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This set of Financial Management Multiple Choice Questions & Answers (MCQs) focuses on Financial Management Set 20

Q1 | The term mutually exclusive investments mean:
  • Choose only the best investments
  • Selection of one investment precludes the selection of an alternative
  • The elite investment opportunities will get chosen
  • There are no investment options available
Q2 | Which of the following is a Profitability Ratio?
  • Proprietary Ratio
  • Debt-Equity Ratio
  • Price-Earning Ratio
  • Fixed Asset Ratio
Q3 | The 'Dividend-Payout Ratio' is equal to
  • The Dividend yield plus the capital gains yield
  • Dividends per share divided by Earning per Equity Share
  • Dividends per share divided by par value per share
  • Dividends per share divided by current price per share
Q4 | If EBIT = Rs. 1,00,000, Fixed Assets = Rs. 2,00,000, Sales = Rs. 10,00,000 and VariableCost = Rs. 7,00,000. Then, the Operating Leverage will be
  • 2
  • 3
  • 6
  • 4
Q5 | Which of the following is not considered while preparing cash budget?
  • Accrual Principal
  • Difference in Capital and Revenue items
  • Conservation Principle
  • All of the above
Q6 | At Indifference level of EBIT, different capitals have:
  • same EBIT
  • same EPS
  • same PAT
  • same PBT
Q7 | ABC Analysis is used in
  • Inventory Management
  • Receivables Management
  • Accounting Policies
  • Corporate Governance
Q8 | Which of the following is not incorporated in Capital Building?
  • Tax-Effect
  • Time Value of Money
  • Required Rate of Return
  • Rate of Cash Discount
Q9 | Objective of Financial Management is
  • Management of Liquidity
  • Maximization of Profit
  • Maximization of Shareholders’ Wealth
  • Management of Fixed Assets
Q10 | Which of the following variables is not known in Internal Rate of Return?
  • Initial Cash Flows
  • Discount Rate
  • Terminal Inflows
  • Life of the Project
Q11 | Cost of Capital refers to
  • Floatation Cost
  • Dividend
  • Required Rate of Return
  • None of the above
Q12 | Working Capital Management involves financing and management of
  • All Assets
  • All Current Assets
  • Cash and Bank Balance
  • Receivables and Payables
Q13 | All listed companies are required to prepare
  • Funds Flow statement
  • Cash Flow Statement
  • Statement of Affairs
  • All of the above
Q14 | Ratio Analysis can be used to study liquidity, turnover, profitability etc., of a firm. What does Debt-Equity Ratio help to study?
  • Solvency
  • Liquidity
  • Profitability
  • Turnover
Q15 | A firm determines the shareholders’ wealth by taking
  • 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
Q16 | Capital Budgeting techniques which considers the time value of money is based on
  • Cash Flows of the organization
  • Accounting Profit of the organization
  • Interest Rate on Borrowings
  • Last Dividend Paid
Q17 | Debt Financing is a cheaper source of finance because of
  • Time Value of Money
  • Rate of Interest
  • Tax-deductibility of Interest
  • Dividends not Payable to lenders
Q18 | What should be the optimum Dividend payout ratio, when r=12% and Ke=10%?
  • Zero
  • 50%
  • 12%
  • 100%
Q19 | The term Float is used in
  • Receivable Management
  • Cash Management
  • Marketable Management
  • Inventory Management
Q20 | Financial planning is ---------- function of a finance manager
  • Executive
  • Incidental
  • Auxiliary
  • None of these
Q21 | Profit maximization may lead to better and efficient utilization of the recourses only when there is -----------
  • Monopoly
  • Oligopoly
  • Perfect competition
  • None of these
Q22 | During inflationary period the risk free interest rate will be …………………………….
  • Lower
  • Does not change
  • Higher
  • Cannot say
Q23 | Implicit cost also called ………………………….
  • Marginal cost
  • Composite cost
  • Opportunity cost
  • Average cost
Q24 | After tax cost of debt is equal to (1-t)x
  • Ko
  • WACC
  • Before tax cost of debt
  • KE
Q25 | Cost of irredeemable preferences share capital is equal to kp=preference dividend divided by
  • Total liabilities
  • Face value Preference issue
  • Total capital
  • Net proceeds