Financial Management | Chapter 1 | Part 3 | MBA MCQs | FM
Finacial Management MCQs
- The __________ decision involves determining the appropriate make-up of the right-hand side of the balance sheet.
- asset management
- capital budgeting
- investment
- financing
- To whom does the Treasurer most likely report?
- Chief Financial Officer.
- Vice President of Operations.
- Chief Executive Officer.
- Board of Directors.
- 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.
- specialist; specialties
- team player; cross-functional capabilities
- technician; quantitative skills
- generalist; general business skills
- 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.
- asset management
- financing
- accounting
- investment
- How are earnings per share calculated?
- 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.
- Use the income statement to determine earnings after taxes (net income) and divide by the number of common shares outstanding
- Use the income statement to determine earnings after taxes (net income) and divide by the number of common and preferred shares outstanding.
- 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.
- what is the most important of the three financial management decisions?
- Asset management decision.
- Financing decision.
- Investment decision.
- Accounting decision.
- The cost of monitoring management is considered to be a (an):
- institutional cost.
- bankruptcy cost.
- transaction cost.
- agency cost.
- The __________ decision involves efficiently managing the assets on the balance sheet on a day-to-day basis, especially current assets
- asset management
. - financing
- investment
- accounting
- asset management
- Which of the following is not a perquisite (perk)?
- Company-provided automobile.
- Salary.
- Expensive office.
- Country club membership.
- Which of the following is not normally a responsibility of the controller of the modern corporation?
- Budgets and forecasts.
- Asset management.
- Financial reporting to the IRS.
- Cost accounting.
- All constituencies with a stake in the fortunes of the company are known as __________.
- shareholders
- stakeholders
- creditors
- customers
- Which of the following statements is not correct regarding earnings per share (EPS) maximization as the primary goal of the firm?
- EPS maximization ignores the firm's risk level.
- EPS maximization naturally requires all earnings to be retained.
- EPS maximization does not specify the timing or duration of expected EPS.
- EPS maximization is concerned with maximizing net income.
- __________ is concerned with the maximization of a firm's stock price.
- Shareholder wealth maximization
- Profit maximization
- Stakeholder welfare maximization
- EPS maximization
- Corporate governance success includes three key groups. Which of the following represents these three groups?
- Suppliers, managers, and customers.
- Common shareholders, managers, and employees.
- oard of Directors, executive officers, and common shareholders
- Suppliers, employees, and customers.
- "Shareholder wealth" in a firm is represented by:
- the number of people employed in the firm.
- the amount of salary paid to its employees
- the market price per share of the firm's common stock.
- the book value of the firm's assets less the book value of its liabilities.
- The long-run objective of financial management is to
- maximize return on investment.
- maximize earnings per share.
- maximize the value of the firm's common stock.
- maximize market share.
- 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?
- $100,000
- $0.50
- $6.50
- $6.00
- The cost of monitoring management is considered to be a (an):
- bankruptcy cost.
- institutional cost.
- agency cost.
- transaction cost.
- The focal point of financial management in a firm is:
- the number and types of products or services provided by the firm.
- the dollars profits earned by the firm
- the creation of value for shareholders.
- the minimization of the amount of taxes paid by the firm.
- The decision function of financial management can be broken down into the.... decisions.
- financing and investment
- capital budgeting, cash management, and credit management
- financing and dividend
- investment, financing, and asset management
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