About Financial Management

The management activity dealing with the planning and control of the company's financial resources is known as financial management. So, in order to achieve an organization's ultimate aim (mostly to maximize the wealth of shareholders), it focuses on the acquisition, financing, and management of assets.

Today, financial management may be described as planning for the future of a corporation to assure a good cash flow, rather of only focusing on book profit. In certain circles, financial management is also known as the science of money management.

Definition of FM

Another way to describe it is that "Financial Management is the act of coordinating and managing the acquisition and utilization of an organization's financial resources." Among Phillippatus's many elaborative definitions is:

'Financial Management' is concerned with the company's short-term and long-term credit acquisition and financing decisions.'

Both the acquisition of cash and the efficient utilization of these assets to fulfill corporate goals are essential components of good financial management.

Scope of FM

  • Calculation of the company's size and rate of progress
  • The process of determining the company's asset composition.
  • Consideration of debt to equity ratios, etc., in determining the financing mix of a business.
  • Control, analysis, and planning of the company's financial issues.

Conclusion

Therefore, FM focuses on circumstances where specific assets (or combinations of assets) need to be selected, as well as the specific challenge of a company's expansion and growth. These decisions are analyzed based on the predicted inflows and outflows of capital and their impact on management objectives.

Following are some of the multiple choice questions on the Financial Management with answers that will help the students in developing their knowledge.

Financial Management MCQ

1. Finance functions are

  • Planning for funds
  • Raising of funds
  • Allocation of funds
  • All of the above

2. The primary goal of financial management is

  • to maximize the return
  • to minimize the risk
  • to maximize wealth of owners
  • to maximize profit

3. Investment can be defined.

  • Person’s dedication to purchasing a house or flat
  • Use of capital on assets to receive returns
  • Usage of money on a production process of products and services
  • Net additions made to the nation’s capital stocks

4. The objective of wealth maximization takes into account

  • Amount of returns expected
  • Timing of anticipated returns
  • Risk associated with uncertainty of returns
  • All of the above

5. What is a savings account?

  • A for profit institution that offers personal loans, mortgages and other services.
  • A business that provides money related services.
  • An interest bearing account where people put money for future use.
  • None of the above

6. Which does not belong to the group?

  • Property, Plant and Equipment
  • Accounts Receivable
  • Inventory
  • Prepaid Expenses

7. Market value of shares are decided by

  • the respective companies
  • the investment market
  • the government
  • the shareholders

8. Financial management is mainly concerned with

  • All aspects of acquiring and utilizing financial resources for firms activities
  • Arrangement of funds
  • Efficient Management of every business
  • Profit maximisation

9. Why is it important to save money?

  • Saving for a goal or something special in the future
  • Because your parents say so
  • So you can spend it faster
  • Its not a good idea to save money

10. Where do you put your signature on a check you just wrote?

  • none of them
  • Bottom left corner on the line
  • Top right corner on the line
  • Bottom right corner on the line

11. A ______________ is a set of documents that outline the essential financial facts about the new venture.

  • financial forecast
  • budget
  • income statement
  • financial plan

12. Which financial decision help a businessman in opening a new branch of its business.

  • Financing decision
  • Dividend decision
  • Investment decision
  • None of the above

13. Which of the following assets is not considered as current asset:

  • Stock
  • Furniture 
  • Cash
  • Goodwill

14. In a financial market, the price to borrow money is called the?

  • Deposit
  • Interest Rate
  • Credit
  • Cost

15. The ___________________ is a report of the revenue, expenses, and net income or net loss over an accounting period.

  • income statement
  • accounts payable
  • owner's equity
  • financial statement

16. When a company is unable to meet its fixed financial charges it is called----------

  • financial risk
  • Business risk
  • Both A & B
  • None of these

17. Which one is source of raising of funds?

  • Equity Shares
  • Preference Shares
  • Debentures
  • All of above

18. Which is not a major decision in Financial Management

  • Investment Decision
  • Operations Decision
  • Financing Decision
  • Dividend Decision

19. What is the formula for Earnings per share (EPS)?

  • Net Income/Ordinary Shares
  • Net Profit/Shares
  • Net Income/Shares
  • Net Income/Shares Oustanding

20. Where is the signature on a credit or debit card?

  • Front of card
  • Back of card
  • No place for a signature on the card
  • Under the card number

21. What is mobile banking?

  • An electronic way to view account activity and pay bills via the internet and an institution's website.
  • A written order for a bank to pay money out of the account holders account.
  • A record of income and spending and a plan for managing money.
  • A wireless service that allows financial transactions by using an app or web browser from a mobile device.

