This quiz works best with JavaScript enabled. Home > Finance > Management > Financial Management > Financial Management – Quiz 7 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Management Quiz 7 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. A direct comparison of the benefit of the project with its cost (Benefit-Costs), is the meaning of ..... A) Internal Rate of Return. B) Net Present Value. C) Profitability Index. D) Payback Period. Show Answer Correct Answer: B) Net Present Value. 2. Why is shareholder's wealth maximization more relevant than profit maximization? A) It focuses on short-term goals. B) It ignores risk and uncertainty. C) It considers the timing of returns. D) It favours the choice of increasing product prices to keep the margins as high as possible. Show Answer Correct Answer: C) It considers the timing of returns. 3. . Traditional approach confines finance function only to ..... funds A) Financing. B) Mobilizing. C) Utilizing. D) Raising. Show Answer Correct Answer: D) Raising. 4. In the NPV model, all cash flows are stated ..... A) In future value dollars, and the total inflow is "netted" against the outflow to see if the net amount is positive or negative. B) In present value or current dollars, and the total inflow is "netted" against the initial outflow to see if the net amount is positive or negative. C) In present value or current dollars, and the outflow is "netted" against the total inflow to see if the gross amount is positive or negative. D) In future dollars, and the initial outflow is "netted" against the total inflow to see if the net amount is positive. Show Answer Correct Answer: B) In present value or current dollars, and the total inflow is "netted" against the initial outflow to see if the net amount is positive or negative. 5. You should not think about long-term financial decisions if you are only a student. A) True. B) False. Show Answer Correct Answer: B) False. 6. These loans are called back at any time. Normally, these loans are taken by bill brokers or stock brokers A) Call loans. B) Short term loans. C) Bills of exchange. D) Cash credit. Show Answer Correct Answer: A) Call loans. 7. From investment, profit will be earned that eventually will lead to business growth. A) Market Prices Reflect Information. B) Cash Flows Are Source Of Values. C) Money Has Time Value. D) Risk Return Trade Off. Show Answer Correct Answer: B) Cash Flows Are Source Of Values. 8. The income statement begins with revenue and subtracts various operating expenses until arriving at Earnings Before Interest and Taxes. Next, interest expense is subtracted to find the taxable income for the period. Then the appropriate taxes are calculated and subtracted. We finally arrive at the ....., the so-called bottom line of the income statement. A) Net income. B) EBIT. C) After-tax income. D) Before-tax income. Show Answer Correct Answer: A) Net income. 9. High Interest Coverage Ratio means companies can have more of borrowed funds. A) True. B) False. Show Answer Correct Answer: A) True. 10. Money supplied by investors, banks, or owners of a business. A) Owner's equity. B) Property. C) Equity. D) Capital. Show Answer Correct Answer: D) Capital. 11. A person or organization that uses a product or service A) Interest. B) Economy. C) Debt. D) Consumer. Show Answer Correct Answer: D) Consumer. 12. What is the fee paid for borrowing money called? A) Debit. B) Credit. C) Interest. D) Tax. Show Answer Correct Answer: C) Interest. 13. What is an example of a VARIABLE expense? A) Cable Bill. B) Water/electricity bill. C) Christmas gifts. D) None of above. Show Answer Correct Answer: B) Water/electricity bill. 14. What is NOT a reason to save money A) Peace of mind. B) For children's education. C) Better future. D) More Money. E) Family security in an emergency. Show Answer Correct Answer: D) More Money. 15. Q7) Which of the following is not a finance function? A) Cost management. B) Risk management. C) Human resource management. D) Investment decisions. Show Answer Correct Answer: C) Human resource management. 16. How is the capital gearing ratio calculated? A) Fixed Interest Bearing Debt / Equity Capital. B) By subtracting the total debt from the total equity. C) By dividing the total equity by the total debt. D) By multiplying the total debt by the total equity. Show Answer Correct Answer: A) Fixed Interest Bearing Debt / Equity Capital. 17. The word credit comes from the Latin word ..... A) 'CREDO' meaning 'I trust'. B) 'CRED' meaning 'I believe'. C) 'CREDO' meaning 'I believe'. D) 'CRED' meaning 'I trust'. Show Answer Correct Answer: C) 'CREDO' meaning 'I believe'. 18. ..... used to compare different firms at the same point in time. A) Industry comparative analysis. B) Trend analysis. C) Cross-sectional analysis. D) Combined analysis. Show Answer Correct Answer: C) Cross-sectional analysis. 19. Abbie, Baylee, and Jackson are running a small business. They are trying to understand the concept of operating leverage. Can you explain it to them? A) Operating leverage is a measure of how revenue growth translates into growth in operating income. It is a measure of leverage, and of how risky, or volatile, a company's operating income is. B) Operating leverage is the total amount of fixed costs that a company has. C) Operating leverage is the total amount of variable costs that a company has. D) Operating leverage and financial leverage are the same thing in a business. Show Answer Correct Answer: A) Operating leverage is a measure of how revenue growth translates into growth in operating income. It is a measure of leverage, and of how risky, or volatile, a company's operating income is. 20. In Financial Report Analysis there are several analytical tools, namely as follows: A) Vertical Analysis or Common Size Analysis. B) Horizontal Analysis or Comparative Analysis. C) Ratio Analysis. D) All Answers are Correct. Show Answer Correct Answer: D) All Answers are Correct. 21. The financial institutions are established by both State and central government A) True. B) False. Show Answer Correct Answer: A) True. 22. Withdrawing more money than you have A) Draft. B) Overdraft. C) Withdraw. D) Underdraft. Show Answer Correct Answer: B) Overdraft. 23. Which of the following is NOT an active income? A) Salary. B) Commission. C) Dividends. D) Fixed allowance. Show Answer Correct Answer: C) Dividends. 24. Higher level of competition neccesitates A) More working capital. B) Less working capital. C) No working capital. D) More fixed capital. Show Answer Correct Answer: A) More working capital. 25. Which of the following is the correct example of asset and liability? A) Asset:SavingLiability:Property. B) Asset:LoanLiability:Credit card debts. C) Asset:TaxLiability:Real estate. D) Asset:Unit TrustLiability:Instalment balance. Show Answer Correct Answer: D) Asset:Unit TrustLiability:Instalment balance. 26. When an existing public corporation issues new stocks this process is called initial public offering. A) False. B) True. Show Answer Correct Answer: A) False. 27. The M in SMART Goal stands for A) Meaningful. B) Measurable. C) Merciful. D) None of above. Show Answer Correct Answer: B) Measurable. 28. It is the basic salary device of accounting. A) Assets. B) T-Account. C) Account. D) Liabilities. Show Answer Correct Answer: C) Account. 29. This Act shall be known as the "Economic and Financial Literacy Act" A) Republic Act No. 10066. B) Republic Act No. 10665. C) Republic Act No. 10922. D) None of above. Show Answer Correct Answer: C) Republic Act No. 10922. 30. Financial ratios, which assess the profitability of a company, include all of the following except the A) Gross profit percentage. B) Dividend yield ratio. C) Earnings per share ratio. D) Return on sales ratio. Show Answer Correct Answer: B) Dividend yield ratio. ← PreviousNext →Related QuizzesManagement QuizzesFinance QuizzesFinancial Management Quiz 1Financial Management Quiz 2Financial Management Quiz 3Financial Management Quiz 4Financial Management Quiz 5Financial Management Quiz 6Financial Management Quiz 8Financial Management Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books