MCQ on Financial Management with Answers | Financial Management MCQs

Questions

1 Return on assets can be computed by

A Annual Net Income/Average total Assets

B Sales/Cost of Sales x 100

C Income/Sales x 100

D Sales/Net Income

View Answer

Answer: Annual Net Income/Average total Assets

2 Capital Employed is

A Cash + Bank

B Shareholders Funds + Long Funds

C Assets + Cash

D Bank

View Answer

Answer: Shareholders Funds + Long Funds

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3 Which is a capital expenditure?

A Research and Development Project

B Project Generation

C Project Expansion

D All of the above

View Answer

Answer: All of the above

4 Which of the following recognises risk in capital budgeting analysis by adjusting estimated cash flows and employs risk-free rate to discount the adjusted cash flows?

A Cash

B Certainty Equivalent Approach

C Pay-back Period

D Inventory

View Answer

Answer: Certainty Equivalent Approach

5 The term "capital structure" refers to:

A long-term debt, preferred stock, and common stock equity.

B current assets and current liabilities.

C total assets minus liabilities.

D shareholders' equity.

View Answer

Answer: long-term debt, preferred stock, and common stock equity.

6 The ______ method provides correct rankings of mutually exclusive projects, when the firm is not subject to capital rationing.

A net present value

B internal rate of return

C payback period

D profitability index

View Answer

Answer: net present value

7 Price Ratio Method is

A Earning Yield Method

B Growth Method

C Dividend Yield Method

D Asset Method

View Answer

Answer: Earning Yield Method

8 Which is Walter formula, for dividend policy?

A V_c = D + R_a/R_c (E - D)/R_c

B V_c = D + R_a/R_c/R_c

C V_c = D + Rc/E - D

D V_c = E - D/R_c

View Answer

Answer: V_c = D + R_a/R_c (E - D)/R_c

9 Operating leverage can be computed by

A %change in EBIT/% change in Sales

B EBIT/Fixed Cost x Capital Employed

C Sales/EBIT

D Fixed Cost/EBIT

View Answer

Answer: %change in EBIT/% change in Sales

10 ________ is concerned with the maximization of a firm's stock price.

A Shareholder wealth maximization

B Profit maximization

C Stakeholder welfare maximization

D EPS maximization

View Answer

Answer: Shareholder wealth maximization

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