22. What is a credit referring to a checking account?

  • Deposit or an addition to the account
  • Subtraction or a minus to the account
  • What is on your credit report
  • When you enter your pin number

23. Worldwide trade is

  • Buying goods from abroad
  • Selling goods to abroad
  • Paying foreign currency
  • All of above

24. Which of following does not a type of direct foreign investment?

  • Franchising
  • International trade
  • Joint ventures
  • Acquisition of existing operators

25. Safe mode by which firms perform worldwide business is

  • Licencing
  • Franchising
  • International trade
  • Establishment of new subsidiary

26. Portfolio Investment is dealing in

  • Same securities
  • Short term investment
  • Different security
  • None

27. Mainly general type of Direct Foreign Investment (DFI) is

  • Franchising
  • Patent
  • International trade
  • The establishment of new subsidiaries

28. How old can you be to open a savings or checking account?

  • 13 with a guardian
  • 20
  • 5 with a guardian
  • 18 with a guardian

29. IF THE SALES OF A FIRM IS RS 10,00,000 AND CONTRIBUTION IS RS 2,00,000 THEN VARIABLE COSTS ARE

  • RS 5,00,000
  • RS 8,00,000
  • RS 12,00,000
  • RS 20,00,000

30. Financial Planning helps in...

  • Managing Business
  • Managing Human Resources
  • Forecasting Business Situations
  • All of the above

31. IF THE SALES ARE RS 50,00,000 AND VARIABLE COSTS ARE 30,00,000

  • CONTRIBUTION RS 80,00,000
  • CONTRIBUTION RS 150,00,000
  • CONTRIBUTION RS 15,00,000
  • NONE OF THE ABOVE

32. CALCULATE THE FIXED EXPENSES IF CONTRIBUTION IS RS 15,00,000 AND EBIT IS RS 10,00,000

  • RS 5,00,000
  • RS 25,00,000
  • RS -(5,00,000)
  • NONE OF THE ABOVE

33. The shareholder's equity of a corporation has three basic components. Which does not belong to the group?

  • Accounts Payable
  • Share Capital
  • Reserves
  • Retained Earnings

34. This is a legal business entity created by the government.

  • Sole Proprietorship
  • Partnership
  • Corporation
  • Cooperative

35. Cash flows are the money that is available to a business at any given time.

  • True
  • False

36. Owner's equity is the owner's claim to the asset of the business. It is NEVER referred to as the owner's capital in the business.

  • True
  • False

37. This considered as the oldest, most common, and simplest form of business organization.

  • Sole Ownership
  • Partnership
  • Sole Proprietorship
  • Corporation

38. The summary of the operating, investing and financing activities of the firm is presented in the?

  • Statement of Financial Position
  • Statement of Retained Earnings
  • Statement of Comprehensive Income
  • Statement of Cash Flows

39. Financial Managers are often task to trade the equity securities of the firm in the financial market. What particular activity is this?

  • Forecasting & Planning
  • Making Crucial Investment & Financing Decisions
  • Coordinating & Controlling
  • Trading in Financial Markets

40. Compute the EPS based on the given data below:Shares Outstanding - 100, 000Year-end Net income - 750,000

  • 7 per share
  • 7.50 per share
  • 6 per share
  • 5 per share

41. It is considered to be the expansive goal of the firm.

  • Valuation Approach
  • Maximization of Shareholder's Wealth
  • Social Responsibility
  • Ethical Behavior

42. Pam needs to take money out of her account from an ATM what card will she use?

  • Credit Card
  • Sam's Card
  • Debit Card
  • Macy's Card

43. FINANCING DECISIONS RELATE TO THE

  • DIVIDEND DECISIONS
  • ASSETS PROCUREMENT
  • RESREVE BUILDING
  • ACQUISITION OF CAPITAL

44. BANK OVERDRAFT IS A FORM OF

  • SHORT TERM FUNDS
  • LONG TERM FUNDS
  • BOTH
  • NONE OF THE ABOVE

45. CAPITAL STRUCTURE DENOTES THE COMPOSITION OF

  • SHARE CAPITAL
  • LONG TERM AND SHORT TERM DEBTS
  • DEBT AND EQUITY
  • RESERVES AND SURPLUS

46. External sources of funds are

  • Funds from long term loans
  • Sale of fixed assets
  • Both (A) and (B)
  • None of the above

47. Portion of Profit distributed to the shareholder is

  • Interest
  • Dividend
  • Tax
  • Earnings

48. It consists of recognized gains and losses that are not included in the income statement but are found in the equity section

  • Income Statement
  • Statement of Changes in Equity
  • Comprehensive Income
  • Statement of Financial Position

49. These are given to managers based on their effectiveness in achieving company goals

  • Economic Value Added
  • Performance Shares
  • Preference Shares
  • Ordinary Shares

50. This statement presents the result of the firm's operation or performance for a given time

  • Statement of Financial Position
  • Income Statement
  • Statement of Comprehensive Income
  • Statement of Changes in Equity

Enjoyed the Quiz. Share this with friends

Comments

Add Your Review

Your email address will not be published.

Subscribe to Newsletter!

Subscribe to get latest updates and information.