Class 12 Business Studies - Chapter 9: Financial Management MCQ Questions

22 Questions 44 Minutes

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Your Class 12 Business Studies Study Path

Question 1

Favourable financial leverage is a situation where _____

A None of the above

B ROI is lower than the rate of interest on debt

C ROI is Equal to the Rate of interest on debt

D ROI is higher than the rate of interest on debt

Question 2

Which of the following affects the Dividend Decision of a company?

A All of the above

B Earnings

C Cash Flow Position

D Taxation Policy

Question 3

Higher working capital usually results in:

A Higher current ratio, higher risk, and higher profits

B Lower equity, lower risk, and higher profits

C Lower current ratio, higher risk, and profits

D Higher equity, lower risk, and lower profits

Question 4

Higher dividend per share is associated with:

A High earning, high cash flows, unstable earnings, and higher growth opportunities

B High earnings, low cash flows, stable earnings, and lower growth opportunities

C High earnings, high cash flows, stable earnings, and lower growth opportunities

D High earnings, high cash flows, stable earnings, and high growth opportunities

Question 5

Higher debt-equity ratio results in:

A Lower financial risk

B Higher EPS

C a Higher degree of operating risk

D a Higher degree of financial risk

Question 6

Which of the following affects capital budgeting decision?

A All of the above

B Cash Flow of the Project

C Rate of Return

D Investment Criteria and interest rate

Question 7

Current assets of a business firm should be financed through:

A None of the above

B Both of the above

C Long-term liability only

D Current liability only

Question 8

The primary goal of the financial management is ____________

A To maximize profit

B To maximize the wealth of owners

C To minimize the risk

D To maximize the return

Question 9

A fixed asset should be financed through:

A None of the above

B A mix of long and short-term liabilities

C A short-term liability

D A long-term liability

Question 10

Companies with a higher growth pattern are likely to:

A None of the above

B Pay lower dividends

C Pay higher dividends

D Dividends are not affected by growth considerations

Question 11

Other things remaining the same, an increase in the tax rate on corporate profits will:

A None of the above

B Have no impact on the cost of debt

C Make the debt relatively the dearer

D Make the debt relatively cheaper

Question 12

Which of the following is not concerned with the Long term investment decision

A Opening a new branch

B Research and Development Programme

C Inventory management

D Management of fixed capital

Question 13

The cheapest source of finance is:

A Debenture

B Equity share capital

C Retained earning

D Preference share

Question 14

Short term investment decisions affect the ___________

A Large amount of funds for future

B Day to Day working of the business

C Long term profitability

D Purchase of fixed assets

Question 15

The main objective of financial planning is to ensure that_________

A Purchase of fixed assets

B Purchase of raw material

C Dividend is paid to shareholders at the right time

D Enough funds are available at the right time

Question 16

Short-term Investment Decision is also known as ____

A None of the above

B Capital Budgeting

C Dividend Decision

D Working capital

Question 17

Cost of advertising and printing prospectus is called__________

A Dividend cost

B Equity cost

C Debt cost

D Floatation cost

Question 18

Financial leverage is called favourable if:

A ROI is higher than the cost of debt

B Debt is easily available

C If the degree of existing financial leverage is low

D Return on Investment is lower than the cost of debt

Question 19

Long term investment decision is also known as _____________

A None of the above

B Dividend Decision

C Working Capital

D Capital Budgeting

Question 20

Financial Management is mainly concerned with ______________

A Profit maximization

B Efficient Management of every business

C Arrangement of funds

D All aspects of acquiring and utilizing financial resources for firms activities

Question 21

Which of the following is not a financial Decision?

A Dividend Decision

B Staffing Decision

C Investment Decision

D Financing Decision

Question 22

Financial planning arrives at:

A Ensuring that the firm faces neither a shortage nor a glut of unusable funds

B Minimising the external borrowing by resorting to equity issues

C Entering that the firm always have significantly more funds than required so that there is no paucity of funds

D Doing only what is possible with the funds that the firms have at its disposal

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Class 12 Business Studies - Chapter 9: Financial Management MCQ Questions

Your Class 12 Business Studies Study Path

Favourable financial leverage is a situation where _____

Which of the following affects the Dividend Decision of a company?

Higher working capital usually results in:

Higher dividend per share is associated with:

Higher debt-equity ratio results in:

Which of the following affects capital budgeting decision?

Current assets of a business firm should be financed through:

The primary goal of the financial management is ____________

A fixed asset should be financed through:

Companies with a higher growth pattern are likely to:

Other things remaining the same, an increase in the tax rate on corporate profits will:

Which of the following is not concerned with the Long term investment decision

The cheapest source of finance is:

Short term investment decisions affect the ___________

The main objective of financial planning is to ensure that_________

Short-term Investment Decision is also known as ____

Cost of advertising and printing prospectus is called__________

Financial leverage is called favourable if:

Long term investment decision is also known as _____________

Financial Management is mainly concerned with ______________

Which of the following is not a financial Decision?

Financial planning arrives at:

Practice Complete!

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