Financial Management Online MCQ Set 25

QN01. A source of funds is a:

1. Decrease in a current asset
2. Decrease in a current liability
3. Increase in a current liability
4. a and c above

Answer

(D)a and c above

QN02. Financial management involves decisions about which of the following:

1. Which projects to fund
2. How to minimize taxation
3. What type of capital should be raised
4. All of these

Answer

(D)All of these

QN03. The money markets deal with ______________.

1. securities with a life of more than one year
2. short-term securities
3. securities such as common stock
4. none of the above

Answer

(B)short-term securities

QN04. If interest expenses for a firm rise, we know that the firm has taken on more ______________

1. Financial Leverage
2. Operating Leverage
3. Fixed Assets
4. None of the above

Answer

(A)Financial Leverage

QN05. Insufficient working capital results in

1. Block of cash
2. Loosing interests
3. Lack of production
4. Lack of smooth flow of production

Answer

(D)Lack of smooth flow of production

QN06. The investment in total current assets is known as

1. Gross working capital
2. Permanent working capital
3. Temporary working capital
4. Net working capital

Answer

(A)Gross working capital

QN07. The time period required for the conversion of raw materials into finished goods

1. Operating cycle period
2. Inventory conversion period
3. Receivable conversion period
4. None

Answer

(B)Inventory conversion period

QN08. Financial Management is mainly concerned with ______________.

1. arrangement of funds
2. all aspects of acquiring and utilizing financial resources for firm's activities
3. efficient Management of every business
4. profit maximization

Answer

(B)all aspects of acquiring and utilizing financial resources for firm's activities

QN09. The gross working capital is a ______________ concern concept.

1. Going
2. money measurement
3. revenue concept
4. cost concept

Answer

(B)money measurement

QN10. Which of the following is not a function performed by a financial system?

1. Savings function
2. Liquidity function
3. Risk function
4. Social function

Answer

(D)Social function

QN11. The policy concerning quarters of profit to be distributed as dividend is termed as ______________.

1. Profit policy
2. Dividend policy
3. Credit policy
4. Reserving policy

Answer

(B)Dividend policy

QN12. Capital Budgeting is related to

1. Long term assets
2. Short term assets
3. Long term and short term assets
4. Fixed assets

Answer

(A)Long term assets

QN13. Which one of the following items is not generally used in preparing a statement of cash flows?

1. Adjusted trial balance
2. Comparative balance sheets
3. Current income statement
4. Additional information

Answer

(A)Adjusted trial balance

QN14. The order of presentation of activities on the statement of cash flows is

1. operating, investing, and financing
2. operating, financing, and investing
3. financing, operating, and investing
4. financing, investing, and operating

Answer

(A)operating, investing, and financing

QN15. Significant noncash transactions would not include

1. conversion of bonds into common stock
2. asset acquisition through bond issuance
3. treasury stock acquisition
4. exchange of plant assets

Answer

(C)treasury stock acquisition

QN16. In the Balance sheet of a firm, the debt equity ratio is 2:1. The amount of long term sources is Rs.12 lac. What is the amount of tangible net worth of the firm?

1. Rs.12 lac
2. Rs.8 lac
3. Rs.4 lac
4. Rs.2 lac

Answer

(B)Rs.8 lac

QN17. Authorised capital of a company is Rs.5 lac, 40% of it is paid up. Loss incurred during the year is Rs.50,000. Accumulated loss carried from last year is Rs.2 lac. The company has a Tangible Net Worth of

1. Nil
2. Rs.2.50 lac
3. (-) Rs.50,000
4. Rs.1 lac

Answer

(C)(-) Rs.50,000

QN18. Quick assets do not include

1. Govt. bond
2. Book debts
3. Advance for supply of raw materials
4. Inventories

Answer

(D)Inventories

QN19. Which of the following ratios would be useful in assessing short-term liquidity?

