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 of the following is NOT a feature of preference shares?

A. Fixed dividend

B. Cumulative dividend

C. Voting rights

D. Priority over equity

Correct answer is: C. Voting rights

Which of the following is NOT a perspective of the Balanced Scorecard?

A. Customer

B. Internal business procedure

C. Human resource planning

D. Financial

Correct answer is: C. Human resource planning

Financial decisions involve:

A. Investment decision only

B. Financing decision only

C. Dividend decision only

D. All of the above: Investment, financing, and dividend decisions

Correct answer is: D. All of the above: Investment, financing, and dividend decisions

Contribution in break-even analysis is best expressed as:

A. Selling price minus absorption cost per unit

B. Selling price minus fixed cost per unit

C. Selling price minus variable cost per unit

D. Selling price minus total cost per unit

Correct answer is: C. Selling price minus variable cost per unit

A high debt-equity ratio generally indicates:

A. Low financial leverage

B. High financial risk

C. High liquidity

D. Low operating risk

Correct answer is: B. High financial risk

Which of the following is an internal source of finance?

A. Rights issue

B. Retained earnings

C. Bank loan

D. Debentures

Correct answer is: B. Retained earnings

What is the major disadvantage of equity financing?

A. Dilution of ownership

B. Fixed payment requirement

C. High financial risk

D. Short maturity

Correct answer is: A. Dilution of ownership

A particular investment is considered risky when:

A. It is dangerous

B. It has low returns

C. Its returns are uncertain

D. Its raw material is unavailable

Correct answer is: C. Its returns are uncertain

Finance is vital for which of the following business activities?

A. Marketing Research

B. Product Pricing

C. Design of marketing and distribution channels

D. All of the given options

Correct answer is: D. All of the given options

The degree to which a firm utilizes its assets relative to its revenue and profits is referred to as:

A. Effectiveness

B. Efficiency

C. Stability

D. Liquidity

Correct answer is: B. Efficiency