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 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
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 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
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 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
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 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. It is dangerous B. It has low returns C. Its returns are uncertain D. Its raw material is unavailable
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 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Marketing Research B. Product Pricing C. Design of marketing and distribution channels 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 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
Which of the following is a tool of financial statement analysis? A. Ratio analysis B. Fund flow statement C. Cash flow statement D. All of the above Correct answer is: D. All of the above 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A higher current ratio always means better liquidity. True or false? A. TRUE B. FALSE C. Depends on industry D. Only for small firms Correct answer is: B. FALSE 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
What is the purpose of financial management? A. Procurement and effective use of funds B. Maximize revenue only C. Minimize expenses only D. Increase market share Correct answer is: A. Procurement and effective use of funds 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Procurement and effective use of funds B. Maximize revenue only C. Minimize expenses only D. Increase market share
In finance, risk is commonly measured by calculating the: A. Mean B. Variance C. Standard deviation D. Kurtosis Correct answer is: C. Standard deviation 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
Who among the following makes the broadest use of accounting information? A. Accountants B. Financial Analysts C. Auditors D. Marketers Correct answer is: B. Financial Analysts 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
Which of the following is the least likely way to benefit from understanding finance? A. Assessing the advice of financial advisers B. Becoming the president of a large national bank C. Making your own financial decisions D. Becoming a financial adviser Correct answer is: B. Becoming the president of a large national bank 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Assessing the advice of financial advisers B. Becoming the president of a large national bank C. Making your own financial decisions D. Becoming a financial adviser
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 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
Which source is cheapest? A. Equity B. Debt C. Preference shares D. Retained earnings Correct answer is: D. Retained earnings 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar