This quiz works best with JavaScript enabled. Home > Management > Financial Management > Financial Management – Quiz 89 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Management Quiz 89 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Unfavourable financial leverage leads to A) Increase in EPS. B) Decrease in EPS. C) EPS is not affected. D) Lncrease in tax. Show Answer Correct Answer: B) Decrease in EPS. 2. Which ratio measures the efficiency of a company's utilization of its assets to generate profits? A) Current Ratio. B) Quick Ratio. C) Return on Assets. D) Debt Ratio. Show Answer Correct Answer: C) Return on Assets. 3. How company raises money is: A) Operational role. B) Investment Role. C) Financing Role. D) None. Show Answer Correct Answer: C) Financing Role. 4. The decision function of financial management can be broken down into the decisions. A) Financing and investment. B) Investment, financing, and asset management. C) Financing and dividend. D) Capital budgeting, cash management, and credit management. Show Answer Correct Answer: B) Investment, financing, and asset management. 5. What is SMART goal? A) Systematic, Manageable, Attainable, Relevant, Time-bound. B) Specific, Measurable, Attainable, Relevant, Time-bound. Show Answer Correct Answer: B) Specific, Measurable, Attainable, Relevant, Time-bound. 6. Which of the following is an example of agency problem? A) Costs incurred for setting up a business. B) Failure of making the best investment decision. C) Payment of income tax. D) Payment of interest. Show Answer Correct Answer: B) Failure of making the best investment decision. 7. Which of the following is a result of failing to pay of your credit card on time? A) Late fees. B) Added benefits. C) Free upgrades. D) Increase your credit score. E) Higher taxes. Show Answer Correct Answer: D) Increase your credit score. 8. Arius, Erynn, and Brayden are planning to start a bakery business. They are discussing various sources of financing for their business. Can you identify the most viable options they could consider? A) Using their credit cards, borrowing from family and friends, and applying for government subsidies. B) Seeking donations, investing in the stock market, and using lottery winnings. C) Engaging in bartering, using inheritance money, and taking personal loans. D) Using personal savings, taking loans from banks or financial institutions, seeking venture capital, finding angel investors, crowdfunding, applying for grants, and forming partnerships. Show Answer Correct Answer: D) Using personal savings, taking loans from banks or financial institutions, seeking venture capital, finding angel investors, crowdfunding, applying for grants, and forming partnerships. 9. The set of ratios that are most useful in evaluating profitability is A) ROA, ROE, and cash flow to debt. B) ROA, ROE, and debt to equity ratio. C) ROA, ROE, and acid-test ratio. D) ROA, ROE, and dividend yield. Show Answer Correct Answer: D) ROA, ROE, and dividend yield. 10. Indicate, by clicking in the relevant boxes, whether the following objectives are financial or non-financial objectives of a company. Objective 1. Maximisation of market share 2. Earnings growth 3. Sales revenue growth 4. Achieving a target level of customer satisfaction 5. Achieving a target level of return on capital employed A) Financial-1, 3 Non-financial-2, 4 & 5. B) Financial-2, 3 & 5 Non-financial-1 & 4. C) Financial-2, 4 & 5 Non-financial-1 & 3. D) Financial-4 & 5 Non-financial-1, 2 & 3. Show Answer Correct Answer: B) Financial-2, 3 & 5 Non-financial-1 & 4. 11. Which of the following is true for NI approach of capital structure A) Higher debts increases value of the firm. B) Lower debt increases WACC. C) Higher equity increases value of the firm. D) All of the above. Show Answer Correct Answer: A) Higher debts increases value of the firm. 12. Bonds are considered what type of strategy A) Aggressive. B) Low risk. C) Moderate. D) High risk. E) Fund generating. Show Answer Correct Answer: B) Low risk. 13. In financial management, what does the term 'liquidity' refer to? A) The ability to meet short-term obligations. B) The profitability of a company. C) The return on investment. D) The value of assets in the long term. Show Answer Correct Answer: A) The ability to meet short-term obligations. 14. Which one of the following statements is INCORRECT? A) Money markets are markets for long-term capital. B) Money markets are operated by banks and other financial institutions. C) Money market instruments include interest-bearing instruments, discount instruments and derivatives. D) Money market instruments are traded over the counter between institutional investors. Show Answer Correct Answer: A) Money markets are markets for long-term capital. 15. Working capital is an investment in short-term assets or investment in current assets, namely: A) Cash, Receivables, Inventory and Long-term debt. B) Cash, Receivables, Inventory and Short-term debt. C) Gross working capital. D) Answers a, b and c are all correct. Show Answer Correct Answer: B) Cash, Receivables, Inventory and Short-term debt. 16. The objective of financial management is to ..... A) Generate the maximum net profit. B) Generate the maximum retained earnings. C) Generate the maximum wealth for its shareholders. D) Generate maximum funds for the firm at the least cost. Show Answer Correct Answer: C) Generate the maximum wealth for its shareholders. 17. Which one of these is non-liquid? A) Cash. B) Real estate. C) Loans. D) Stocks. E) Bank accounts. Show Answer Correct Answer: B) Real estate. 18. What is a creditor's objective in performing an analysis of financial statements? A) To determine the firm's capital structure. B) To decide whether or not the firm has operated profitably in the past. C) To determine the company's future earnings stream. D) To decide whether or not the borrower has the ability to repay interest and principal on borrowed funds. Show Answer Correct Answer: D) To decide whether or not the borrower has the ability to repay interest and principal on borrowed funds. 19. The objective of a credit policy is to curtail the credit period allowed to debtors A) True. B) May be. C) False. D) None. Show Answer Correct Answer: C) False. 20. CALCULATE THE FIXED EXPENSES IF CONTRIBUTION IS RS 15, 00, 000 AND EBIT IS RS 10, 00, 000 A) RS 5, 00, 000. B) RS 25, 00, 000. C) RS-(5, 00, 000). D) NONE OF THE ABOVE. Show Answer Correct Answer: A) RS 5, 00, 000. ← 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