Financial Management Test

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Financial Management Test - 20

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Weekly Quiz Competition

Question 1
1 / -0

The basic assumption made for using "forced distribution method" is that employees are distinguishable as outstanding, above average, average, below average and poor; and their number conforms to a normal frequency distribution.__________ each in the highest and lowest categories, _________ each in the above average and below average categories, and _________ in the average category.

A
20%; 30%; 50%

B
10%; 60%; 40%

C
10%; 20%; 40%

D
40%; 20%; 10%
Question 2
1 / -0

The funds spent on fixed assets remain invested in the business for a __________.

A
Short period of time

B
Long period of time

C
For an year

D
None of the above

Solution

Fixed assets are those which remains in the business for more than one year, usually for much longer period, e.g., plant and machinery, furniture and fixture, land and building, vehicles etc. Decision to invest in fixed assets must be taken very carefully as the investment is usually quite large and for a long period of time.
Question 3
1 / -0

Which of the following is an aspect of financial management?

A
The quantum of current assets as well as its break-up into cash, inventories and receivables

B
The size as well as the composition of fixed assets of the business

C
The amount of long-term and short-term financing to be used

D
All of the above

Solution

The financial management aspect of planning involves accurately forecasting the company's revenues, expenses, and resulting net profit. The business owner uses the budget, sometimes called a forecast, as a tool to manage the company.
The aspects are:
1. Investment Decision
2. Financing Decision
3. Dividend Policy Decision
Question 4
1 / -0

________ is known as fixed capital.

A
Furniture and fixtures

B
Land and building

C
Plant and machinery

D
All of the above

Solution

Fixed capital refers to the investment of a business into long term assets. Management of fixed capital involves allocation of firm’s capital to different projects or assets with long-term implications for the business. Some of the long term assets that a business invests in are furniture and fixtures, land and buildings, plant and machinery.
Question 5
1 / -0

Availability of adequate finance is ___________ for the survival and growth of a business.

A
optional

B
very crucial

C
secondary

D
none of the above

Solution

Proper management of working capital is essential to a company’s fundamental financial health and operational success as a business. A hallmark of good business management is the ability to manage the working capital requirements to maintain a solid balance between growth, profitability and liquidity.
Question 6
1 / -0

Money required for carrying out business activties is called ___________.

A
financial management

B
business finance

C
finance

D
cost management

Solution

Business finance refers to money and credit employed in business. It involves procurement and utilization of funds so that business firms may be able to carry out their operations effectively and efficiently.
Question 7
1 / -0

Financial management aims at _________ the cost of funds procured, keeping the risk under control and achieving effective deployment of such funds.

A
increasing

B
equaling

C
reducing

D
nullifying

Solution

Financial Management is concerned with optimal procurement as well as usage of finance.
Financial Management aims at reducing the cost of funds procured, keeping the risk under control and achieving effective deployment of such funds. It also aims at ensuring availability of enough funds whenever required as well as avoiding idle finance.
Question 8
1 / -0

Funds required for day-to-day operations are called _______.

A
fixed capital

B
current capital

C
working capital

D
short term capital

Solution

The financial requirements of an enterprise do not end with the procurement of fixed assets. No matter how small or large a business is, it needs funds for its day-to-day operations. This is known as working capital of an enterprise, which is used for holding current assets such as stock of material, bills receivables and for meeting current expenses like salaries, wages, taxes, and rent.
Question 9
1 / -0

______________ is concerned with optimal procurement as well as usage of finance.

A
Cost management

B
Financial management

C
Financial decision

D
Management

Solution

Financial Management is a vital activity in any organization. It is the process of planning, organizing, controlling and monitoring financial resources with a view to achieve organizational goals and objectives. It is an ideal practice for controlling the financial activities of an organization such as procurement of funds, utilization of funds, accounting, payments, risk assessment and every other thing related to money.

In other terms, Financial Management is the application of general principles of management to the financial possessions of an enterprise. Proper management of an organization’s finance provides quality fuel and regular service to ensure efficient functioning. If finances are not properly dealt with an organization will face barriers that may have severe repercussions on its growth and development.
Question 10
1 / -0

The _________ decision relates to how the firm's funds are invested in different assets.

A
profit

B
invetment

C
financing

D
dividend

Solution

Investment Decision relates to the determination of total amount of assets to be held in the firm, the composition of these assets and the business risk of the firm as perceived by its investors. It is the most important financial decision. Since funds involve cost and are available in a limited quantity, its proper utilization is very necessary to achieve the goal of wealth maximization.
Investment decisions includes investment in fixed assets (called as capital budgeting). Investment in current assets are also a part of investment decisions called as working capital decisions.

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Financial Management Test - 20

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Financial Management Test - 20

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SHARING IS CARING

Question 1

20%; 30%; 50%

10%; 60%; 40%

10%; 20%; 40%

40%; 20%; 10%

Question 2

Short period of time

Long period of time

For an year

None of the above

Solution

Question 3

The quantum of current assets as well as its break-up into cash, inventories and receivables

The size as well as the composition of fixed assets of the business

The amount of long-term and short-term financing to be used

All of the above

Solution

Question 4

Furniture and fixtures

Land and building

Plant and machinery

All of the above

Solution

Question 5

optional

very crucial

secondary

none of the above

Solution

Question 6

financial management

business finance

finance

cost management

Solution

Question 7

increasing

equaling

reducing

nullifying

Solution

Question 8

fixed capital

current capital

working capital

short term capital

Solution

Question 9

Cost management

Financial management

Financial decision

Management

Solution

Question 10

profit

invetment

financing

dividend

Solution

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