740+ Financial Management Solved MCQs

These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Business Administration (BBA) , Master of Commerce (M.com) , Bachelor of Accounting and Finance (BAF) , Bachelor of Business Administration in Finance (BBA Finance) , Cost Accounting .

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51.	The appropriate objective of an enterprise is;
A.	Maximisation of sale
B.	Maximisation of owners wealth.
C.	Maximisation of profits.
D.	None of these.
Answer» B. Maximisation of owners wealth.

52.	The job of a finance manager is confined to
A.	Raising funds
B.	Management of cash
C.	Raising of funds and their effective utilization.
D.	None of these.
Answer» C. Raising of funds and their effective utilization.

53.	Financial decision involve;
A.	Investment ,financing and dividend decision
B.	Investment ,financing and sales decision
C.	Financing , dividend and cash decision
D.	None of these.
Answer» A. Investment ,financing and dividend decision

54.	Net Profit Ratio Signifies:
A.	Operational Profitability
B.	Liquidity Position
C.	Solvency
D.	Profit
Answer» A. Operational Profitability

55.	Working Capital Turnover measures the relationship of Working Capital with:
A.	Fixed Assets
B.	Sales
C.	Purchases
D.	Stock.
Answer» A. Fixed Assets

56.	Dividend Payout Ratio is:
A.	PAT Capital
B.	DPS ÷ EPS
C.	Pref. Dividend ÷ PAT
D.	Pref. Dividend ÷ Equity Dividend
Answer» B. DPS ÷ EPS

57.	Inventory Turnover measures the relationship of inventory with:
A.	Average Sales
B.	Cost of Goods Sold
C.	Total Purchases
D.	Total Assets
Answer» B. Cost of Goods Sold

58.	The term 'EVA' is used for:
A.	Extra Value Analysis
B.	Economic Value Added
C.	Expected Value Analysis
D.	Engineering Value Analysis
Answer» B. Economic Value Added

59.	Return on Investment may be improved by:
A.	Increasing Turnover
B.	Reducing Expenses
C.	Increasing Capital Utilization
D.	All of the above
Answer» D. All of the above

60.	In Current Ratio, Current Assets are compared with:
A.	Current Profit
B.	Current Liabilities
C.	Fixed Assets
D.	Equity Share Capital
Answer» B. Current Liabilities

61.	There is deterioration in the management of working capital of XYZ Ltd. What does it refer to?
A.	That the Capital Employed has reduced,
B.	That the Profitability has gone up,
C.	That debtors collection period has increased,
D.	That Sales has decreased.
Answer» C. That debtors collection period has increased,

62.	Debt to Total Assets Ratio can be improved by:
A.	Borrowing More
B.	Issue of Debentures
C.	Issue of Equity Shares
D.	Redemption of Debt.
Answer» D. Redemption of Debt.

63.	Ratio of Net Income to Number of Equity Shares known as:
A.	Price Earnings Ratio
B.	Net Profit Ratio,
C.	Earnings per Share
D.	Dividend per Share.
Answer» C. Earnings per Share

65.	A firm has Capital of 10,00,000; Sales of 5,00,000; Gross Profit of . 2,00,000 and Expenses of . 1,00,000. What is the Net Profit Ratio?
A.	20%
B.	50%
C.	10%
D.	40%
Answer» A. 20%

67.	Which of the following is a measure of Debt Service capacity of a firm?
A.	Current Ratio
B.	Acid Test Ratio
C.	Interest Coverage Ratio
D.	Debtors Turnover
Answer» C. Interest Coverage Ratio

64.	A Current Ratio of Less than One means:
A.	Current Liabilities < Current Assets
B.	Fixed Assets > Current Assets
C.	Current Assets < Current Liabilities
D.	Share Capital > Current Assets
Answer» C. Current Assets < Current Liabilities

66.	Suppliers and Creditors of a firm are interested in
A.	Profitability Position
B.	Liquidity Position
C.	Market Share Position
D.	Debt Position
Answer» B. Liquidity Position

68.	Gross Profit Ratio for a firm remains same but the Net Profit Ratio is decreasing. The reason for such behavior could be:
A.	Increase in Costs of Goods Sold
B.	If Increase in Expense
C.	Increase in Dividend
D.	Decrease in Sales.
Answer» B. If Increase in Expense

69.	Which of the following statements is correct?
A.	A Higher Receivable Turnover is not desirable,
B.	Interest Coverage Ratio depends upon Tax Rate,
C.	Increase in Net Profit Ratio means increase in Sales,
D.	Lower Debt-Equity Ratio means lower Financial Risk.
Answer» D. Lower Debt-Equity Ratio means lower Financial Risk.

70.	Debt to Total Assets of a firm is .2. The Debt to Equity boo would be:
A.	0.80
B.	0.25
C.	1.00
D.	0.75
Answer» B. 0.25

71.	Which of the following helps analysing return to equity Shareholders?
A.	Return on Assets
B.	Earnings Per Share
C.	Net Profit Ratio
D.	Return on Investment.
Answer» B. Earnings Per Share

72.	In Inventory Turnover calculation, what is taken in the numerator?
A.	Sales
B.	Cost of Goods Sold,
C.	Opening Stock
D.	Closing Stock.
Answer» B. Cost of Goods Sold,

73.	Financial Planning deals with:
A.	Preparation of Financial Statements
B.	Planning for a Capital Issue
C.	Preparing Budgets
D.	All of the above
Answer» C. Preparing Budgets

74.	Financial planning starts with the preparation of:
A.	Master Budget
B.	Cash Budget
C.	Balance Sheet
D.	None of the above.
Answer» D. None of the above.

