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

Finacial Management MCQs

  

1 / 20

1. Corporate governance success includes three key groups. Which of the following represents these three groups?
   1.   oard of Directors, executive officers, and common shareholders
   2.   Suppliers, employees, and customers.
   3.   Suppliers, managers, and customers.
   4.   Common shareholders, managers, and employees.
2. __________ is concerned with the maximization of a firm's stock price.
   1.   Shareholder wealth maximization
   2.   Stakeholder welfare maximization
   3.   EPS maximization
   4.   Profit maximization
3. 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 is concerned with maximizing net income.
   4.   EPS maximization does not specify the timing or duration of expected EPS.
4. All constituencies with a stake in the fortunes of the company are known as __________.
   1.   customers
   2.   shareholders
   3.   stakeholders
   4.   creditors
5. The long-run objective of financial management is to
   1.   maximize the value of the firm's common stock.
   2.   maximize market share.
   3.   maximize return on investment.
   4.   maximize earnings per share.
6. The __________ decision involves determining the appropriate make-up of the right-hand side of the balance sheet.
   1.   asset management
   2.   capital budgeting
   3.   financing
   4.   investment
7. The cost of monitoring management is considered to be a (an):
   1.   institutional cost.
   2.   bankruptcy cost.
   3.   agency cost.
   4.   transaction cost.
8. what is the most important of the three financial management decisions?
   1.   Financing decision.
   2.   Investment decision.
   3.   Asset management decision.
   4.   Accounting decision.
9. The cost of monitoring management is considered to be a (an):
   1.   institutional cost.
   2.   bankruptcy cost.
   3.   agency cost.
   4.   transaction cost.
10. Which of the following is not normally a responsibility of the controller of the modern corporation?
    1.   Cost accounting.
    2.   Budgets and forecasts.
    3.   Asset management.
    4.   Financial reporting to the IRS.
11. "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 book value of the firm's assets less the book value of its liabilities.
    4.   the market price per share of the firm's common stock.
12. 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 and preferred shares outstanding.
    3.   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.
    4.   Use the income statement to determine earnings after taxes (net income) and divide by the number of common shares outstanding
13. Which of the following is not a perquisite (perk)?
    1.   Country club membership.
    2.   Expensive office.
    3.   Company-provided automobile.
    4.   Salary.
14. 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.   investment
    2.   financing
    3.   accounting
    4.   asset management
15. 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.   generalist; general business skills
    2.   technician; quantitative skills
    3.   team player; cross-functional capabilities
    4.   specialist; specialties
16. The decision function of financial management can be broken down into the.... decisions.
    1.   investment, financing, and asset management
    2.   financing and dividend
    3.   financing and investment
    4.   capital budgeting, cash management, and credit management
17. 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 minimization of the amount of taxes paid by the firm.
    4.   the creation of value for shareholders.
18. To whom does the Treasurer most likely report?
    1.   Chief Executive Officer.
    2.   Chief Financial Officer.
    3.   Vice President of Operations.
    4.   Board of Directors.
19. The __________ decision involves efficiently managing the assets on the balance sheet on a day-to-day basis, especially current assets
    1.   asset management
       .
    2.   accounting
    3.   financing
    4.   investment
20. 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.   $6.50
    3.   $6.00
    4.   $0.50