Financial Management MCQ

Financial Management MCQ

1- Operating leverage =

(A) Contribution x Earnings before interest and tax

(B) Contribution / Earnings before interest and tax

(C) Earnings before interest and tax / Contribution

(D) Earnings before interest and tax + Contribution

2- Financial leverage =

(A) Earnings before interest and tax / (Earnings before interest and tax – Interest)

(B) Earnings before interest and tax / (Earnings before interest and tax + Interest)

(C) (Earnings before interest and tax – Interest) / Earnings before interest and tax  

(D) (Earnings before interest and tax + Interest) / Earnings before interest and tax

3- Earnings per share =

(A) Number of Equity shares / (Profit after tax – Preference dividend)

(B) (Profit after tax – Preference dividend) / Number of Equity shares

(C) (Profit after tax + Preference dividend) / Number of Equity shares

(D) Number of Equity shares / (Profit after tax + Preference dividend)

4- Price earnings ratio =

(A) Market Price per share / Earnings per share

(B) Earnings per share / Market Price per share

(C) (Market Price per share x No. of shares) / Earnings per share

(D) Market Price per share / (Earnings per share x No. of shares)

5- The projects having Profitability index of less than ________ will be rejected.

(A) 0

(B) 0.5

(C) 1

(D) 1.5

6- The ratio which measures the profits available to the equity shareholders on a per are basis is termed as

(A) Profitability index

(B) Earnings per share

(C) Debt equity ratio

(D) None of the above

7- Return of Shareholders funds being much higher than the overall return on investment can be judged by

(A) Profitability index

(B) Earnings per share

(C) Debt equity ratio

(D) None of the above

8- Debt Service coverage ratio may be considered to be one of the most important ratios calculated by the

(A) Bankers

(B) Financial Institutions

(C) Both (A) and (B)

(D) None of the above

9- Break-even point is that level of sales revenue at which there is ________

(A) Profit

(B) Loss

(C) No profit no loss

(D) None of the above

10- Which of the following activity(ies) is (are) used while recording for method study?

(A) Delay

(B) Operation

(C) Inspection

(D) All of the above

11- The project having ________ profitability index will be ranked highest

(A) Highest

(B) Lowest

(C) Zero

(D) One

12- One of the tools available to the company to ensure the maintenance of ________ cash balance is to prepare cash budget

(A) Minimum

(B) Maximum

(C) Optimum

(D) Any of the above

13- Debt Service coverage ratio is calculated as ________

(A) (Net Profit after taxes + Depreciation + Interest on term loan) / (Interest + Instalment)

(B) (Net Profit after taxes + Depreciation – Interest on term loan) / (Interest + Instalment)

(C) (Net Profit after taxes + Depreciation + Interest on term loan) / (Interest – Instalment)

(D) (Net Profit after taxes – Depreciation + Interest on term loan) / (Interest + Instalment)

14- The cost which varies in direct proportion to the sales revenue is termed as

(A) Variable cost

(B) Fixed cost

(C) Marginal cost

(D) None of the above

15- ________ indicates the symptom of liquidity crisis.

(A) Debt equity ratio

(B) Current ratio

(C) Liquidity ratio

(D) All of the above

16- External source(s) of funds is (are)

(A) Funds from long term loans

(B) Sale of fixed assets

(C) Both (A) and (B)

(D) None of the above

17- Type(s) of capital budgeting decision(s)

(A) Replacements

(B) Expansion

(C) Diversification

(D) All of the above

18- Live Stock is an example of

(A) Fixed asset

(B) Tangible asset

(C) Intangible asset

(D) Operating asset

19- The Pay Back period is calculated as

(A) Cash outlay / Annual cash inflow

(B) Annual cash inflow / Cash outlay

(C) Cash outlay + Annual cash inflow

(D) Cash outlay – Annual cash inflow

20- The Proprietary concern is owned by

(A) Only one person

(B) Two person

(C) Group of person

(D) Any of the above

ANSWERS:

1-(B), 2-(A), 3-(B), 4-(A), 5-(C), 6-(B), 7-(C), 8-(C), 9-(C), 10-(D), 11-(A), 12-(C), 13-(A), 14-(A), 15-(B), 16-(C), 17-(D), 18-(A), 19-(A), 20-(A)