Top 550+ Solved Financial Management MCQ Questions Answer
Q. Operating leverage works when:
a. Sales Increases
b. Sales Decreases
c. Both (a) and (b)
d. None of (a) and (b)
Q. If the fixed cost of production is zero, which one of the following is correct?
a. OL is zero
b. FL is zero
c. CL is zero
d. None of the above
Q. If a firm has no debt, which one is correct?
a. OL is one
b. FL is one
c. OL is zero
d. FL is zero
Q. If a company issues new share capital to redeem debentures, then:
a. OL will increase
b. FL will increase
c. OL will decrease
d. FL will decrease
Q. If a firm has a DOL of 2.8, it means:
a. If sales increase by 2.8%, the EBIT will increase by 1%,
b. If EBIT increase by 2.896, the EPS will increase by 1 %,
c. If sales rise by 1%, EBIT will rise by 2.8%,
d. None of the above
Q. Higher FL is related the use of:
a. Higher Equity
b. Higher Debt
c. Lower Debt
d. None of the above
Q. In order to calculate EPS, Profit after Tax and Preference Dividend is divided by:
a. MP of Equity Shares
b. Number of Equity Shares
c. Face Value of Equity Shares
d. None of the above.
Q. Trading on Equity is
a. Always beneficial
b. May be beneficial
c. Never beneficial
d. None of the above.
Q. Benefit of 'Trading on Equity' is available only if:
a. Rate of Interest < Rate of Return
b. Rate of Interest > Rate of Return
c. Both (a) and (b) (d) None of
d. and (b)
Q. Indifference Level of EBIT is one at which:
a. EPS is zero
b. EPS is Minimum
c. EPS is highest
d. None of these
Q. Financial Break-even level of EBIT is one at which:
a. EPS is one
b. EPS is zero
c. EPS is Infinite
d. EPS is Negative
Q. Relationship between change in Sales and d Operating Profit is known as:
a. Financial Leverage
b. Operating Leverage
c. Net Profit Ratio
d. Gross Profit Ratio
Q. If a firm has no Preference share capital, Financial Break even level is defined asequal to -
a. EBIT
b. Interest liability
c. Equity Dividend
d. Tax Liability