MBA/MBA Financial Management MCQ Set 9 Sample Test,Sample questions

Question:
A company's ability to meet its short-term financial obligations is referred to as:

1.Stability

2.Efficiency

3.Effectiveness

4.Liquidity


Question:
A company's ______________ is its merchandise, raw materials, and products waiting to be sold.

1.Inventory

2.Liquidity

3.Accounts Receivable

4.Accounts Payable


Question:
A firm's working capital consists of investment in

1.Current assets

2.Current Liabilities

3.Short term assets

4.Both (a) and (c)


Question:
A firm's working capital consists of investment in

1.Current Assets

2.Current liabilities

3.Short term assets

4.Both a & c


Question:
A series of activities in an organization related to production is known as

1.Operating cycle

2.Working cycle

3.Current cycle

4.Fixed cycle


Question:
An example of current liability

1.Creditors

2.Outstanding expenses

3.Provisions for depreciation

4.All


Question:
Bad debt cost is not borne by factor in case of

1.Pure Factoring

2.Without Recourse Factoring

3.With Recourse Factoring

4.None of the above


Question:
Balance Sheet shows the:

1.Profit earned by the business

2.Total capital employed

3.Financial position of the business

4.Trading results of the business


Question:
Capital Budgeting Decisions are:

1.Reversible

2.Irreversible

3.Unimportant

4.All of the above


Question:
Cash Budget does not include

1.Dividend Payable

2.Postal Expenditure

3.Issue of Capital

4.Total Sales Figure


Question:
Combined Leverage is obtained from OL and FL by their:

1.Addition

2.Subtraction

3.Multiplication

4.Any of these


Question:
Dividend Payout Ratio is

1.PAT÷ Capital

2.DPS ÷ EPS

3.Pref. Dividend ÷ PAT

4.Pref. Dividend ÷ Equity Dividend


Question:
EOQ determines the order size when

1.Total Order cost is Minimum

2.Total Number of order is least

3.Total inventory costs are minimum

4.None of the above


Question:
EOQ is the quantity that minimizes

1.Total Ordering Cost

2.Total Inventory Cost

3.Total Interest Cost

4.Safety Stock Level


Question:
Every company should follow

1.High Dividend Payment

2.Low Dividend Payment

3.Stable Dividend Payment

4.Fixed Dividend Payment


Question:
Finance function is one of the most important functions of ______________ management.

1.business

2.marketing

3.financial

4.debt


Question:
Financial Break-even level of EBIT is one at which:

1.EPS is one

2.EPS is zero

3.EPS is Infinite

4.EPS is Negative


Question:
Financial management deals with two things -- raising money and:

1.Operations management

2.Production management

3.Warehousing

4.Managing a company's finances


Question:
Financial management deals with two things:

1.Operations management and procurement

2.Warehousing and managing a company's finances

3.Raising money and managing a company's finances

4.Marketing and production management


Question:
For a constant EBIT, if the debt level is further increased then

1.EPS will always increase

2.EPS may increase

3.EPS will never increase

4.None of the above


Question:
If a company sells its receivable to another party to raise funds, it is known as

1.Securitization

2.Factoring

3.Pledging

4.None of the above


Question:
In lease system, interest is calculated on

1.Cash down payment

2.Cash price outstanding

3.Hire purchase price

4.None of the above


Question:
In MM Model with taxes, where 'r' is the interest rate, ‘D’ is the total debt and 't' is tax rate, then present valued shields would be:

1.r×D×t

2.r×D

3.D×t

4.(D× r)/(l-t)


Question:
In Risk-Adjusted Discount Rate method, the normal rate of discount is:

1.Increased

2.Decreased

3.Unchanged

4.None of the above


Question:
Lease which includes a third party (a lender) is known as

1.Sale and leaseback

2.Direct Lease

3.Inverse Lease

4.Leveraged Lease


Question:
Long term sources are

1.Retained earnings

2.Debentures

3.Share capital

4.All of the above


Question:
Marketable securities are primarily

1.Equity shares,'

