MBA/MBA Financial Management MCQ Set 10 Sample Test,Sample questions

Question:
A firm has Capital of Rs. 10,00,000; Sales of Rs. 5,00,000; Gross Profit of Rs. 2,00,000 and Expenses of Rs. 1,00,000. What is the Net Profit Ratio?

1.20%

2.50%

3.10%

4.40%


Question:
A level of working capital which is required by the firm always is knows as

1.Gross working capital

2.Permanent working capital

3.Temporary working capital

4.Net working capital


Question:
A source of funds is a:

1.Decrease in a current asset

2.Decrease in a current liability

3.Increase in a current liability

4.a and c above


Question:
ABC Ltd. has a Current Ratio of 1.5: 1 and Net Current Assets of Rs. 5,00,000. What are the Current Assets?

1.Rs. 5,00,000

2.Rs. 10,00,000

3.Rs. 15,00,000

4.Rs. 25,00,000


Question:
Adequate working capital means

1.Sufficient funds

2.Insufficient funds

3.Lack of funds

4.All of the above


Question:
An asset is a

1.Source of fund

2.Use of fund

3.Inflow of funds

4.none of the above


Question:
Banks generally prefer Debt Equity Ratio at:

1.1:1

2.1:3

3.2:1

4.3:1


Question:
Current ratio is 2:5.Current liability is Rs.30000.The Net working capital is

1.Rs.18,000

2.Rs.45,000

3.Rs.(-) 45,000

4.Rs.(-)18000


Question:
Current ratio is 4:1.Net Working Capital is Rs.30,000.Find the amount of currentAssets.

1.Rs. 10,000

2.Rs. 40,000

3.Rs.24,000

4.Rs.6,000


Question:
Debt Equity Ratio is 3:1,the amount of total assets Rs.20 lac, current ratio is 1.5:1 and owned funds Rs.3 lac. What is the amount of current asset?

1.Rs.5 lac

2.Rs.3 lac

3.Rs.12 lac

4.none of the above


Question:
Financial decisions involve ______________.

1.Investment, financing and dividend decisions

2.Investment sales decisions

3.Financing cash decisions

4.Investment dividend decisions


Question:
Financial leverage means

1.Use of more debt capital to increase profit

2.High degree of solvency

3.Low bank finance

4.None of the above


Question:
Financial management involves decisions about which of the following:

1.Which projects to fund

2.How to minimize taxation

3.What type of capital should be raised

4.All of these


Question:
Financial risk arises due to the

1.variability of returns due to fluctuations in the securities market

2.changes in prevailing interest rates in the market

3.leverage used by the company

4.liquidity of the assets of the company


Question:
Greater the size of a business unit ______________ will be the requirements of working capital

1.larger

2.lower

3.no change

4.fixed


Question:
Gross Profit Ratio for a firm remains same but the Net Profit Ratio is decreasing. The reason for such behavior could be:

1.Increase in Costs of Goods Sold

2.Increase in Expense

3.Increase in Dividend

4.Decrease in Sales


Question:
If a company revalues its assets, its networth:

1.Will improve

2.Will remain same

3.Will be positively affected

4.None of the above


Question:
If interest expenses for a firm rise, we know that the firm has taken on more ______________

1.Financial Leverage

2.Operating Leverage

3.Fixed Assets

4.None of the above


Question:
In Inventory Turnover calculation, what is taken in the numerator?

1.Sales

2.Cost of Goods Sold

3.Opening Stock

4.Closing Stock


Question:
Investing activities include

1.collecting cash on loans made

2.obtaining cash from creditors

3.obtaining capital from owners

4.repaying money previously borrowed


Question:
Net Profit Ratio Signifies:

1.Operational Profitability

2.Liquidity Position

3.Big-term Solvency

4.Profit for Lenders


Question:
Of the items below, the one that appears first on the statement of cash flows is

1.Non cash investing and financing activities

2.net increase (decrease) in cash

3.cash at the end of the period

4.cash at the beginning of the period


Question:
Properietory ratio is calculated by

1.Total assets/Total outside liability

2.Total outside liability/Total tangible assets

3.Fixed assets/Long term source of fund

4.Properietor'sFunds/TotalTangible Assets


Question:
Retained earnings are

1.An indication of a company's liquidity

2.The same as cash in the bank

3.Not important when determining dividends

4.The cumulative earnings of the company after dividends


Question:
Return on Investment may be improved by:

1.Increasing Turnover

2.Reducing Expenses

3.Increasing Capital Utilization

4.All of the above


Question:
Stock is not included in the current assets when calculating the acid test ratio because:

