CBSE Questions for Class 12 Commerce Business Studies Financial Management Quiz 3 - MCQExams.com

If raw material and other inputs are easily available on credit, ______ amount of working capital is needed. 
  • fixed
  • more
  • less
  • no
A company which has a better operating efficiency requires ______ working capital.
  • less
  • more
  • no
  • fixed
Which one of the following statements regarding 'financial literacy' is not true?
  • Its objective is to make people aware of the risks and rewards of investments so that they can make an informed choice.
  • India has a formal nationwide structured financial education programme.
  • This would enhance the effectiveness and integrity of financial markets.
  • It reduces the government burden in protecting the common person from elements of market failure.
The goal of financial management is _______________.
  • Maximization of profit
  • Maximization of shareholder's wealth
  • Ensuring financial discipline in the organization
  • Expanding market

Which of the following is not a business transaction?
  • Bought furniture 25,000 for business
  • Paid for salaries of employees, 20,000
  • Cash withdraw from personal bank account , 10,000 for personal use
  • All of the above.
Unfavourable financial leverage
  • Indicates a low level of profitability
  • Indicates a high level of profitability
  • Makes borrowings more costly
  • Both (a) and (c)
The capital structure is represented by:
  • $$Long\ term\ debt+Preferred\ stock+Net\ worth$$
  • $$Short-term\ debt+ Preferred\ stock + Net\ worth$$
  • $$Long\ term\ debt + Short-term\ debt$$
  • $$Preferred\ stock + Debentures + Net\ worth$$
The concept of financial leverage has a direct relationship with ______.
  • Capital structure management
  • Cost of capital
  • Dividend policy
  • Capital bugeting
The management of working capital is concerned with the following activities ________________.
  • Short-term operations
  • Long-term operations
  • Medium-term operations
  • Both (a) and (b)
Financial leverage is
  • The process of using debt capital to increase the rate of return on equity
  • The utilisation of current assets to effect disproportionate changes in income
  • Both (a) and (b)
  • A relationship between preference share capital and securities
The concept of valuation is affected by __________.
  • opinion
  • judgement
  • bargaining power
  • all of the above
Capital gearing refers to __________________________.
  • The proportion between net interest and non-fixed interest or dividend bearing funds in the capital employed
  • The proportion between fixed interest or dividend bearing funds and non-fixed interest or dividend bearing funds in the total capital employed in the business
  • Both (A) and (B)
  • None of the above
Financial leverage is also referred to as _____________.
  • Gearing
  • Trading on equity
  • Fixed changes leverage
  • All the above
Financial leverage depends upon _______.
  • the ratio of debt
  • preferred stock to common stock equity
  • both (a) and (b)
  • None of the above
Working capital is the difference between
  • Inflow and outflow of funds
  • Inflow and outflow of savings
  • Internal and external capital sources
  • Gross cash flow and net cash flow
The optimum capital structure of a company is planned as per considerations of which of the following?
I. Profitability
II. Solvency
III. Marketability of shares
IV. Control
  • I, II and IV only
  • II, III and IV only
  • I and II only
  • III and IV only
ABC Ltd. has declared $$40$$% dividend. Which one of the following does it mean?
  • The company has declared $$40$$% on net profit as dividend
  • The company has declared $$40$$% of profit after tax as dividend
  • The company will provide dividend $$40$$% on issued capital
  • The company will provide dividend $$40$$% on paid-up capital
Working capital is _________.
  • gross cash inflow
  • net cash inflow
  • gross cash outflow
  • net cash outflow
Working capital is referred to as _________________.
  • Permanent capital
  • Temporary capital
  • Circulating capital
  • Gross cash inflow
  • Both Assertion and Reason are correct and Reason is the correct explanation for Assertion
  • Both Assertion and Reason are correct but Reason is not the correct explanation for Assertion
  • Assertion is correct but Reason is incorrect
  • Assertion is incorrect but Reason is correct
The cost of capital is related to the firm's objective of__________.
  • Worth maximisation
  • Sales maximisation
  • output maximisation
  • Cost reduction
Examine the following statements:
i) Pay Back Period method measures the true profitability of a project.
ii) Capital Rationing and Capital Budgeting mean the same thing.
iii) Internal Rate of Return and Time Adjusted Rate of Return are the same thing.
iv) Accounting Rate of Return Method considers time value of money.
  • (i), (ii) and (iii) are correct
  • (ii) and (iii) are correct
  • Only (iii) is correct
  • All (i), (ii), (iii) and (iv) are false
Capital structure designing has nothing to do with which of the following options?
  • Profitability
  • Solvency
  • Flexibility
  • Transferability
Minimum cash reserves fixed by law is a percentage of _________.
  • capital and reserves
  • securities held
  • aggregate deposit of the bank
  • aggregate loans and advances
The basic objective of financial management is _____________.
  • maximization of profits
  • profit planning of the organization
  • maximization of shareholders wealth
  • ensuring financial discipline in the organization
No planning can start without setting the __________.
  • budget
  • objectives
  • powers
  • none of the above
Which of the following are the application of funds?
i.Redemption of Preference share capital.
ii.Payment of Dividend.
iii.Increase in working capital.
  • Only (i) and (ii)
  • Only (ii) and (iii)
  • Only (i) and (iii)
  • (i), (ii) and (iii)
Read the following statements:
i) "Working Capital is the amount of funds necessary to cover the cost of operating the enterprise."
ii) "Circulating capital means current assets of a company that are changed in the ordinary course of business from one form to another."
  • (i) and (ii) both are correct
  • (i) and (ii) both are false
  • (i) is correct, but (ii) is false
  • (i) is false, but (ii) is correct
With the cash-reserve ratio of 20%, if a bank receives Rs. 5000 deposits, then the multiple expansion of credit would be?
  • Rs. 2000
  • Rs. 4000
  • Rs. 40,000
  • Rs. 20,000
Which one refers to cash inflow under payback period method?
  • Cash flow before depreciation and taxes
  • Cash flow after depreciation and taxes
  • Cash flow after depreciation but before taxes
  • Cash flow before depreciation and after taxes
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