2.Preference shares

3.Fixed deposits with companies

4.Short-term debt investments


Question:
Miller-Orr Model deals with

1.Optimum Cash Balance

2.Optimum Finished goods

3.Optimum Receivables

4.All of the above


Question:
MM Model argues that dividend is irrelevant as

1.the value of the firm depends upon earning power

2.the investors buy shares for capital gain

3.dividend is payable after deciding the retained earnings

4.dividend is a small amount


Question:
NOI Approach advocates that the degree of debt financing is:

1.Relevant

2.May be relevant

3.Irrelevant

4.May be irrelevant


Question:
One of the limitations of the ______________ is that it is based on historical costs.

1.Income statement

2.Statement of cash flows

3.Balance sheet

4.none of the above


Question:
Payment to creditors is a manifestation of cash held for:

1.Transactionery Motive

2.Precautionary Motive

3.Speculative Motive

4.All of the above


Question:
Residuals Theory argues that dividend is a

1.Relevant Decision

2.Active Decision

3.Passive Decision

4.Irrelevant Decision


Question:
Short - term interest rates, in a normal economy, are generally ______________ than long - term rates.

1.Higher

2.The same

3.Lower

4.None of the above


Question:
Suppliers and Creditors of a firm are interested in

1.Profitability Position

2.Liquidity Position

3.Market Share Position

4.Debt Position


Question:
That personal leverage can replace corporate leverage' is assumed by:

1.Traditional Approach

2.MM Model

3.Net Income Approach

4.Net Operating Income Approach


Question:
The aftertax cost of debt is expressed:

1.Kd = Y/k(1-T)

2.Kd = Y(1-T)

3.K = (1-t)/Y

4.K = Y


Question:
The formula for the Capital Asset Pricing Model (CAPM) is:

1.Kj = Rf + β (Rf – Rm)

2.Kj = Rf + β (Rm – Rf)

3.K = R + β (R – M)

4.K = R + β (R – R)


Question:
The most important item that can be extracted from financial statements is the actual ______________ of the firm.

1.Net Working Capital

2.Cash Flow

3.Net Present Value

4.None of the given options


Question:
The term 'EVA' is used for:

1.Extra Value Analysis

2.Economic Value Added

3.Expected Value Analysis

4.Engineering Value Analysis


Question:
The term capital structure denotes:

1.Total of Liability side of Balance Sheet

2.Equity Funds, Preference Capital and Long term Debt

3.Total Shareholders Equity

4.Types of Capital Issued by a Company


Question:
Trading on Equity is

1.Always beneficial

2.May be beneficial

3.Never beneficial

4.None of the above


Question:
Which combination is generally good for firms

1.High OL, High FL

2.Low OL, Low FL

3.High OL, Low FL

4.None of these


Question:
Which of the following is correct?

1.CL= OL + FL

2.CL=OL-FL

3.OL= OL × FL

4.OL=OL÷FL


Question:
Which of the following is not a spontaneous source of short-term funds?

1.Trade credit

2.Accrued expenses

3.Provision for dividend

4.All of the above


Question:
Which of the following is not a standard method of inventory valuation?

1.First in First out

2.Standard Cost

3.Average Pricing

4.Realizable Value


Question:
Which of the following is true of Net Income Approach?

1.VF = VE+VD

2.VE = VF+VD

3.VD = VF+VE

4.VF = VE-VE


Question:
Which of the following is true?

1.Retained earnings are cost free

2.External Equity is cheaper than Internal Equity

3.Retained Earnings are cheaper than External Equity

4.Retained Earnings are costlier than External Equity


Question:
Which of the following selections correctly matches the financial statement with its description

1.Income statement/tells how much a firm is making or losing

2.Income statement/depicts the structure of a firm's assets and liabilities

3.Balance sheet/tells how much a firm is making or losing

4.Statement of cash flows/depicts the structure of a firm's assets and liabilities


Question:
______________ is concerned with the acquisition, financing and management of assets with some overall goal in mind.

1.Financial Management

2.Profit Maximisation

3.Agency Theory

4.Social Responsibility


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