CBSE Questions for Class 12 Commerce Business Studies Financial Management Quiz 7 - MCQExams.com

As per section 2(51) of the Companies Act, 2013, "Key Managerial Personnel", in relation to a company, means _______.
(i) Chief Executive officer or managing director or manager
(ii) Company Secretary
(iii) General Manager
(iv) Whole Time Director
(v) Chief Legal Officer 
(vi) Chief Financial Officer
The correct answer is -
  • (i), (ii), (iv) & (vi)
  • (i), (iii), (iv), (v) & (vi)
  • (i), (ii), (v) & (vi)
  • (i), (iv), (v) & (vi)
Financial Management is concerned with -
A. Investment decisions
B. Labour turnover decisions
C. Financing decisions
D. Personnel policy decisions
E. Dividend decisions
Select the correct answer from the options given below.
  • D, B & C
  • A, C, B & E
  • A and C only
  • E, C & A
Financial statement differ from management accounting statements because____________
  • they are mainly prepared for external users of financial information
  • they are more complex and hard to prepare
  • they are the summary of accounting data
  • they are prepared on basis of actual concept
__________ means deciding the quantum of investment out of available finance on long term basis as well as on short-term basis.
  • Investment decisions
  • Financing decisions
  • Dividend decisions
  • All of above
__________ comprises two decisions,viz.,
(i) Financial Planning and
(ii) Capital structure decision.
  • Investment decisions
  • Financing decisions
  • Dividend decisions
  • All of above
Decisions for raising funds from long-term sources are called __________.
  • Capital structure decision
  • Investment decisions
  • Dividend decisions
  • Investment of funds
____________ means pre-estimating financial needs of an organization to ensure availability of adequate finance.
  • Financial planning
  • Material planning
  • Value chain planning
  • Capital structure decision
To guard against the dangers of excess payment arising out of double insurance or over insurance made by the insured, insurance companies provide in their agreement _________________.
  • Average clause
  • Subrogation clause
  • Risk clause
  • Indemnity clause
_____ the lead time, higher the quantity of material to be stored and higher is the amount of working capital requirement.
  • Constant
  • Lower
  • Higher
  • None of the level
Interest paid by other than financial enterprises is shown in cash flow statement under ________________.
  • Operating activities
  • Investing activities
  • Financing activities
  • None of the above
The working capital requirement of a business thus, become ____ with ______ rate of inflation.
  • higher; higher
  • higher; lower
  • lower; higher
  • lower; lower
______ is the time span between the receipt of raw material and their conversion into finished goods.
  • Working capital management
  • Production cycle
  • Industry cycle
  • All of the above
Which of the following is the test of the long-term liquidity of a business?
  • Current ratio
  • Operating ratio
  • Stock turnover ratio
  • Interest coverage ratio
While calculating the net present value under discounted cash flow method of return on investment analysis, the calculations involved are: 
Cash outflow
Discounted net cash flow
Cash inflow
Net present value
The correct sequence of these calculations is:
  • 4, 1, 3, 2
  • 1, 3, 2, 4
  • 1, 2, 3, 4
  • 3. 1, 4, 2
A decision to acquire a new and modern plant to upgrade an old one is a______________.
  • Financing decision
  • Working capital decision
  • Investment decision
  • Dividend decision
Financial planning arrives at __________________.
  • Minimising the external borrowing by resorting to equity issues
  • Entering that the firm always have significantly more fund than required so that there is no paucity of funds
  • ensuring that the firm paces neither a shortage nor a glut of unuable funds
  • doing only what is possible with the funds that the firm has at tis disposal
Financial leverage is called favorable if __________________.
  • Return on Investment is lower than cost of debt
  • ROI is higher than cost of debt
  • Debt is nearly available
  • If the degree of existing financial leverage is low
Higher working capital usually results in _______________.
  • Higher current ratio, higher risk and higher profits
  • Lower current ratio, higher risk and higher profits
  • Higher equitably, lower risk and lower profits
  • Lower equitably, lower risk and higher profits
The organisations which have sufficient possibilities of growth require _______ amount of working capital.
  • fixed
  • less
  • more
  • no
Which of the following is the external user of financial statements?
  • Manager of the business
  • CEO of the business
  • Creditor of the business
  • Controller of the business
Bancassurance is ___________________.
  • an insurance scheme to insure bank deposits
  • an insurance scheme exclusively for the employees banks
  • a composite financial service offering both bank and insurance products
  • a bank deposit scheme exclusively for employees of insurance companies
Which financial decision affects the Return on Investment (ROI) of a company?
  • Financing decision
  • Profit decision
  • Investment decision
  • Dividend decision
What is the primary aim of financial management?
  • Maximisation of profit
  • Minimisation of Profit
  • Maximisation of shareholders' wealth
  • Minimisation of shareholders' wealth
These decisions affect the liquidity as well as profitability of a business.
  • Dividend decision
  • Capital budgeting decision
  • Financing decision
  • Working capital decision
Name the financial decision which relates to disposal of profits.
  • Capital budgeting decision
  • Dividend decision
  • Financing decision
  • Investment decision
This decision determines the overall cost of capital and the financial risk of the enterprise
  • Dividend decision
  • Investment decision
  • Financing decision
  • Capital budgeting decision
Financial Management aims at
  • Reducing the cost of funds procured
  • Keeping the risk under control
  • Achieving effective deployment of such funds
  • All of the above
Under which of the following circumstances a company is not likely to declare a higher dividend?
  • When the earnings of the company are high
  • When a company has a lucrative forthcoming business opportunity
  • When the cash flow position of the company is strong
  • None of the above
A company is likely to declare higher dividends if 
  • Tax rate has no effect on dividend declaration
  • Tax rates are high
  • Tax rates are relatively lower
  • None of the above
Name the process that enables the management to foresee the fund requirements, both the quantum as well as the timing.
  • Dividend decision
  • Capital budgeting decisions
  • Financial planning
  • Financial management
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