22nd
Feb
Financial Management MCQ

Take Financial Management MCQ & Online Test to Test your Knowledge

Practice here the Best Financial Management MCQ Questions, that check your basic knowledge of Financial Management abilities. This MCQ Test contains the 50+ multiple choice questions based on the Financial Management. These Mcqs are very popular & helpful for the preparation of the Financial Management Exam/Interview. You can also download the Financial Management MCQ PDF completely free.

Financial Management MCQ

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

  • A. Net proceeds
  • B.Annual Interest
  • C.Annual Depreciation
  • D.Capital

2) What is factoring?

  • A. Production Plan
  • B.New Financial Service
  • C.Cost of Sales
  • D.All of the above

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

  • A. Maximise the wealth of Equity shareholders
  • B.Maximise the wealth of Preference Shareholders
  • C.Maximise the wealth of Debenture holders
  • D.All of the above

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

  • A. More emphasis on long term problems
  • B.Ignores allocation of resources
  • C.One-sided approach
  • D.All of the above

5) Financial management mainly focuses on ...............

  • A. Efficient management of every business
  • B.Brand dimension
  • C.Arrangement of funds
  • D.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.

  • A. True
  • B.False

7) Which of the following is capital market line?

  • A. Capital allocation line of a market portfolio
  • B.Capital allocation line of a risk free asset
  • C.Both first & second options
  • D.None of the above

8) A risk free security has __________ variance.

  • A. 0
  • B.2
  • C.4
  • D.6

9) ................... is called as dividend ratio method.

  • A. Debt Equity Method
  • B.Dividend Yield Method
  • C.Equity Method
  • D.Asset Method

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

  • A. Reserve
  • B.Capital structure
  • C.Depreciation
  • D.Cost of equity share capital

11) Which of the following is capital employed?

  • A. Cash + Bank
  • B.Assets + Cash
  • C.Shareholders Funds + Long Funds
  • D.All of the above

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

  • A. Current liabilities / Current assets
  • B.Current assets / Current liabilities
  • C.Inventory / Current liabilities
  • D.Current liabilities / Inventory

13) ................ is an example of fixed asset.

  • A. Value stock
  • B.Live stock
  • C.Income stock
  • D.none of these

14) Current assets are also referred to as ................

  • A. Inventory
  • B.Working capital
  • C.Livestock
  • D.Investments

15) Which of the following is short term Sources?

  • A. Bank Credit
  • B.Public Deposit
  • C.Commercial Paper
  • D.All of the above

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

  • A. true
  • B.false

17) Which of the following is the primary goal of financial management?

  • A. To Maximize the return
  • B.To Minimize the risk
  • C.To maximize the wealth of owners
  • D.To maximize profit

18) Which of the following are financial Assets?

  • A. Bonds
  • B.Machines
  • C.Stocks
  • D.Both Bonds & Machines

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

  • A. Negotiable, Liquid
  • B.Liquid, Marketable
  • C.liquid, Personal
  • D.None of these

20) ................. is not a characteristic of investments.

  • A. Pooled investments.
  • B.Reduced expenses
  • C.manage portfolios
  • D.All of the above

21) What is Balance of Payment ?

  • A. Foreign exchange inflow – Foreign exchange outflow
  • B.Balance of trade + Net earnings on invisibles
  • C.balance of current account + Balance of capital account + Statistical discrepancy
  • D.Export of goods – Import of goods

22) A capital investment is one that ___________ .

  • A. applies only to investment in fixed assets
  • B.has the prospect of long-term benefits.
  • C.has the prospect of short-term benefits.
  • D.is only undertaken by large corporations

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

  • A. fixed assets.
  • B.total assets.
  • C.current assets
  • D.current assets minus current liabilities.

24) Liabilities varies inversely with profitability.

  • A. true
  • B.false

25) Net working capital means -

  • A. total assets minus fixed assets.
  • B.current assets minus current liabilities
  • C.current assets minus inventories
  • D.current assets.

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

  • A. long-term debt, preferred stock, and common stock equity
  • B.shareholders' equity
  • C.total assets minus liabilities
  • D.All of the above

27) Reserves & Surplus are __________________ of financing.

  • A. Security Financing
  • B.Internal Financing
  • C.Loans Financing
  • D.International Financing

28) What is an asset ?

  • A. Inflow of funds
  • B.Source of fund
  • C.Use of fund
  • D.All of the above

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

  • A. Rs.18,000
  • B.Rs.(-) 45,000
  • C.Rs.(-)18000
  • D.Rs.45,000

30) What is The ideal quick ratio ?

