Financial Management | Chapter 3 | Part 2 | MBA MCQs | FM

Finacial Management MCQs

  

 

1. Banks generally prefer Debt Equity Ratio at
   1.   1:1
   2.   1:3
   3.   2:1
   4.   3:1
2. An asset is a-
   1.   Source of fund
   2.   Use of fund
   3.   Inflow of funds
   4.   none of the above.
3. If a company issues bonus shares the debt equity ratio will
   1.   Remain unaffected
   2.   Will be affected
   3.   Will improve
   4.   none of the above
4. In the balance sheet amount of total assets is Rs.10 lac, current liabilities Rs.5 lac & capital & reserves are Rs.2 lac .What is the debt equity ratio?
   1.   1;1
   2.   2:1
   3.   none of the above.
   4.   1.5:1
5. In last year the current ratio was 3:1 and quick ratio was 2:1.Presently current ratio is 3:1 but quick ratio is 1:1.This indicates comparably
   1.   high liquidity
   2.   higher stock
   3.   lower stock
   4.   low liquidity
6. Authorised capital of a company is Rs.5 lac, 40% of it is paid up. Loss incurred during the year is Rs.50,000. Accumulated loss carried from last year is Rs.2 lac. The company has a Tangible Net Worth of
   1.   Nil
   2.   Rs.2.50 lac
   3.   (-)Rs.50,000
   4.   Rs.1 lac.
7. Proprietary ratio is calculated by
   1.   Total assets/Total outside liability
   2.   Fixed assets/Long term source of fund
   3.   Proprietors’’ Funds/Total
   4.   Total outside liability/Total tangible assets
8. Current ratio of a concern is 1,its net working capital will be
   1.   Positive
   2.   Negative
   3.   Nil
   4.   None of the above
9. Current ratio is 4:1.Net Working Capital is Rs.30,000.Find the amount of current Assets
   1.   Rs.10,000
   2.   Rs.40,000
   3.   Rs.24,000
   4.   Rs.6,000
10. Current ratio is 2:5.Current liability is Rs.30000.The Net working capital is
    1.   Rs.18,000
       .
    2.   Rs.(-)18000
    3.   Rs.(-) 45,000
    4.   Rs.45,000
11. Quick assets do not include
    1.   Govt.bond
    2.   Book debts
    3.   Advance for supply of raw materials
    4.   Inventories.
12. The ideal quick ratio is
    1.   2:1
    2.   1:1
    3.   5:1
    4.   None of the above
13. __________ is concerned with the acquisition, financing, and management of assets with some overall
    1.   Financial management
    2.   Profit maximization
    3.   Agency theory
    4.   Social responsibility
14. Jensen and Meckling showed that __________ can assure themselves that the __________ will make optimal decisions only if appropriate incentives are given and only if the __________ are monitored.
    1.   agents; principals; principals
    2.   principals; agents; principals
    3.   principals; agents; agents
    4.   agents; principals; agents
15. __________ is concerned with the maximization of a firm's earnings after taxes.
    1.   Shareholder wealth maximization
       .
    2.   Stakeholder maximization
    3.   EPS maximization
    4.   Profit maximization
16. What is the most appropriate goal of the firm?
    1.   Shareholder wealth maximization
       .
    2.   Stakeholder maximization
    3.   EPS maximization
    4.   Profit maximization
17. Which of the following statements is correct regarding profit maximization as the primary goal of the firm?
    1.   Profit maximization considers the firm's risk level.
    2.   Profit maximization is concerned more with maximizing net income than the stock price
    3.   Profit maximization does consider the impact on individual shareholder's EPS.
    4.   Profit maximization will not lead to increasing short-term profits at the expense of lowering expected future profits.
18. __________ is concerned with the branch of economics relating the behavior of principals and their agents
    1.   Financial management
    2.   Profit maximization
    3.   Agency theory
    4.   Social responsibility
19. A concept that implies that the firm should consider issues such as protecting the consumer, paying fair wages, maintaining fair hiring practices, supporting education, and considering environmental issues.
    1.   Financial management
    2.   Profit maximization
    3.   Agency theory
    4.   Social responsibility
20. Which of the following is not normally a responsibility of the treasurer of the modern corporation but rather the controller?
    1.   Budgets and forecasts
    2.   Asset management
    3.   Investment management
    4.   Financing management