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.

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.

Which source is cheapest?

A. Equity

B. Debt

C. Preference shares

D. Retained earnings

Correct answer is: D. Retained earnings

Retained earnings have no explicit cost.

Financial leverage refers to:

A. Use of debt

B. Use of equity

C. Use of assets

D. Use of cash

Correct answer is: A. Use of debt

Debt increases returns and risk.

High leverage means:

A. Low risk

B. High risk

C. No risk

D. Stable income

Correct answer is: B. High risk

More debt increases risk.

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.