1. Current ratio, inventory turnover, fixed asset turnover
2. Average collection period, debt ratio, return on assets
3. Current ratio, quick ratio, cash-flow liquidity ratio
4. Quick ratio, accounts receivable turnover, returns on assets

Answer

(C)Current ratio, quick ratio, cash-flow liquidity ratio

QN20. Accounting Ratios are important tools used by

1. Managers
2. Researchers
3. Investors
4. All of the above

Answer

(D)All of the above

QN21. Ratio of Net Income to Number of Equity Shares known as?

1. Price Earnings Ratio
2. Net Profit Ratio
3. Earnings per Share
4. Dividend per Share

Answer

(C)Earnings per Share

QN22. Debt to Total Assets of a firm is .2. The Debt to Equity ratio would be:

1. 0.80
2. 0.25
3. 1.00
4. 0.75

Answer

(B)0.25

QN23. An asset is a

1. Source of fund
2. Use of fund
3. Inflow of funds
4. none of the above

Answer

(B)Use of fund

QN24. Current ratio of a concern is 1,its net working capital will be

1. Positive
2. Negative
3. Nil
4. None of the above

Answer

(C)Nil

QN25. A very high current ratio indicates

1. High efficiency
2. flabby inventory
3. position of more long term funds
4. b or c

Answer

(D)b or c

QN26. Which of the following is not a category of ratios?

1. Profitability
2. Management
3. Efficiency
4. Solvency

Answer

(B)Management

QN27. Which of the following are microeconomic variables that help define and explain the discipline of finance?

1. risk and return
2. capital structure
3. inflation
4. All of the above

Answer

(D)All of the above

QN28. Which of the following is not identified as one of the four main financial objectives of a firm?

1. Profitability
2. Liquidity
3. Efficiency
4. Timeliness

Answer

(D)Efficiency

QN29. A company's ______________ is money owned to it by its customers.

1. Liquidity
2. Accounts Receivable
3. Accounts Payable
4. Inventory
5. Owners' Equity

Answer

(B)Accounts Receivable

QN30. ______________ depict relationships between items on a firm's financial statements.

1. Financial proportions
2. Fiscal relations
3. Financial ratios
4. Fiscal proportions

Answer

(C)Financial ratios

QN31. "Share holder wealth" in a firm is represented by:

1. The number of people employed in the firm
2. The book value of the firm's assets less the book value of its liabilities
3. The amount of salary paid to its employees
4. The market price per share of the firm's common stock

Answer

(D)The market price per share of the firm's common stock

QN32. Who of the following make a broader use of accounting information?

1. Accountants
2. Financial Analysts
3. Auditors
4. Marketers

Answer

(B)Financial Analysts

QN33. Working capital management involves the financing and management of the assets of the firm.

1. Fixed
2. Total
3. Current
4. None of the above

Answer

(C)Current

QN34. Excess working capital results in

1. Block of cash
2. Loosing interests
3. Lack of production
4. Lack of smooth flow of production

Answer

(A)Block of cash

QN35. The excess of current assets over current liabilities is known as

1. Gross working capital
2. Permanent working capital
3. Temporary working capital
4. Net working capital

Answer

(D)Net working capital

QN36. The time period required to convert the credit sales into cash

1. Operating cycle period
2. Inventory conversion period
3. Receivable conversion period
4. None

Answer

(C)Receivable conversion period

QN37. Working capital is also known as ______________ capital.

1. circulating
2. fluctuating
3. fixed
4. going

Answer

(B)fluctuating

QN38. Factoring is a form of financing ______________.

1. payable
2. receivables
3. borrowings
4. debts

Answer

(C)borrowings

QN39. Ordering cost is the cost of ______________ materials.

1. selling
2. purchasing
3. stocking
4. financing

Answer

(B)purchasing

QN40. Which one of the following is capital expenditure:

1. Capital invested by owner
2. Selling expense for machine
3. Machine purchased
4. Daily expense to operate business

Answer

(C)Machine purchased