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This set of Financial Management Multiple Choice Questions & Answers (MCQs) focuses on Financial Management Set 17

Q1 | Which of the following is not a part of the money market?
  • Call money market
  • Treasury bill market
  • Commercial paper market
  • Stock market
Q2 | The objective of financial management is to
  • Maximize the revenue
  • Minimize the expenses
  • Maximize the return on investment
  • Maximize the wealth of the owners by increasing the value of the firm
Q3 | Which of the following is the main objective of financial management?
  • Revenue Maximisation
  • Profit Maximisation
  • Wealth Maximisation
  • Cost Minimisation
Q4 | Which one of the following activities is outside the purview of financing decision infinancial management?
  • Identification of the source of funds
  • Measurement of the cost of funds
  • Deciding on the time of raising the funds
  • Deciding on the utilization of the funds
Q5 | A firm has a capital of Rs. 10 lakhs, sales of Rs. 5 lakhs, gross profit of Rs. 2 lakhs andexpenses of Rs. 1 lakh. The Net Profit Ratio is:
  • 50%
  • 40%
  • 20%
  • 10%
Q6 | Which of the following forms of equity financing is especially designed for fundingHigh Risk & High Reward projects?
  • ADR
  • GDR
  • FCCB
  • Venture Capital
Q7 | A process through which loans and other receivables are underwritten and sold in aform of asset is known as:
  • Factoring
  • Forfeiting
  • Securitisation
  • Bill Discounting
Q8 | In Net Profit Ratio, the denominator is:
  • Credit Sales
  • Net Sales
  • Cost of Sales
  • Cost of Goods Sold
Q9 | Current Assets Rs. 20,00,000; Current Liabilities Rs. 10,00,000 and Stock Rs. 2,00,000,then what is liquid ratio?
  • 2 times
  • 1.8 times
  • 1.4 times
  • None of these
Q10 | Annual credit sales Rs. 4,00,000; Average collection period 45 days (assume 360 days in a year). What is Average debtors?
  • Rs. 60,000
  • Rs. 74,000
  • Rs. 50,000
  • Rs. 4,00,000
Q11 | Investment in a project is Rs. 200 lakhs and Net Present Value is Rs. 50 lakhs. Then theamount of inflows is :
  • Rs. 150 lakhs
  • Rs. 200 lakhs
  • Rs. 100 lakhs
  • Rs. 250 lakhs
Q12 | PAT of a company Rs. 100 lakhs and number of equity shares of Rs. 10 each with acapital of Rs. 50 lakhs, then EPS is:
  • Rs. 2
  • Rs. 1
  • Rs. 10
  • None of these
Q13 | Degree of operating leverage is:
  • EBIT / EBT
  • Contribution / EBT
  • Contribution / EBIT
  • None of these
Q14 | Cost of goods sold is Rs. 8000 and gross margin is Rs. 5000 then revenue will be
  • Rs. 3,000
  • Rs. 5,000
  • Rs. 8,000
  • Rs. 13,000
Q15 | Present value of inflows Rs. 10 lakhs from a project and initial investment is Rs. 7.5lakhs. The NPV is:
  • Rs. 17.5 lakhs
  • Rs. 7.5 lakhs
  • Rs. 10 Lakhs
  • Rs. 2.5 lakhs
Q16 | Cash & Bank Rs. 20,000; Debtors Rs. 2,00,000; Stock Rs. 2,80,000 and Current Liabilities:Creditors Rs. 1,00,000; Bills Payable Rs. 50,000. Then the working capital is:
  • Rs. 4,00,000
  • Rs. 3,80,000
  • Rs. 3,50,000
  • Rs. 70,000
Q17 | 1,00,000; 10% Debentures of Rs. 100 each of company, the interest payable forquarter is:
  • Rs. 10,00,000
  • Rs. 2,50,000
  • Rs. 5,00,000
  • None of these
Q18 | Gross margin is added to cost of sold goods for calculating
  • revenues
  • selling price
  • unit price
  • bundle price
Q19 | Cash Flow Statement is also known as
  • Statement of Changes in Financial Position on Cash basis
  • Statement accounting for variation in cash
  • Both a and b
  • None of the above
Q20 | Degree of financial leverage of business indicates.
  • Total risk
  • Operating risk
  • Financial risk
  • None of these
Q21 | Which of the following is not a characteristic of GDR?
  • Is a negotiable instrument
  • Carry voting rights
  • Freely tradable in International Market
  • Denominated in US Dollars
Q22 | Which of the following is a feature of Factoring?
  • Tool of short term borrowing
  • Purchase of export bill only
  • Used in Export business only
  • Done without recourse to the client
Q23 | Which of the following is a Profitability Ratio?
  • Proprietary Ratio
  • Debt –equity Ratio
  • Price Earnings Ratio
  • Fixed Asset Ratio
Q24 | GP Margin=20%, GP= Rs. 54000, Sales=
  • Rs. 300000
  • Rs. 270000
  • Rs. 280000
  • Rs. 290000
Q25 | EBIT= Rs. 1120000, PBT= Rs. 320000, Fixed Costs= Rs. 700000, Operating Leverage =
  • 1.625
  • 2.625
  • 6.625
  • 3.625