Financial Management Questions

Financial Management Questions

1- Receipt of loans/borrowings appear in the cash budget under the head

(A) Operating cash inflow

(B) Non-operating cash inflow

(C) Operating cash outflow

(D) Non-operating cash outflow

2- In case of Bills Purchased, the company gets only the present worth of the amount of the bill, the difference between the face value of the bill and the amount of assistance being in the form of ______

(A) Discount charges

(B) Negotiation charges

(C) Sharing charges

(D) None of the above

3- The amount of cheques deposited by a Bank awaiting clearance is called

(A) Deposits awaiting clearance

(B) Collection float

(C) both (A) and (B)

(D) None of the above

4- Debt to Equity ratio is alternatively called ________

(A) Leverage ratio

(B) Risk ratio

(C) Gearing

(D) All of the above

5- The analytical method of inventory control which aims at concentrating efforts in those areas where attention is required most is termed as ________

(A) Just in Time (JIT) Method

(B) Material Requirement Planning (MRP) Method

(C) ABC Analysis

(D) VED Analysis

6- The ratio which indicate the long term financial prospects of the company are

(A) Liquidity ratios

(B) Solvency ratios

(C) Both (A) and (B)

(D) None of the above

7- Following ratio is useful in indicating the symptom of Inability to pay interest

(A) Price/Earnings growth ratio

(B) Interest coverage ratio

(C) Debt-to-equity ratio

(D) Price to book value

8-A manufacturer uses 300 units of a component every month and he buys them entirely from outside supplier. The order placing cost is $120 per order and annual carrying cost per unit is $15. Calculate Economic Order Quantity

(A) 60 units

(B) 120 units

(C) 180 units

(D) 240 units

9- A list of all the material required for a job, process or production order is termed as ________.

(A) Bills of exchange

(B) Bill of lading

(C) Bills of materials

(D) None of the above

10- Advantage(s) of ABC Analysis is (are)

(A) A close and strict control is facilitated on the most important items

(B) Helps in maintaining a high inventory turnover ratio

(C) Optimum utilization of the available funds can be assured

(D) All of the above

11- Net Present value considers ________ from the project throughout its life

(A) Cash inflow

(B) Cash outflow

(C) Both (A) and (B)

(D) None of the above

12- The ratio used to measure the profits available to the equity shareholders on a per share basis is referred to as

(A) Dividend

(B) Earnings per share

(C) Premium

(D) None of the above

13- The following technique(s) can be used to delay cash payments

(A) Payments can be made from a bank which is distant from the bank of the company to which payment is to be made

(B) Attempts should be made by the company to get the maximum credit for the goods or service supplied

(C) Avoid early payments

(D) All of the above

14- The accounting report which summarizes the revenues and expenses for a specified accounting period is referred to as

(A) Income report

(B) Statement of cash flows

(C) Profit and loss Account

(D) None of the above

15- If the process of capital rationing is strictly followed then there will be avoidance of ________ projects

(A) smaller

(B) bigger

(C) technical

(D) all of the above

16- Depreciation is sometimes treated as ________ funds

(A) source

(B) mutual

(C) capital

(D) credit

17- Utility of cash flow analysis

(A) Helps in efficient cash management

(B) helps in internal financial management

(C) Discloses the movements of cash

(D) All of the above

18- Calculate the Gross Profit Ratio from the following figures : Sales $ 1,00,000/-, Purchases $ 60,000/-, Sales Return $ 10,000/-, Opening stock $ 20,000/-, Purchases Return $ 15,000/-, Closing Stock $ 5,000/-

(A) 0.1234

(B) 0.3333

(C) 0.4354

(D) 0.6545

19- Dividends can be paid only out of

(A) Current year’s profits

(B) Previous year’s profits

(C) Quarterly profits

(D) Any of the above

20- Advantages of Debentures from Investor’s point of view

(A) They earn a stable rate of return

(B) They are protected by the various provisions of the debenture Trust Deed

(C) They generally have a fixed maturity period

(D) All of the above


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