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
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
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 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
What is sensitivity analysis in capital budgeting? A. Change in NPV due to change in an input variable B. Breakeven analysis C. Regression analysis D. Simulation analysis Correct answer is: A. Change in NPV due to change in an input variable 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Change in NPV due to change in an input variable B. Breakeven analysis C. Regression analysis D. Simulation analysis
Which of the following is a profitability ratio? A. Net profit margin B. Debt-equity ratio C. Current ratio D. Inventory turnover ratio Correct answer is: A. Net profit margin 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
What does the term “blue chip” refer to? A. High-risk stock B. Large, stable, well-established company C. New startup D. Government bond Correct answer is: B. Large, stable, well-established company 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
Which of these is a motive for holding cash? A. Transaction motive B. Precautionary motive C. Speculative motive 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 formula for earnings per share (EPS)? A. Net income / Number of shares outstanding B. EBIT / Shares C. Net income / Sales D. Dividends / Shares Correct answer is: A. Net income / Number of shares outstanding 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Net income / Number of shares outstanding B. EBIT / Shares C. Net income / Sales D. Dividends / Shares
Which of the following increases a firm’s financial risk? A. High operating leverage B. High debt in capital structure C. High current ratio D. High inventory turnover Correct answer is: B. High debt in capital structure 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. High operating leverage B. High debt in capital structure C. High current ratio D. High inventory turnover
What does the term “cost of capital” mean? A. Cost of equity B. Minimum return required by investors C. Interest rate on loans D. Cost of issuing shares Correct answer is: B. Minimum return required by investors 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Cost of equity B. Minimum return required by investors C. Interest rate on loans D. Cost of issuing shares
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