Which of the following is a determinant of dividend policy? A. Liquidity B. Legal constraints C. Growth opportunities D. All of the above Correct answer is: D. All of the above 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
What is the purpose of a cash budget? A. Forecast cash inflows and outflows B. Calculate profit C. Estimate depreciation D. Determine inventory levels Correct answer is: A. Forecast cash inflows and outflows 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Forecast cash inflows and outflows B. Calculate profit C. Estimate depreciation D. Determine inventory levels
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
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
Which of these is a non-cash expense? A. Rent expense B. Salary expense C. Depreciation D. Interest expense Correct answer is: C. Depreciation 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
What does the term “capital structure” refer to? A. Total assets B. Mix of debt and equity C. Fixed assets only D. Current liabilities Correct answer is: B. Mix of debt and equity 📖 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
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 goal of cash management? A. Maximize cash balance B. Minimize transaction needs C. Maintain optimum cash balance D. Invest all cash in fixed assets Correct answer is: C. Maintain optimum cash balance 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Maximize cash balance B. Minimize transaction needs C. Maintain optimum cash balance D. Invest all cash in fixed assets
Which of the following is an example of spontaneous financing? A. Bank loan B. Accounts payable C. Lease financing D. Debentures Correct answer is: B. Accounts payable 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
Financial leverage is favorable when: A. ROI > Cost of debt B. ROI < Cost of debt C. Tax rate is high D. Sales are low Correct answer is: A. ROI > Cost of debt 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
What does EBIT stand for? A. Earnings Before Interest and Taxes B. Earnings Before Income Taxes C. Equity Before Interest and Taxes D. Earnings Before Interest and Turnover Correct answer is: A. Earnings Before Interest and Taxes 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Earnings Before Interest and Taxes B. Earnings Before Income Taxes C. Equity Before Interest and Taxes D. Earnings Before Interest and Turnover
Which of these is a limitation of the payback period method? A. Ignores time value of money B. Hard to calculate C. Requires complex software D. Not useful for small projects Correct answer is: A. Ignores time value of money 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Ignores time value of money B. Hard to calculate C. Requires complex software D. Not useful for small projects
What is the formula for the payback period? A. Initial investment / Annual cash inflow B. Net income / Investment C. Cash inflow / Debt D. Investment / Net profit Correct answer is: A. Initial investment / Annual cash inflow 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Initial investment / Annual cash inflow B. Net income / Investment C. Cash inflow / Debt D. Investment / Net profit
Which of the following is a cash outflow from financing activities? A. Purchase of machinery B. Payment of dividends C. Increase in inventory D. Sale of investments Correct answer is: B. Payment of dividends 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
What is the cost of debt generally lower than cost of equity? A. Higher risk for equity holders B. Tax deductibility of interest C. Longer maturity D. Regulatory requirement Correct answer is: B. Tax deductibility of interest 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Higher risk for equity holders B. Tax deductibility of interest C. Longer maturity D. Regulatory requirement
Which ratio is used to evaluate profitability? A. Quick ratio B. Return on Equity C. Debt ratio D. Inventory turnover Correct answer is: B. Return on Equity 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
What is the effect of a stock split on shareholders’ equity? A. Increases retained earnings B. Decreases total equity C. Increases share capital D. No change in total equity Correct answer is: D. No change in total equity 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Increases retained earnings B. Decreases total equity C. Increases share capital D. No change in total equity
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
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
Which of the following is a method of capital budgeting? A. Payback period B. Internal Rate of Return C. Net Present Value D. All of the above Correct answer is: D. All of the above 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
What is the main assumption of MM dividend irrelevance theory? A. Perfect capital markets B. No taxes C. No transaction costs D. All of the above Correct answer is: D. All of the above 📖 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 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
What does the retention ratio measure? A. Dividends / Earnings B. Retained earnings / Total equity C. Retained earnings / Earnings after tax D. Earnings / Share price Correct answer is: C. Retained earnings / Earnings after tax 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Dividends / Earnings B. Retained earnings / Total equity C. Retained earnings / Earnings after tax D. Earnings / Share price