1.Stock is not a liquid asset

2.Only debtors can be included, as they will be converted into cash shortly

3.It makes comparison easier as only two current liabilities are included in the acid test ratio

4.Banks only recognize cash and debtors as liquid assets


Question:
Suppliers and Creditors of a firm are interested in

1.Profitability Position

2.Liquidity Position

3.Market Share Position

4.Debt Position


Question:
The category that is generally considered to be the best measure of a company's ability tocontinue as a going concern is

1.cash flows from operating activities

2.cash flows from investing activities

3.cash flows from financing activities

4.usually different from year to year


Question:
The degree of solvency of two firms can be compared by measuring

1.Net worth

2.Tangible Net Worth

3.Asset coverage ratio

4.Solvency Ratio


Question:
The difference between selling price and present book value of machinery is called

1.Capital income

2.Revenue income

3.Revenue Receipt

4.Capital Receipt


Question:
The job of a finance manager is confined to

1.Raising funds

2.Management of cash

3.Raising of funds and their effective utilization

4.None of these


Question:
The long term use is 120% of long term source. This indicates the unit has

1.current ratio 1.2:1

2.Negative TNW

3.Low capitalization

4.Negative NWC


Question:
The money markets deal with ______________.

1.securities with a life of more than one year

2.short-term securities

3.securities such as common stock

4.none of the above


Question:
The net working capital measures

1.Ability

2.Liquidity

3.Credibility

4.None


Question:
The objective of financial management is to maximize ______________ wealth.

1.Select correct option:

2.Stakeholders

3.Shareholders

4.Bondholders


Question:
The primary purpose of the statement of cash flows is to

1.provide information about the investing and financing activities during a period

2.prove that revenues exceed expenses if there is a net income

3.provide information about the cash receipts and cash payments during a period

4.facilitate banking relationships


Question:
The statement of cash flows will not report the

1.amount of checks outstanding at the end of the period

2.sources of cash in the current period

3.uses of cash in the current period

4.change in the cash balance for the current period


Question:
The strength and vigor of a firm's overall financial posture is referred to as:

1.Liquidity

2.Stability

3.Effectiveness

4.Profitability


Question:
The transaction motive for holding cash is for

1.A safety cushion

2.Daily operating requirements

3.Compensating Balance requirements

4.None of the above


Question:
Traditional approach confines finance function only to ______________ funds.

1.Raising

2.Mobilising

3.Utilising

4.Financing


Question:
What is the net trade cycle?

1.The amount of time needed to complete the normal operating cycle of a firm

2.The amount of time it takes to manufacture or buy inventory

3.The amount of time it takes to sell inventory

4.None of the above


Question:
What relationship exists between the average collection period and accounts receivable turnover?

1.Both ratios are expressed in number of days

2.Both ratios are expressed in number of times receivables are collected per year

3.As average collection period increases (decreases) the accounts receivable turnover decreases (increases)

4.There is a direct and proportional relationship


Question:
What type of ratios measure the liquidity of specific assets and the efficiency of managing assets?

1.Leverage ratios

2.Profitability ratios

3.Liquidity ratios

4.Activity ratios


Question:
Which of the following does not help to increase Current Ratio?

1.Issue of Debentures to buy Stock

2.Issue of Debentures to pay Creditors

3.Sale of Investment to pay Creditors

4.Avail Bank Overdraft to buy Machine


Question:
Which of the following is not an efficiency ratio?

1.Asset turnover

2.Stock Turnover

3.Debtor days

4.Interest cover


Question:
Which of the following would be subtracted from net income using the indirect'method?

1.Depreciation expense

2.An increase in accounts receivable

3.An increase in accounts payable

4.A decrease in prepaid expenses


Question:
Which of the following would not be an adjustment to net income using the indirect method?

1.Depreciation Expense

2.An increase in Prepaid Insurance

3.Amortization Expense

4.An increase in Land


Question:
Which one of the following is NOT a tool of financial forecasting ?

1.Cash budget

2.Capital budget

3.Pro forma Balance sheet

4.Pro forma Income statement


Question:
XYZ Ltd. has a Debt Equity Ratio of 1.5 as compared to 1.3 Industry average. It means that the firm has:

1.Higher Liquidity

2.Higher Financial Risk

3.Higher Profitability

4.Higher Capital Employed


Question:
______________ reflect past performance and are usually prepared on a quarterly and annual basis

1.Chronological financial statements

2.Ad-hoc financial statements

3.Historical financial statements

4.Concurrent financial statement


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