Financial Management Mcqs

here are key Multiple Choice Questions (MCQs) on Financial Management, covering core topics like capital budgeting, cost of capital, and financial analysis.

Which is not part of working capital?

A. Cash

B. Inventory

C. Machinery

D. Receivables

Correct answer is: C. Machinery

Machinery is fixed asset.

IRR is defined as:

A. Discount rate with zero NPV

B. Interest rate charged

C. Simple rate of return

D. Average return

Correct answer is: A. Discount rate with zero NPV

IRR makes NPV equal to zero.

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 is a short-term financing source?

A. Equity shares

B. Debentures

C. Trade credit

D. Bonds

Correct answer is: C. Trade credit

Trade credit is short-term.

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.

Working capital is:

A. Fixed assets

B. Current assets minus current liabilities

C. Long-term funds

D. Net profit

Correct answer is: B. Current assets minus current liabilities

It represents liquidity.

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.

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.

Break-even point occurs when:

A. Profit is maximum

B. Revenue equals cost

C. Loss occurs

D. Fixed cost is zero

Correct answer is: B. Revenue equals cost

At BEP, no profit no loss.

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.