75.	Process of Financial Planning ends with:
A.	Preparation of Projected Statements
B.	Preparation of Actual Statements
C.	Comparison of Actual with Projected
D.	Ordering the employees that projected figures m come true.
Answer» C. Comparison of Actual with Projected

740+ Financial Management Solved MCQs

The appropriate objective of an enterprise is;

The job of a finance manager is confined to

Financial decision involve;

Net Profit Ratio Signifies:

Working Capital Turnover measures the relationship of Working Capital with:

Dividend Payout Ratio is:

Inventory Turnover measures the relationship of inventory with:

The term 'EVA' is used for:

Return on Investment may be improved by:

In Current Ratio, Current Assets are compared with:

There is deterioration in the management of working capital of XYZ Ltd. What does it refer to?

Debt to Total Assets Ratio can be improved by:

Ratio of Net Income to Number of Equity Shares known as:

A Current Ratio of Less than One means:

A firm has Capital of 10,00,000; Sales of 5,00,000; Gross Profit of . 2,00,000 and Expenses of . 1,00,000. What is the Net Profit Ratio?

Suppliers and Creditors of a firm are interested in

Which of the following is a measure of Debt Service capacity of a firm?

Gross Profit Ratio for a firm remains same but the Net Profit Ratio is decreasing. The reason for such behavior could be:

Which of the following statements is correct?

Debt to Total Assets of a firm is .2. The Debt to Equity boo would be:

Which of the following helps analysing return to equity Shareholders?

In Inventory Turnover calculation, what is taken in the numerator?

Financial Planning deals with:

Financial planning starts with the preparation of:

Process of Financial Planning ends with:

Capital Budgeting is a part of:

Capital Budgeting deals with:

Which of the following is not used in Capital Budgeting?

Capital Budgeting Decisions are:

Which of the following is not incorporated in Capital Budgeting?

Which of the following is not a capital budgeting decision?

A sound Capital Budgeting technique is based on:

Which of the following is not a relevant cost in Capital Budgeting?

Capital Budgeting Decisions are based on:

Which of the following does not effect cash flows proposal?

Cash Inflows from a project include:

Which of the following is not true with reference capital budgeting?

Which of the following is not followed in capital budgeting?

Depreciation is incorporated in cash flows because it:

Which of the following is not true for capital budgeting?

Which of the following is not applied in capital budgeting?

Evaluation of Capital Budgeting Proposals is based on Cash Flows because:

Which of the following is not included in incremental A flows?

A proposal is not a Capital Budgeting proposal if it:

In Capital Budgeting, Sunk cost is excluded because it is:

Savings in respect of a cost is treated in capital budgeting as:

In capital budgeting, the term Capital Rationing implies:

Feasibility Set Approach to Capital Rationing can be applied in:

In case of divisible projects, which of the following can be used to attain maximum NPV?

In case of the indivisible projects, which of the following may not give the optimum result?

76.	Capital Budgeting is a part of:
A.	Investment Decision
B.	Working Capital Management
C.	Marketing Management
D.	Capital Structure
Answer» A. Investment Decision

77.	Capital Budgeting deals with:
A.	Long-term Decisions
B.	Short-term Decisions
C.	Both (a) and (b)
D.	Neither (a) nor (b)
Answer» A. Long-term Decisions

78.	Which of the following is not used in Capital Budgeting?
A.	Time Value of Money
B.	Sensitivity Analysis
C.	Net Assets Method
D.	Cash Flows.
Answer» C. Net Assets Method

79.	Capital Budgeting Decisions are:
A.	Reversible
B.	Irreversible
C.	Unimportant
D.	All of the above
Answer» B. Irreversible

80.	Which of the following is not incorporated in Capital Budgeting?
A.	Tax-Effect
B.	Time Value of Money
C.	Required Rate of Return
D.	Rate of Cash Discount
Answer» D. Rate of Cash Discount

81.	Which of the following is not a capital budgeting decision?
A.	Expansion Programme
B.	Merger
C.	Replacement of an Asset
D.	Inventory Level
Answer» D. Inventory Level

82.	A sound Capital Budgeting technique is based on:
A.	Cash Flows
B.	Accounting Profit
C.	Interest Rate on Borrowings
D.	Last Dividend Paid
Answer» B. Accounting Profit

83.	Which of the following is not a relevant cost in Capital Budgeting?
A.	Sunk Cost
B.	Opportunity Cost
C.	Allocated Overheads
D.	Both (a) and (c) above.
Answer» D. Both (a) and (c) above.

84.	Capital Budgeting Decisions are based on:
A.	Incremental Profit
B.	Incremental Cash Flows
C.	Incremental Assets
D.	Incremental Capital
Answer» B. Incremental Cash Flows

85.	Which of the following does not effect cash flows proposal?
A.	Salvage Value
B.	Depreciation Amount
C.	Tax Rate Change
D.	Method of Project Financing
Answer» D. Method of Project Financing