Author name: Umar Draz

educationist

Liquidity refers to:

A. Profitability

B. Ability to pay short-term obligations

C. Long-term growth

D. Investment capacity

Correct answer is: B. Ability to pay short-term obligations

Liquidity ensures short-term solvency.

Which ratio measures liquidity?

A. Debt ratio

B. Current ratio

C. Profit margin

D. Return on equity

Correct answer is: B. Current ratio

Current ratio measures liquidity.

Capital structure refers to:

A. Asset mix

B. Debt and equity mix

C. Revenue mix

D. Cost structure

Correct answer is: B. Debt and equity mix

It shows financing sources mix.

Payback period measures:

A. Profitability

B. Liquidity

C. Time to recover investment

D. Risk

Correct answer is: C. Time to recover investment

It shows recovery time.

Cost of capital is:

A. Return expected by investors

B. Company profit

C. Tax rate

D. Interest rate only

Correct answer is: A. Return expected by investors

It reflects investor expectations.

Risk-return tradeoff means:

A. High risk low return

B. Low risk high return

C. High risk high return

D. No relation

Correct answer is: C. High risk high return

Higher risk gives higher return.

Which is not part of working capital?

A. Cash

B. Inventory

C. Machinery

D. Receivables

Correct answer is: C. Machinery

Machinery is fixed asset.

Financial planning involves:

A. Short-term only

B. Long-term only

C. Both short and long term

D. No planning

Correct answer is: C. Both short and long term

It covers all financial decisions.

Which ratio measures profitability?

A. Current ratio

B. Debt ratio

C. Net profit margin

D. Quick ratio

Correct answer is: C. Net profit margin

It shows earning efficiency.

Which is not a function of finance manager?

A. Investment decision

B. Financing decision

C. Production decision

D. Dividend decision

Correct answer is: C. Production decision

Production is not finance function.