Financial management MCQs Questions Answers

1.________  is a series of constant cash flows that occur at the end of each period for some fixed number of periods from the following?
A. Ordinary annuity

1. Annuity due
2. Perpetuity
3. None of the given options
4. All of these
5. None of these

2. During the accounting period, sales revenue is Rs. 25,000 and accounts receivable increased by Rs.8,000. __________amount of cash is received from the customers for period.

1. Rs. 33,000
2. Rs. 25,000
3. Rs. 17,000
4. Rs. 8,000
5. All of these
6. None of these

3.The encounter of interest b/w stockholders and management is called _________.

1. Agency problem
2. Interest conflict
3. Management conflict
4. Agency cost
5. All of these
6. None of these

4._________ form of business organization is least regulated? Select from the options.

1. Sole-proprietorship
2. General Partnership
3. Limited Partnership
4. Corporation
5. All of these
6. None of these

5. Select the right ratios which are intended to address the firm’s financial leverage.

1. Liquidity Ratios
2. Long-term Solvency Ratios
3. Asset Management Ratios
4. Profitability Ratios
5. All of these
6. None of these

6.The right formula for Balance Sheet is based upon_________?

1. Assets = Liabilities – Stockholder’s equity
2. Assets + Liabilities = Stockholder’s equity
3. Assets + Stockholder’s equity = Liabilities
4. Assets = Liabilities + Stockholder’s equity
5. All of these
6. None of these

7.Quick Ratio is also called______ .

1. Current Ratio
2. Acid-test Ratio
3. Cash Ratio
4. None of the given options
5. All of these
6. None of these

8._____________ is a special case of annuity, where the stream of cash flows continues forever? Select

from following?

1. Ordinary Annuity
2. Special Annuity
3. Annuity Due
4. Perpetuity
5. All of these
6. None of these

9._________ratios are particularly interesting to shortterm creditors.

1. Liquidity Ratios
2. Long-term Solvency Ratios
3. Profitability Ratios
4. Market Value Ratios
5. All of these
6. None of these

10.Second mortgages pledged against bond’s security are referred as_________. Select from the following.

1. loan mortgages

B.medium mortgages

C.senior mortgages

D.junior mortgages

1. All of these
2. None of these

11.AST Company has a current ratio of 4:3. Present Liabilities stated by the company are Rs.30,000.________ be the Net Working Capital for the company?

1. Rs. 40,000
2. (–Rs. 40,000)
3. Rs. 10,000
4. (–Rs. 10,000)
5. All of these
6. None of these

12.In __________form of Business, owners have limited liability. Select right option from the following.

1. sole proprietorship
2. partnership
3. joint stock company
4. none of the above
5. All of these

13.__________item provides the important function of shielding part of income from taxes?

1. Inventory
2. Supplies
3. Machinery
4. Depreciation
5. All of these
6. None of these

14. The process of determining the present value of a payment or a stream of payments that is to be received in the future is called __________. Select the right option from the following.

1. Discounting
2. Compounding
3. Factorization
4. None of the given options
5. All of these

15. You need Rs. 10,000 to buy a new television. If you have Rs. 6,000 to spend at 5 % compounded annually, how long will it take to buy the television? Select the right option from the following.

8. 8.42 years
9. 10.51 years
10. 15.75 years
11. 18.78 years
12. All of these
13. None of these

16._________equation is known as Cash Flow (CF)identity? Select right option from the following.

1. CF from Assets = CF to Creditors – CF to Stockholder
2. CF from Assets = CF to Stockholders – CF to Creditors
3. CF to Stockholders = CF to Creditors + CF from Assets
4. CF from Assets = CF to Creditors + CF to Stockholder
5. All of these
6. None of these

17.In __________type of annuity, cash flows occur at the beginning of each period? Select the right option from the following.

1. Ordinary annuity
2. Annuity due
3. Perpetuity
4. None of the given options
5. All of these

18.Between the two identical bonds having different maturity periods the price of the ______ bond will change less than that of ______ bond. Select right option from the following.

1. long-term; short-term
2. short-term; long-term
3. lower-coupon; higher-coupon
4. None of the given options
5. All of these

19.________area is NOT addressed by Business Finance? Select right option from the following.

1. Financing
2. Investing
3. Managing day today expenses
4. None of the given options
5. All of these

20. Which form of business organization is the least regulated? Select the right option from the following.

1. Sole-proprietorship
2. General Partnership
3. Limited Partnership
4. Corporation
5. All of these
6. None of these

21.__________is measured by profit margin? Select right option from the following.

1. Operating efficiency
2. Asset use efficiency
3. Financial policy
4. Dividend policy
5. All of these
6. None of these

1. Leverage
2. Profitability
3. Market Value
4. All of these
5. None of these

29. If a firm uses cash to purchase inventory, its quick ratio will____________? Select the right option from the followings.

1. Increase
2. Decrease
3. Remain unaffected
4. Become zero
5. All of these
6. None of these

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