  • A. 2:1
  • B.1:1
  • C.5:1
  • D.2.2

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

  • A. the creation of value for shareholders.
  • B.the number and types of products or services provided by the firm.
  • C.the dollars profits earned by the firm.
  • D.investment, financing, and asset management

32) Long period of bond maturity leads to _________ .

  • A. stable prices
  • B.more price change
  • C.standing prices
  • D.mature prices

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

  • A. Divided to Stock ratio
  • B.Cash flow to price ratio
  • C.sales to growth ratio
  • D.price to cash flow ratio

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

  • A. Competitive Companies
  • B.Benchmark Companies
  • C.Analytical Companies
  • D.Return 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 ________.

  • A. 0.025
  • B.0.023
  • C.0.081
  • D.None of these

36) In Capital Budgeting, the positive net present value results in -

  • A. Negative Economic Value Added
  • B.Positive Economic Value Added
  • C.Zero Economic Value Added
  • D.Percent Economic Value Added

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

  • A. Negative Numbers
  • B.Positive Numbers
  • C.Hurdle Numbers
  • D.Relative Numbers

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

  • A. Relative Number
  • B.Negative Number
  • C.Hurdle Number
  • D.Positive Number

39) The Long period of bond Maturity lends to -

  • A. Stable Prices
  • B.More Price change
  • C.Standing Prices
  • D.Mature Prices

40) The bond issued by corporations and exposed to default risk are classified as _____________ .

  • A. Default Bonds
  • B.Corporation Bonds
  • C.Risk Bonds
  • D.Zero Risk Bonds

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

  • A. Central Bank
  • B.Savings Bank
  • C.Commercial Bank
  • D.Co-operative Bank

42) Which of the following is not an asset?

  • A. Cash
  • B.Inventory
  • C.Investments
  • D.Owner's Equity

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

  • A. Shareholders.
  • B.Stakeholders.
  • C.Board of directors.
  • D.The vice president of finance.

44) A characteristic of a fixed asset is that ............

  • A. It can be depreciated
  • B.It have a useful life of more than one year
  • C.It is used in the ordinary operations of a business
  • D.All of the above

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

  • A. the risky portfolio
  • B.the riskfree asset
  • C.the risky portfolio and the index
  • D.The risk free asset and the risky portfolio combined

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

  • A. determining whether or not a project should be accepted
  • B.determining the amount of equipment needed to complete a job
  • C.determining the amount of long-term debt required to complete a project
  • D.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 ..............

  • A. revenue
  • B.societal benefit
  • C.shareholder wealth
  • D.earnings per share

48) The ______ measure of returns ignores compounding.

  • A. IRR
  • B.dollar-weighted
  • C.geometric average
  • D.arithmetic average

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

  • A. Common stock
  • B.Corporate bonds
  • C.Commercial paper
  • D.Retained earnings

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

  • A. Cash
  • B.Prepaid expenses
  • C.Accounts receivable
  • D.Marketable securities

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

  • A. It must be payable in cash.
  • B.It results from past transactions or events.
  • C.It arises from present obligations to other entities.
  • D.It represents a probable, future sacrifice of economic benefits.

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

  • A. Declaration Date
  • B.Payment date
  • C.Outstanding stock
  • D.Date of Record

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

  • A. current assets
  • B.current liabilities
  • C.cash and inventory
  • D.None of the above

54) Which of the following is not true when managing a portfolio system?

  • A. It does not require a constant effort
  • B.It requires input from senior management
  • C.Within a small organization it can be managed by a small group of key employees
  • D.It involves monitoring and adjusting criteria to reflect the strategic focus of the organization

55) Which of the following questions are addressed by financial managers?

  • A. Should the firm borrow more money?
  • B.Should the firm acquire new equipment?
  • C.Should customers be given 30 or 45 days to pay for their credit purchases?
  • D.All of the above

56) Which of the following is not a source of financing for a company?

  • A. Bonds
  • B.Common stock
  • C.Treasury stock
  • D.Preferred Stock

57) Which of the following are traditional financial ratio categories?

  • A. Turnover Ratios
  • B.Profitability Ratios
  • C.Financial Leverage Ratios
  • D.All of the above

58) The cash basis of accounting ignores ...............

  • A. Cash
  • B.Revenue
  • C.Payables
  • D.Expenses

59) The flow rate of a liquid is ..................

  • A. Directly proportional to the resistance
  • B.Directly proportional to the pressure gradient
  • C.Inversely proportional to the pressure gradien
  • D.Directly proportional to the pressure gradient and the resistance

60) Which of the following is not a current asset?

  • A. cash
  • B.stock​
  • C.building
  • D.debtors

61) Cash flow from assets is also known as the firm's free cash flow.

  • A. True
  • B.False

Leave A Comment :

Valid name is required.

Valid name is required.

Valid email id is required.