Financial Management | Chapter 4 | Part 3 | MBA MCQs | FM

Finacial Management MCQs

  

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1. ______________ is the price at which the bond is traded in the stock exchange
   1.   Maturity value
   2.   Face value
   3.   Redemption value
   4.   Market value
2. The cost of insurance and taxes are included in
   1.   Inventory carrying cost
   2.   Set up cost
   3.   Cost of ordering
   4.   Cost of shortages
3. The working capital fnancing policy that sub)ects the frm to the greatest risk of being unable to meetthe frm*s maturing obligations is the policy that fnances
   1.   permanent current assets with short term debt.
   2.   permanent current assets with long-term debt
   3.   fluctuating current assets with short-term debt
   4.   fluctuating current assets with long-term debt
4. Activities related to coordinating, controlling and planning flow of inventory are classified as
   1.   decisional management
   2.   Mnaufacturing Management
   3.   throughput management
   4.   inventory management
5. . _______________ refers to the length of time allowed by a firm for its customers to make paymentfor their purchases.
   1.   average collection period
   2.   Credit period
   3.   holding period
      .
   4.   pay back period
6. _______________ refers to the amount invested in various components of current assets.
   1.   Net working capital
   2.   Permanent working capital
   3.   Gross working capital
   4.   Temporary working capital
7. How are earnings per share calculated?
   1.   Use the income statement to determine earnings after taxes (net income) and divide by the number ofcommon shares outstanding
   2.   Use the income statement to determine earnings after taxes (net income) and divide by the number ofcommon and preferred shares outstanding
   3.   Use the income statement to determine earnings after taxes (net income) and divide by the forecastedperiod's earnings after taxes. Then subtract 1 from the previously calculated value
   4.   Use the income statement to determine earnings after taxes (net income) and divide by the previousperiod's earnings after taxes. Then subtract 1 from the previously calculated value
8. Which of the following would NOT improve the current ratio?
   1.   Issue long-term debt to buy inventory.
   2.   Borrow short term to finance additional fixed assets.
      .
   3.   Sell fixed assets to reduce accounts payable.
   4.   Sell common stock to reduce current liabilities.
9. Markets which deals with high liquid and short term debt securities are classified as
   1.   liquid markets
   2.   short-term markets
   3.   capital markets
   4.   money markets
10. ____________ is the length of time between the firms actual cash expenditure and its own cash receipt
    1.   Cash conversion cycle
    2.   Net operating cycle
    3.   Gross operating cycle
    4.   Working capital cycle
11. The following classes of costs are usually involved in inventory decisions except
    1.   Carrying cost
    2.   Machining cost
    3.   Cost of shortages
    4.   Cost of ordering
12. The market price of a share of common stock is determined by
    1.   individuals buying and selling the stock.
    2.   the board of directors of the firm.
    3.   the stock exchange on which the stock is listed.
    4.   the president of the company.
13. ____________ and____________ carry a fixed rate of interest and are to be paid off irrespective of thefirms revenues.
    1.   Debentures, Dividends
    2.   Dividends, Bonds
    3.   Dividends, Treasury notes
    4.   Debentures, Bonds
14. Mutual fund allows investors to sale out their share during any normal trading hours is classified as
    1.   capital trade fund
    2.   money trade fund
    3.   exchange traded fund
    4.   management expense
15. Financial security which is tax exempted and issues by state governments to individuals is classified as
    1.   U.S treasury bond
    2.   municipal bonds
    3.   mortgages
       C.
    4.   corporate bonds
16. Profit forgone by capital investment in inventory rather than investment of capital to somewhere else isclassified as ____________
    1.   relevent opportunity cost of capital
    2.   relevent inventory carrying costs
    3.   relevent purcgase order costs
    4.   irrelevent inventory carrying costs
17. Compared to other frms in the industry, a company that maintains aconservative working capital policywill tend to have a
    1.   Higher total asset turnover.
    2.   Higher ratio of current assets to fixed assets
    3.   Greater risk of needing to sell current assets to repay debt.
    4.   Greater percentage of short-term fnancing
18. To financial analysts, "working capital" means the same thing as __________.
    1.   total asset
    2.   fixed asset
    3.   current assets minus current liabilities
    4.   current asset
19. A firm following an aggressive working capital strategy would_____________
    1.   Hold substantial amount of fixed assets.
    2.   fiinance fluctuating assets with long-term fnancing.
    3.   minimise the amount of fun ds held invery liquid asset
    4.   minimise the amount of short-term borrowing
20. Credit policy of every company is largely influenced by _____________ and _____________.
    1.   Liability, liquidity
    2.   Liability, profitability
    3.   Liquidity, profitability
    4.   Liquidity, accountability