Self Studies
Self Studies
Self Studies
Self Studies

Financial Management Test - 22

Result Self Studies

Financial Management Test - 22
  • Score

    -

    out of -
  • Rank

    -

    out of -
TIME Taken - -
Self Studies

SHARING IS CARING

If our Website helped you a little, then kindly spread our voice using Social Networks. Spread our word to your readers, friends, teachers, students & all those close ones who deserve to know what you know now.

Self Studies Self Studies
Weekly Quiz Competition
  • Question 1
    1 / -0
    Under the amount of long term and short term financing to be used, the underlying assumption is that current liabilities cost _______ than long term liabilities.
    Solution
    Current liabilities have high interest rates with shorter duration to pay off hence,
    Under the amount of long term and short term financing to be used, the underlying assumption is that current liabilities cost less than long term liabilities.
  • Question 2
    1 / -0
    Financial Leverage is computed as _______.
    Solution
    A leverage ratio is any one of several financial measurements that look at how much capital comes in the form of debt (loans), or assesses the ability of a company to meet its financial obligations.
    The most well known financial leverage ratio is the debt-to-equity ratio. It is expressed as:
    D/E Ratio = Total Debt / Total Equity  
  • Question 3
    1 / -0
    The ________________ refers to the number of times earnings before interest and taxes of a company covers the interest obligations.
    Solution
    The interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a company can pay interest on its outstanding debt. The interest coverage ratio may be calculated by dividing a company's earnings before interest and taxes (EBIT) during a given period by the company's interest payments due within the same period.
  • Question 4
    1 / -0
    Which of the following is the importance of financial planning? 
    Solution
    Importance of financial planning
    1. Income: It's possible to manage income more effectively through planning. Managing income helps you understand how much money you'll need for tax payments, other monthly expenditures and savings.
    2. Cash Flow: Increase cash flows by carefully monitoring your spending patterns and expenses. Tax planning, prudent spending and careful budgeting will help you keep more of your hard earned cash.
    3. Capital: An increase in cash flow, can lead to an increase in capital. Allowing you to consider investments to improve your overall financial well-being.
    4. Family Security: Providing for your family's financial security is an important part of the financial planning process. Having the proper insurance coverage and policies in place can provide peace of mind for you and your loved ones.
    5. Investment: A proper financial plan considers your personal circumstances, objectives and risk tolerance. It acts as a guide in helping choose the right types of investments to fit your needs, personality, and goals.
    6. Standard of Living: The savings created from good planning can prove beneficial in difficult times. For example, you can make sure there is enough insurance coverage to replace any lost income should a family bread winner become unable to work.
    7. Financial Understanding: Better financial understanding can be achieved when measurable financial goals are set, the effects of decisions understood, and results reviewed. Giving you a whole new approach to your budget and improving control over your financial lifestyle.
    8. Assets: A nice 'cushion' in the form of assets is desirable. But many assets come with liabilities attached. So, it becomes important to determine the real value of an asset. The knowledge of settling or canceling the liabilities, comes with the understanding of your finances. The overall process helps build assets that don't become a burden in the future.
    9. Savings: It used to be called saving for a rainy day. But sudden financial changes can still throw you off track. It is good to have some investments with high liquidity. These investments can be utilized in times of emergency or for educational purposes.
    10. Ongoing Advice: Establishing a relationship with a financial advisor you can trust is critical to achieving your goals. Your financial advisor will meet with you to assess your current financial circumstances and develop a comprehensive plan customized for you.
  • Question 5
    1 / -0
    The quantum of ________ assets as well as its break-up is an aspect affected by finance.
    Solution
    The above statement is used to describe the function of financial management. The quantum of current assets and its breakup into cash, inventory and receivables means financial management decisions regarding how much to invest in current assets and its breakup into cash, inventory i.e stock, debtors.
  • Question 6
    1 / -0
    An expansion of business which is a result of capital budgeting decision is likely to affect virtually all items in the __________ account of the business.
    Solution
    All items in the Profit and Loss Account, e.g., Interest, Expense, Depreciation, etc. and an expansion of business which is a result of capital budgeting decision is likely to affect virtually all items in the profit and loss account of the business.
  • Question 7
    1 / -0
    Interest Coverage Ratio (ICR) = _________.
    Solution
    The interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a company can pay interest on its outstanding debt. The interest coverage ratio may be calculated by dividing a company's earnings before interest and taxes (EBIT) during a given period by the company's interest payments due within the same period.
  • Question 8
    1 / -0
    ________ capital refers to investment in long-term assets, which involves allocation of firm's capital to different projects or assets with long-term implications for the business.
    Solution
    Fixed capital is capital or money that we invest in fixed assets. In other words, money that we invest in assets of a durable nature. These are assets that we repeatedly use over a long period. We can also use the term ‘fixed investment‘ with the same meaning.
    Fixed assets are tangible assets that we cannot convert into cash easily. Property is an example of a fixed asset. So are plant and equipment.
  • Question 9
    1 / -0
    The size as well as the composition of _______ assets of the business is an aspect affected by finance.
  • Question 10
    1 / -0
    Which of the following types of budget is prepared to assess the level of inventories, receivables, etc?
    Solution
    Working capital budgeting commonly involves monitoring cash flow, assets, and liabilities through the ratio analysis of key elements of operating expenses, including the working capital ratio, collection ratio, and the inventory turnover ratio. Efficient working capital management helps maintain the smooth operation of the operating cycle (the minimum amount of time required to convert net current assets and liabilities into cash) and can also help to improve the company's earnings and profitability. Management of working capital includes inventory management and management of accounts receivables and accounts payables. The main objectives of working capital management include maintaining the working capital operating cycle and ensuring its ordered operation, minimizing the cost of capital spent on the working capital, and maximizing the return on current asset investments.
Self Studies
User
Question Analysis

  • Correct -

  • Wrong -

  • Skipped -

My Perfomance
  • Score

    -

    out of -
  • Rank

    -

    out of -
Re-Attempt Weekly Quiz Competition
Self Studies Get latest Exam Updates
& Study Material Alerts!
No, Thanks
Self Studies
Click on Allow to receive notifications
Allow Notification
Self Studies
Self Studies Self Studies
To enable notifications follow this 2 steps:
  • First Click on Secure Icon Self Studies
  • Second click on the toggle icon
Allow Notification
Get latest Exam Updates & FREE Study Material Alerts!
Self Studies ×
Open Now