Actual with Projected
  • Ordering the employees that projected figures m come true.