This quiz works best with JavaScript enabled. Home > Management > Financial Management > Financial Management – Quiz 44 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Management Quiz 44 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. If return on investment is less than the rate of interest, then company must prefer A) (a) Equity. B) (b) Debt. C) C) Both (a) and (b). D) (d) None of the above. Show Answer Correct Answer: A) (a) Equity. 2. The importance of 'Trading on Equity' lies in the fact that if the company is earning more profit, it can make use of borrowed capital and preference share capital and by doing so it can increase the income of ..... A) Preference Shareholders. B) Lenders. C) Equity Shareholders. D) Government. Show Answer Correct Answer: C) Equity Shareholders. 3. This account allows you to deposit money at a bank for safekeeping. A) Saving Account. B) Checking Account. C) Bill Account. D) Casino Account. Show Answer Correct Answer: A) Saving Account. 4. What is the formula for Earnings per share (EPS)? A) Net Income/Ordinary Shares. B) Net Profit/Shares. C) Net Income/Shares. D) Net Income/Shares Oustanding. Show Answer Correct Answer: D) Net Income/Shares Oustanding. 5. What date do you have to file taxes by? A) April 1st. B) March 15th. C) April 15th. D) February 30th. Show Answer Correct Answer: C) April 15th. 6. The higher the risk ..... A) The higher the potential return. B) The lower the potential return. C) The potential return remains the same. D) Potential return is not related to risk. E) Potential return isn't real. Show Answer Correct Answer: A) The higher the potential return. 7. Closed credit is A) A one time loan. B) A plan with a changing credit limit. C) A credit card. D) Doesn't go on your credit report. Show Answer Correct Answer: A) A one time loan. 8. Bill is a construction worker who has to have back surgery. He will be out of work for 3 months. His disability insurance policy will pay him 60% of his salary for the entire time he is out of work. If his salary is $ 3000 per month how much money will he receive from his insurance company for the three months he will be out of work? A) $ 1, 800. B) $ 5, 400. C) $ 9, 000. D) None of above. Show Answer Correct Answer: B) $ 5, 400. 9. Which of the following statements are correct? 1. Maximising market share is an example of a financial objective 2. Shareholder wealth maximisation is the primary financial objective for a company listed on a stock exchange 3. Financial objectives should be quantitative so that their achievement can be measured A) 1 and 2 only. B) 1 and 3 only. C) 2 and 3 only. D) 1, 2 and 3. Show Answer Correct Answer: C) 2 and 3 only. 10. What is the primary objective of corporate financing? A) Increasing the cost of capital. B) Improving liquidity. C) Reducing market risk. D) Generating long-term value. Show Answer Correct Answer: D) Generating long-term value. 11. A firm has a DFL of 5.5. What does this tell us about the firm? A) If sales rise by 5.5%, then EBIT will rise by 1%. B) If EBIT rises by 5.5%, then EPS will rise by 1%. C) If EBIT rises by 1 %, then EPS will rise by 5.5%. D) If sales rise by 1 %, then EBIT will rise by 5.5%. Show Answer Correct Answer: C) If EBIT rises by 1 %, then EPS will rise by 5.5%. 12. Choose the right statement about investment! A) Investments are definitely profitable and there is no possibility of loss. B) A. Investment is a form of gambling. C) Investment Always Has Elements of Profit (return) and Risk (risk). D) None of above. Show Answer Correct Answer: C) Investment Always Has Elements of Profit (return) and Risk (risk). 13. Property or items of value owned by a business A) Assets. B) Accounts payable. C) Owner's equity. D) Liabilities. Show Answer Correct Answer: A) Assets. 14. NCW Co is considering investing $ 10, 000 immediately in a 1-year project with the following cash flows.Income-$ 100, 000Expenses-$ 35, 000 The cash flows will arise at the end of the year. The above are stated in current terms. Income is subject to 10% inflation; expenses will not vary.The real cost of capital is 8% and general inflation is 2%. Using the money cost of capital to the nearest whole percentage, what is the net present value of the project? A) $ 68, 175. B) $ 60, 190. C) $ 58, 175. D) $ 78, 175. Show Answer Correct Answer: C) $ 58, 175. 15. Which of the following statements is TRUE if you increase your monthly payment above the required loan payment? A) The extra portion of the payment does not go to the principal. B) You can significantly increase the number of payments needed to pay off the loan. C) The extra portion of the payment increases the principal. D) You can significantly reduce the number of payments needed to pay off the loan. Show Answer Correct Answer: D) You can significantly reduce the number of payments needed to pay off the loan. 16. Which is needed to evaluate financial status? A) Financial goal. B) Assets. C) Cash flow. D) Total income. Show Answer Correct Answer: B) Assets. 17. The balance sheet elements include: A) Interest Charge. B) Income received in advance. C) Prepaid expenses. D) All the answers above are incorrect. Show Answer Correct Answer: C) Prepaid expenses. 18. Assume that International Appliances has a current ratio of 1.2. Now, which of the following actions would improve (increase) this ratio? A) Use cash to pay off current liabilities. B) Collect some of the current accounts receivable. C) Use cash to pay off some long-term debt. D) Purchase additional inventory on credit (accounts payable). Show Answer Correct Answer: A) Use cash to pay off current liabilities. 19. Leverage means A) Gear box of a car. B) Capital structure. C) Profit and loss. D) Effectiveness. Show Answer Correct Answer: D) Effectiveness. 20. How can poor financial management impact a company's credit rating? A) It has no effect on credit rating. B) Improves credit rating. C) Lowers credit rating. D) Stays constant . Show Answer Correct Answer: C) Lowers credit rating. ← PreviousNext →Related QuizzesManagement QuizzesFinancial Management Quiz 1Financial Management Quiz 2Financial Management Quiz 3Financial Management Quiz 4Financial Management Quiz 5Financial Management Quiz 6Financial Management Quiz 7Financial Management Quiz 8Financial Management Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books