Top 550+ Solved Financial Management MCQ Questions Answer
Q. Cash Flow Statement is _____________ for Income Statement or Funds Flow Statement.
a. not a substitute
b. a substitute
c. depends on situation
d. None of the above
Q. Funds Flow Statement reveals the change in _______________ between two BalanceSheet dates.
a. Working capital
b. Internal capital
c. Share capital
d. Both (A) & (C)
Q. A firm following an aggressive working capital strategy would:
a. Hold substantial amount of fixed assets
b. Minimize the amount of short term borrowing
c. Finance fluctuating assets with long term financing
d. Minimize the amount of fund in very liquid assets
Q. Which of the following would be consistent with a conservative approach to financingworking capital?
a. Financing short-term needs with short-term funds
b. Financing short-term needs with long-term debt
c. Financing seasonal needs with short-term funds
d. Financing some long-term needs with short-term fund
Q. To financial analysts, "net working capital" means the same thing as __________.
a. total assets
b. fixed assets
c. current assets
d. current assets minus current liabilities
Q. Baumol's Model of Cash Management attempts to:
a. Minimise the holding cost
b. Minimization of transaction cost
c. Minimization of total cost
d. Minimization of cash balance
Q. Which of the following is not considered by Miller-Orr Model?
a. Variability in cash requirement
b. Cost of transaction
c. Holding cost
d. Total annual requirement of cash
Q. A firm is said to be financially unlevered firm if the firm has ……….
a. only external equity in its capital structure
b. only owner‘s equity in its capital structure
c. both external equity and owner‘s equity in its capital structure
d. only equity share capital in its capital structure
Q. The term optimal capital structure‘ implies that combination of external equity andinternal equity at which ………
a. the overall cost of capital is minimised
b. the overall cost of capital is maximised
c. the market value of the firm is minimised
d. the market value of firm is greater than the overall cost of capital
Q. Net Income Approach to capital structure decision was proposed by …….
a. J. E. Walter
b. M.H. Miller and D.Orr
c. E. Solomon
d. D. Durand
Q. There is a reciprocal relationship between ……………….
a. DOL and DFL
b. DOL and margin of safety ratio
c. DFL and margin of safety ratio
d. DOL and break-even-point
Q. The genesis of financial risk lies in …………….
a. capital budgeting decision
b. capital structure decision
c. dividend decision
d. liquidity decision
Q. Financial break-even point is that level of EBIT at which ………….
a. EPS > 0
b. EPS < 0
c. EPS = 0
d. EPS > 1
Q. In mutually exclusive projects, projects which are selected for comparison must have
a. positive net present value
b. negative net present value
c. zero net present value
d. none of the above
Q. In a single projects situation, results of internal rate of return and net present valuelead to
a. cash flow decision
b. cost decision
c. same decisions
d. different decisions