The liability which should be paid within a period of one year is known as a/an: A. Current asset B. Current liability C. Fixed asset D. Long-term liability Correct answer is: B. Current liability 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
Having a __________ level of future wealth (from more savings) requires you to sacrifice by having a __________ level of spending today. A. Lower; lower B. Higher; lower C. Higher; higher D. Lower; higher Correct answer is: B. Higher; lower 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
What does the term “beta” measure? A. Liquidity risk B. Market risk of a stock C. Inflation risk D. Credit risk Correct answer is: B. Market risk of a stock 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
What is the main advantage of leasing? A. Tax benefit B. Ownership at end C. No fixed payment D. Low cost maintenance Correct answer is: A. Tax benefit 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
The ability of a firm to convert an asset into cash quickly without significant loss of value is called ____________. A. Solvency B. Liquidity C. Leverage D. Profitability Correct answer is: B. Liquidity 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
The value of an option at the time of expiration is a function of: A. Volatility and interest rate B. Stock price and exercise price C. Interest rate and stock price D. Exercise price and volatility Correct answer is: B. Stock price and exercise price 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Volatility and interest rate B. Stock price and exercise price C. Interest rate and stock price D. Exercise price and volatility
The excess of current assets over current liabilities is known as: A. Gross working capital B. Permanent working capital C. Temporary working capital D. Net working capital Correct answer is: D. Net working capital 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Gross working capital B. Permanent working capital C. Temporary working capital D. Net working capital
Which of the following is a source of long-term funds? A. Debentures B. Cash credit C. Trade credit D. Factoring Correct answer is: A. Debentures 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
Which of the following has the highest claim on assets in liquidation? A. Equity shareholders B. Preference shareholders C. Debenture holders D. Retained earnings Correct answer is: C. Debenture holders 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
Which of the following is a microeconomic variable that helps define the discipline of finance? A. Inflation only B. Risk and return only C. Capital structure only D. Risk and return and capital structure Correct answer is: D. Risk and return and capital structure 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Inflation only B. Risk and return only C. Capital structure only D. Risk and return and capital structure
Which of the following would increase the break-even output level? A. Lower fixed costs B. Higher selling prices per unit C. Higher production costs per unit of output D. Lower output level Correct answer is: C. Higher production costs per unit of output 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Lower fixed costs B. Higher selling prices per unit C. Higher production costs per unit of output D. Lower output level
The net working capital of a firm measures its: A. Profitability B. Liquidity C. Credibility D. Solvency Correct answer is: B. Liquidity 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
Which of the following is a capital budgeting decision? A. Deciding credit terms B. Inventory management C. Buying a new factory D. Issuing dividends Correct answer is: C. Buying a new factory 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
What does WACC stand for? A. Weighted Average Cost of Capital B. Working Average Cost of Capital C. Weighted Average Capital Cost D. Western Average Cost of Capital Correct answer is: A. Weighted Average Cost of Capital 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Weighted Average Cost of Capital B. Working Average Cost of Capital C. Weighted Average Capital Cost D. Western Average Cost of Capital
Which theory suggests dividend policy affects firm value? A. Dividend Irrelevance Theory (Modigliani–Miller) B. Bird-in-the-Hand Theory C. Clientele Effect D. Residual Dividend Theory Correct answer is: B. Bird-in-the-Hand Theory 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Dividend Irrelevance Theory (Modigliani–Miller) B. Bird-in-the-Hand Theory C. Clientele Effect D. Residual Dividend Theory
What is the formula for operating leverage? A. Contribution / EBIT B. EBIT / Sales C. Fixed cost / Contribution D. Sales / EBIT Correct answer is: A. Contribution / EBIT 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
Which of the following is NOT a current asset? A. Cash B. Inventory C. Machinery D. Accounts receivable Correct answer is: C. Machinery 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
What is the objective of working capital management? A. Maximize current liabilities B. Maintain optimal balance of current assets and liabilities C. Maximize fixed assets D. Minimize cash balance Correct answer is: B. Maintain optimal balance of current assets and liabilities 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Maximize current liabilities B. Maintain optimal balance of current assets and liabilities C. Maximize fixed assets D. Minimize cash balance
What is the primary goal of financial management? A. Maximize sales B. Maximize profit C. Maximize shareholder wealth D. Minimize costs Correct answer is: C. Maximize shareholder wealth 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
Which of the following is a long-term source of finance? A. Trade credit B. Bank overdraft C. Equity shares D. Commercial paper Correct answer is: C. Equity shares 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
What does NPV stand for? A. Net Positive Value B. Net Present Value C. Nominal Present Value D. Net Profit Value Correct answer is: B. Net Present Value 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A project has an IRR higher than the cost of capital. What should the firm do? A. Reject B. Indifferent C. Accept D. Delay Correct answer is: C. Accept 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
Which ratio measures a firm’s liquidity? A. Debt-equity ratio B. Current ratio C. Gross profit ratio D. Return on equity Correct answer is: B. Current ratio 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
What is the cost of retained earnings compared to cost of equity? A. Always higher B. Always lower C. Generally equal but no flotation cost D. Zero Correct answer is: C. Generally equal but no flotation cost 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
Which is not a capital budgeting technique? A. NPV B. IRR C. Payback ratio D. Current ratio Correct answer is: D. Current ratio 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar