Financial Management Test

Result

Financial Management Test - 27

Score
-
out of -
Rank
-
out of -

TIME Taken - -

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.

Weekly Quiz Competition

Question 1
1 / -0

These decisions affect the liquidity as well as profitability of a business.

A
Dividend decision

B
Capital budgeting decision

C
Financing decision

D
Working capital decision

Solution

Current assets are usually more liquid but contribute less to the profits than fixed assets. These provide liquidity to the business but provide little or low return. Hence, a balance needs to be struck between liquidity and profitability.
Question 2
1 / -0

Name the financial decision which relates to disposal of profits.

A
Capital budgeting decision

B
Dividend decision

C
Financing decision

D
Investment decision

Solution

Dividend is that portion of profit which is distributed to shareholders. The decision involved here is how much of the profit earned by company (after paying tax) is to be distributed to the shareholders and how much of it should be retained in the business.
Question 3
1 / -0

This decision determines the overall cost of capital and the financial risk of the enterprise

A
Dividend decision

B
Investment decision

C
Financing decision

D
Capital budgeting decision

Solution

This decision is about the quantum of finance to be raised from various long-term sources. This decision determines the overall cost of capital and the financial risk of the enterprise. The overall financial risk depends upon the proportion of debt in the total capital.
Question 4
1 / -0

Under which of the following circumstances a company is not likely to declare a higher dividend?

A
When the earnings of the company are high

B
When a company has a lucrative forthcoming business opportunity

C
When the cash flow position of the company is strong

D
None of the above

Solution

Instead of paying higher dividends, re-investment of profit as retained earning provides funds for future investment opportunities and increases the firms future earning capacity. The extent of retained earnings also influences the financing decision of the firm.
Question 5
1 / -0

Financial Management aims at

A
Reducing the cost of funds procured

B
Keeping the risk under control

C
Achieving effective deployment of such funds

D
All of the above

Solution

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 6
1 / -0

Financial Planning means

A
the optimal procurement as well as the usage of finance.

B
preparation of a financial blueprint of an organisations future operations.

C
understanding of business finance, major financial decision areas, etc.

D
the solution of three major issues relating to the financial operations of a firm.

Solution

Financial planning is essentially the preparation of a financial blueprint of an organisations future operations. The objective of financial planning is to ensure that enough funds are available at right time.
Question 7
1 / -0

Which of the following affects the WACC (Weighted Average Cost of Capital) of a company?

A
Financing decision

B
Floatation costs

C
Investment decision

D
Dividend decision

Solution

A firm needs to have a judicious mix of both debt and equity that adds to the Weighted Average Cost of Capital, which may be debt, equity, preference share capital, and retained earnings. The cost of each type of finance has to be estimated.
Question 8
1 / -0

Raj has two projects A and B in hand. The same amount of risk is involved in both the projects. If the rate of return of project A and B is 20% and 15% respectively, then under normal circumstance, which of the two projects is likely to be selected?

A
Project A

B
Project B

C
Both of the above

D
None of the above

Solution

Project A and Project B involve the same amount of risk but project A has a higher return than B. Hence, the reward per unit of risk in the case of Project A is higher than B. So, according to the prudence concept, Project A is preferable.
Hence, A is the correct option.
Question 9
1 / -0

Which financial decision affects the Return on Investment (ROI) of a company?

A
Financing decision

B
Profit decision

C
Investment decision

D
Dividend decision

Solution

The investment decision relates to how the firms funds are invested in different assets. A firm, therefore, has to choose where to invest the resources, so that they are able to earn the highest possible return on their investment.
Question 10
1 / -0

What is the primary aim of financial management?

A
Maximisation of profit

B
Minimisation of Profit

C
Maximisation of shareholders' wealth

D
Minimisation of shareholders' wealth

Solution

The primary aim of financial management is to maximise shareholders wealth, which is referred to as the wealth-maximisation concept. The market price of a companys shares is linked to the three basic financial decisions taken in financial management.

User

Question Analysis

Correct -
Wrong -
Skipped -

My Perfomance

Score
-
out of -
Rank
-
out of -

Re-Attempt Weekly Quiz Competition

Financial Management Test - 27

Result

Financial Management Test - 27

Score

-

Rank

-

SHARING IS CARING

Question 1

Dividend decision

Capital budgeting decision

Financing decision

Working capital decision

Solution

Question 2

Capital budgeting decision

Dividend decision

Financing decision

Investment decision

Solution

Question 3

Dividend decision

Investment decision

Financing decision

Capital budgeting decision

Solution

Question 4

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

Solution

Question 5

Reducing the cost of funds procured

Keeping the risk under control

Achieving effective deployment of such funds

All of the above

Solution

Question 6

the optimal procurement as well as the usage of finance.

preparation of a financial blueprint of an organisations future operations.

understanding of business finance, major financial decision areas, etc.

the solution of three major issues relating to the financial operations of a firm.

Solution

Question 7

Financing decision

Floatation costs

Investment decision

Dividend decision

Solution

Question 8

Project A

Project B

Both of the above

None of the above

Solution

Question 9

Financing decision

Profit decision

Investment decision

Dividend decision

Solution

Question 10

Maximisation of profit

Minimisation of Profit

Maximisation of shareholders' wealth

Minimisation of shareholders' wealth

Solution

User

Question Analysis

My Perfomance

Score

-

Rank

-

Results Announcement on: coming Monday

Stay Tuned: We’ll update you on your result via email or SMS.