Financial Management | Chapter 1 | Part 3 | MBA MCQs | FM

Finacial Management MCQs

  

 

1. The __________ decision involves determining the appropriate make-up of the right-hand side of the balance sheet.
   1.   asset management
   2.   capital budgeting
   3.   investment
   4.   financing
2. To whom does the Treasurer most likely report?
   1.   Chief Financial Officer.
   2.   Vice President of Operations.
   3.   Chief Executive Officer.
   4.   Board of Directors.
3. The authors of your textbook suggest that you need to understand financial management even if you have no intention of becoming a financial manager. One reason is that the successful manager of the not-too-distant future will need to be much more of a __________ who has the knowledge and ability to move not just vertically within an organization but horizontally as well. Developing __________ will be the rule, not the exception.
   1.   specialist; specialties
   2.   team player; cross-functional capabilities
   3.   technician; quantitative skills
   4.   generalist; general business skills
4. The __________ decision involves a determination of the total amount of assets needed, the composition of the assets, and whether any assets need to be reduced, eliminated, or replaced.
   1.   asset management
   2.   financing
   3.   accounting
   4.   investment
5. How are earnings per share calculated?
   1.   Use the income statement to determine earnings after taxes (net income) and divide by the previous period's earnings after taxes. Then subtract 1 from the previously calculated value.
   2.   Use the income statement to determine earnings after taxes (net income) and divide by the number of common shares outstanding
   3.   Use the income statement to determine earnings after taxes (net income) and divide by the number of common and preferred shares outstanding.
   4.   Use the income statement to determine earnings after taxes (net income) and divide by the forecasted period's earnings after taxes. Then subtract 1 from the previously calculated value.
6. what is the most important of the three financial management decisions?
   1.   Asset management decision.
   2.   Financing decision.
   3.   Investment decision.
   4.   Accounting decision.
7. The cost of monitoring management is considered to be a (an):
   1.   institutional cost.
   2.   bankruptcy cost.
   3.   transaction cost.
   4.   agency cost.
8. The __________ decision involves efficiently managing the assets on the balance sheet on a day-to-day basis, especially current assets
   1.   asset management
      .
   2.   financing
   3.   investment
   4.   accounting
9. Which of the following is not a perquisite (perk)?
   1.   Company-provided automobile.
   2.   Salary.
   3.   Expensive office.
   4.   Country club membership.
10. Which of the following is not normally a responsibility of the controller of the modern corporation?
    1.   Budgets and forecasts.
    2.   Asset management.
    3.   Financial reporting to the IRS.
    4.   Cost accounting.
11. All constituencies with a stake in the fortunes of the company are known as __________.
    1.   shareholders
    2.   stakeholders
    3.   creditors
    4.   customers
12. Which of the following statements is not correct regarding earnings per share (EPS) maximization as the primary goal of the firm?
    1.   EPS maximization ignores the firm's risk level.
    2.   EPS maximization naturally requires all earnings to be retained.
    3.   EPS maximization does not specify the timing or duration of expected EPS.
    4.   EPS maximization is concerned with maximizing net income.
13. __________ is concerned with the maximization of a firm's stock price.
    1.   Shareholder wealth maximization
    2.   Profit maximization
    3.   Stakeholder welfare maximization
    4.   EPS maximization
14. Corporate governance success includes three key groups. Which of the following represents these three groups?
    1.   Suppliers, managers, and customers.
    2.   Common shareholders, managers, and employees.
    3.   oard of Directors, executive officers, and common shareholders
    4.   Suppliers, employees, and customers.
15. "Shareholder wealth" in a firm is represented by:
    1.   the number of people employed in the firm.
    2.   the amount of salary paid to its employees
    3.   the market price per share of the firm's common stock.
    4.   the book value of the firm's assets less the book value of its liabilities.
16. The long-run objective of financial management is to
    1.   maximize return on investment.
    2.   maximize earnings per share.
    3.   maximize the value of the firm's common stock.
    4.   maximize market share.
17. What are the earnings per share (EPS) for a company that earned $100,000 last year in aftertax profits, has 200,000 common shares outstanding and $1.2 million in retained earning at the year end?
    1.   $100,000
    2.   $0.50
    3.   $6.50
    4.   $6.00
18. The cost of monitoring management is considered to be a (an):
    1.   bankruptcy cost.
    2.   institutional cost.
    3.   agency cost.
    4.   transaction cost.
19. The focal point of financial management in a firm is:
    1.   the number and types of products or services provided by the firm.
    2.   the dollars profits earned by the firm
    3.   the creation of value for shareholders.
    4.   the minimization of the amount of taxes paid by the firm.
20. The decision function of financial management can be broken down into the.... decisions.
    1.   financing and investment
    2.   capital budgeting, cash management, and credit management
    3.   financing and dividend
    4.   investment, financing, and asset management