This quiz works best with JavaScript enabled. Home > Finance > Management > Financial Management > Financial Management – Quiz 74 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Management Quiz 74 (22 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What is the main disadvantage of a partnership? A) Unlimited life. B) Limited liability. C) Difficulty of transferring ownership. D) Ease of raising capital. Show Answer Correct Answer: C) Difficulty of transferring ownership. 2. A company has calculated the NPV of a new project as follows:Present value($ '000)Sales revenue 4, 000Variable costs (2, 000)Fixed costs (500)Corporation tax at 20% (300)Initial outlay (1, 000)NPV 200What is the sensitivity of the project decision to a change in sales volume? A) 5.0%. B) 10.0%. C) 12.5%. D) 6.3%. Show Answer Correct Answer: C) 12.5%. 3. Which of the following can lead to increased expected cash flow over time to the firm? A) Open and collaborative relations with the community. B) Qualified and motivated employees. C) Greater customer satisfaction. D) All of the above. Show Answer Correct Answer: D) All of the above. 4. In constant growth model, the value of equity share is sensitive to growth rate. A) False. B) True. Show Answer Correct Answer: B) True. 5. ..... are property and other items of value owned by a business. A) Current assets. B) Liabilities. C) Assets. D) Fixed assets. Show Answer Correct Answer: C) Assets. 6. Flotation cost is the cost involved in the issue of shares and debentures. A) False. B) True. Show Answer Correct Answer: B) True. 7. AM Co will receive a perpetuity starting in 2 years' time of $ 10, 000 per annum, increasing by the rate of inflation (which is 2%). What is the present value of this perpetuity assuming a money cost of capital of 10.2%? A) $ 115, 740. B) $ 74, 403. C) $ 90, 910. D) $ 125, 000. Show Answer Correct Answer: A) $ 115, 740. 8. It is also known as static measure or structural ratios A) VERTICAL ANALYSIS. B) HORIZONTAL ANALYSIS. Show Answer Correct Answer: A) VERTICAL ANALYSIS. 9. It has to do with motivating people, paying them well and taking cared of their interest. A) Risk Return Trade Off. B) Cash Flows Are Source of Values. C) Money Has Time Value. D) Individuals Respond to Incentives. Show Answer Correct Answer: D) Individuals Respond to Incentives. 10. Which of the following is not an element of financial management? A) Allocation of resources. B) Financial Planning. C) Financial Decision-making. D) Financial control. Show Answer Correct Answer: D) Financial control. 11. In carrying out Break Even Point analysis, we must know what is called Cost Behavior. Below are types of cost behavior, except: A) Variable Costs. B) Semi Variable Costs. C) Fixed cost. D) Advertising Costs. Show Answer Correct Answer: D) Advertising Costs. 12. Which of the following statements concerning capital structure theory is correct? A) In the traditional view, there is a linear relationship between the cost of equity and financial risk. B) Modigliani and Miller said that, in the absence of tax, the cost of equity would remain constant. C) Pecking order theory indicates that preference shares are preferred to convertible debt as a source of finance. D) Business risk is assumed to be constant as the capital structure changes. Show Answer Correct Answer: D) Business risk is assumed to be constant as the capital structure changes. 13. Main limitation of financial analysis is: A) To know financial strength. B) Comparative study with other firms. C) Do not reflect changes in price level. D) To know earning capacity. Show Answer Correct Answer: C) Do not reflect changes in price level. 14. ..... is not included in owner's capital? A) Retained profit. B) Long-term debt. C) Preference share capital. D) Equity share capital. Show Answer Correct Answer: B) Long-term debt. 15. With an increase in the investment in fixed assets, there is a commensurate ..... in the working capital requirement. A) Decrease. B) No change. C) May increase or decrease. D) Increase. Show Answer Correct Answer: D) Increase. 16. The objective of wealth maximization takes into consideration: A) Risk related to uncertainty of returns. B) Timing of expected returns. C) Amount of returns expected. D) All of the above. Show Answer Correct Answer: D) All of the above. 17. Which of the following is used as Working Capital? A) Factory. B) Machinery. C) Furniture. D) Stock. Show Answer Correct Answer: D) Stock. 18. How much to invest in long term assets? This decision belongs to ..... A) Capital Budgeting. B) Working capital management. C) Dividend decision. D) Financing decision. Show Answer Correct Answer: A) Capital Budgeting. 19. What Is NOT a technique for credit worthiness A) Pay off your bar tab. B) Spending only 20% of your credit limit. C) Pay more then the minnium balance. D) Limit the number of credit cards you have. E) Avoid cash advances. Show Answer Correct Answer: A) Pay off your bar tab. 20. Which TWO of the following are examples of internal stakeholders in a firm? A. Company directors B. Customers C. Suppliers D. Employees E. Finance providers A) A & D. B) B & C. C) B & D. D) A & E. Show Answer Correct Answer: A) A & D. 21. If the "original price" a item is $ 49.99 and has a 25% discount, what is the new discounted sale price: A) $ 37.49. B) $ 12.50. C) $ 12.4975. D) $ 37.50. Show Answer Correct Answer: A) $ 37.49. 22. Flotation cost includes the cost of discount of issue of shares. A) True. B) False. Show Answer Correct Answer: B) False. ← PreviousRelated QuizzesManagement QuizzesFinance QuizzesFinancial Management Quiz 1Financial Management Quiz 2Financial Management Quiz 3Financial Management Quiz 4Financial Management Quiz 5Financial Management Quiz 6Financial Management Quiz 7Financial Management Quiz 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books