Financial Management Quiz Questions:

Ques. The job of a finance manager is confined to

(a) Raising funds
(b) Management of cash
(c) Raising of funds and their effective utilization
(d) None of these
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Ans. (c)
Ques. Marginal cost of capital is the cost of:
(a) Additional Sales
(b) Additional Funds
(c) Additional Interests
(d) None of the above
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Ans. (b)
Ques. __ Is also known as marginal profit ratio
(a) P/V
(b) current
(c) profitability
(d) none
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Ans. (a)
Ques. Which of the following statements is correct?
(a) A Higher Receivable Turnover is not desirable
(b) Interest Coverage Ratio depends upon Tax Rate
(c) Increase in Net Profit Ratio means increase in Sales
(d) Lower Debt-Equity Ratio means lower Financial Risk
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Ans. (d)
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Ques. In order to find out cost of equity capital under CAPM, which of the following is not
required:
(a) Beta Factor
(b) Market Rate of Return
(c) Market Price of Equity Share
(d) Risk-free Rate of Interest
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Ans. (c)
Ques. Return on Investment may be improved by:
(a) Increasing Turnover
(b) Reducing Expenses
(c) Increasing Capital Utilization
(d) All of the above
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Ans. (d)
Ques. Financial Leverage measures relationship between
(a) EBIT and PBT
(b) EBIT and EPS
(c) Sales and PBT
(d) Sales and EPS
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Ans. (b)
Ques. Contribution margin ratio is better known as __
(a) P/V
(b) current
(c) profitability
(d) none
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Ans. (a)
Ques. 5Cs of the credit does not include
(a) Collateral
(b) Character
(c) Conditions
(d) None of the above
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Ans. (d)
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Ques. Financial break-even level of EBIT is:
(a) Intercept at Y-axis
(b) Intercept at X-axis
(c) Slope of EBIT-EPS line
(d) None of the above
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Ans. (b)
Ques. Financial planning starts with the preparation of:
(a) Master Budget
(b) Cash Budget
(c) Balance Sheet
(d) None of the above
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Ans. (d)
Ques. The Traditional Approach to Value of the firm m that:
(a) There is no optimal capital structure
(b) Value can be increased by judicious use of leverage
(c) Cost of Capital and Capital structure are m dent
(d) Risk of the firm is independent of capital structure
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Ans. (b)
Ques. __ratio establishes relationship between contribution margin and total sales.
(a) P/V
(b) current
(c) profitability
(d) none
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Ans. (a)
Ques. The Real Cashflows must be discounted to get the present value at a rate equal to:
(a) Money Discount Rate
(b) Inflation Rate
(c) Real Discount Rate
(d) Risk free rate of interest
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Ans. (c)
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Ques. Cheques deposited in bank may not be available for immediate use due to
(a) Payment Float
(b) Recceipt Float
(c) Net Float
(d) Playing the Float
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Ans. (b)
Ques. Financial Planning deals with:
(a) Preparation of Financial Statements
(b) Planning for a Capital Issue
(c) Preparing Budgets
(d) All of the above
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Ans. (c)
Ques. Which of the following is not a part of credit policy?
(a) Collection Effort
(b) Cash Discount
(c) Credit Standard
(d) Paying Practices of debtors
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Ans. (d)
Ques. __ is described as bread earning point.
(a) cash flow
(b) fund flow
(c) ratio
(d) breakeven
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Ans. (d)
Ques. Working Capital Turnover measures the relationship of Working Capital with:
(a) Fixed Assets
(b) Sales
(c) Purchases
(d) Stock
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Ans. (a)
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Ques. Receivables Management deals with
(a) Receipts of raw materials
(b) Debtors collection
(c) Creditors Management
(d) Inventory Management
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Ans. (b)
Ques. Process of Financial Planning ends with:
(a) Preparation of Projected Statements
(b) Preparation of Actual Statements
(c) Comparison of Actual with Projected
(d) Ordering the employees that projected figures m come true
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Ans. (c)
Ques. Cash discount terms offered by trade creditors never be accepted because
(a) Benefit in very small
(b) Cost is very high
(c) No sense to pay earlier
(d) None of the above
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Ans. (d)
Ques. __ is an equilibrium point.
(a) cash flow
(b) fund flow
(c) ratio
(d) breakeven
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Ans. (d)
Ques. Which of the following is not an element of credit policy?
(a) Credit Terms
(b) Collection Policy
(c) Cash Discount Terms
(d) Sales Price
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Ans. (d)
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Ques. If a company sells its receivable to another party to raise funds, it is known as
(a) Securitization
(b) Factoring
(c) Pledging
(d) None of the above
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Ans. (b)
Ques. Financial decision involve:
(a) Investment ,financing and dividend decision
(b) Investment ,financing and sales decision
(c) Financing, dividend and cash decision
(d) None of these
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Ans. (a)
Ques. Mathematical relationship between two figures taken from financial statements is
called __
(a) cash flow
(b) fund flow
(c) ratio
(d) breakeven
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Ans. (c)
Ques. Concentration Banking helps in
(a) Reducing Idle Bank Balance
(b) Increasing Collection
(c) Increasing Creditors
(d) Reducing Bank Transactions
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Ans. (b)
Ques. Cost of Capital refers to:
(a) Flotation Cost
(b) Dividend
(c) Required Rate of Return
(d) None of the above
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Ans. (c)
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Ques. ‘That personal leverage can replace corporate leverage’ is assumed by:
(a) Traditional Approach
(b) MM Model
(c) Net Income Approach
(d) Net Operating Income Approach
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Ans. (b)
Ques. Which of the following is studied with the help of financial leverage?
(a) Marketing Risk
(b) Interest Rate Risk
(c) Foreign Exchange Risk
(d) Financing risk
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Ans. (d)
Ques. Which combination is generally good for firms
(a) High OL, High FL
(b) Low OL, Low FL
(c) High OL, Low FL
(d) None of these
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Ans. (c)
Ques. Which of the following is not a technique of financial analysis:
(a) Ratio analysis
(b) Risk analysis
(c) cash flow analysis
(d) Fund flow analysis
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Ans. (b)
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Ques. __ shows movement of cash into and out of the firm and its net effect on balance sheet.
(a) cash flow
(b) fund flow
(c) ratio
(d) breakeven
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Ans. (a)
Ques. __ analysis is done to ascertain financial viability of a project
(a) Network
(b) financial
(c) techno-economic
(d) input
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Ans. (b)
Ques. __ is the difference between sales and variable cost.
(a) margin of safety
(b) fixed cost
(c) contribution
(d) profit
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Ans. (c)
Ques. __ shows the changes in assets, liabilities and net worth between two balance sheet
dates.
(a) cash flow
(b) fund flow
(c) ratio
(d) breakeven
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Ans. (b)
Ques. The process of the total valuation of the financial assets of a company is technically
known as
(a) Market capitalisation
(b) Gross Domestic Product
(c) Net wealth of the country
(d) Gross Domestic Resources
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Ans. (a)
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