Cases in Finance MCQs (Multiple Choice Questions)

DNYANSAGAR ARTS AND COMMERCE COLLEGE, BALEWADI, PUNE – 45

Subject: Cases in Finance (606 A) CLASS: TYBBA (Sem-VI) (2013 PATTERN)

PROF. KAVITA PAREEK www.dacc.edu.in

Question Bank - Multiple Choice Questions (MCQs)

UNIT I - Business Finance

1. Business finance refers to ...... and ........ employed in a business.

A. money

B. credit

C. both a & b

D. none of the above

2. Business finance includes ........

A. procurement of funds and utilization of funds

B. management of funds

C. allocation

D. Insurance

3. Funds are required for the ..........

A. purchase of land & building

B. purchase of machinery

C. purchase of another fixed asset

D. all of the above

4. Business finances is concerned with _________ funds and _______ funds from different sources.

A. estimation of funds

B. raising of funds

C. short term finance

D. both a & b

5. __________ is concerned with the acquisition, financing, and management of assets with some overall goal

in mind.

A. Financial management

B. Profit maximization

C. Agency theory

D. Social responsibility

6. __________ is concerned with the maximization of a firm's earnings after taxes.

A. Shareholder wealth maximization

B. Profit maximization

C. Stakeholder maximization

Page 1

DNYANSAGAR ARTS AND COMMERCE COLLEGE, BALEWADI, PUNE – 45

Subject: Cases in Finance (606 A) CLASS: TYBBA (Sem-VI) (2013 PATTERN)

PROF. KAVITA PAREEK www.dacc.edu.in

D. EPS maximization

7. ___________________is the most appropriate goal of the firm.

A. Shareholder wealth maximization.

B. Profit maximization.

C. Stakeholder maximization.

D. EPS maximization.

8. Financial planning objectives is very effective in reduction of financial losses. In these objectives signifies

________________.

A. not determining capital requirement for non-trading activity.

B. not determining capital structure for non-trading activity.

C. framing financial policies for trading activity.

D. framing rules and regulation for trading activity.

9. Financial planning is the process of framing _______________.

A. objectives & policies

B. procedures & program

C. program and budget.

D. all the above

10. Financial advisor and financial planner which implies same meaning

A. false

B. true

C. none of these

D. neither a nor b

11. Basic objective of Financial Management is ________________.

A. Maximization of profit.

B. Maximization of shareholder’s wealth

C. Ensuring Financial discipline in the firm.

D. All of these.

12. Which of the following statements is correct regarding profit maximization as the primary goal of the firm?

A. Profit maximization considers the firm's risk level.

B. Profit maximization will not lead to increasing short-term profits at the expense of lowering expected future

profits.

C. Profit maximization does consider the impact on individual shareholder's EPS.

D. Profit maximization is concerned more with maximizing net income than the stock price.

Page 2

DNYANSAGAR ARTS AND COMMERCE COLLEGE, BALEWADI, PUNE – 45

Subject: Cases in Finance (606 A) CLASS: TYBBA (Sem-VI) (2013 PATTERN)

PROF. KAVITA PAREEK www.dacc.edu.in

13. The __________ decision involves determining the appropriate make-up of the right-hand side of the

balance sheet.

A. asset management.

B. financing.

C. investment.

D. capital budgeting.

14. The __________ decision involves a determination of the total amount of assets needed, the

composition of the assets, and whether any assets need to be reduced, eliminated, or replaced.

A. asset management.

B. financing.

C. investment.

D. accounting.

15. According to the text's authors, ___________ is the most important of the three financial management

decisions.

A. asset management decision.

B. financing decision.

C. investment decision.

D. accounting decision.

16. The __________ decision involves efficiently managing the assets on the balance sheet on a day-today

basis, especially current assets.

A. asset management.

B. financing.

C. investment.

D. accounting.

17. __________ is concerned with the maximization of a firm's stock price.

A. Shareholder wealth maximization.

B. Profit maximization.

C. Stakeholder welfare maximization.

D. EPS maximization.

18. The long-run objective of financial management is to _____________.

A. maximize earnings per share.

B. maximize the value of the firm's common stock.

C. maximize return on investment.

D. maximize market share.

Page 3

DNYANSAGAR ARTS AND COMMERCE COLLEGE, BALEWADI, PUNE – 45

Subject: Cases in Finance (606 A) CLASS: TYBBA (Sem-VI) (2013 PATTERN)

PROF. KAVITA PAREEK www.dacc.edu.in

19. The long-run objective of financial management is to ___________.

A. maximize earnings per share.

B. maximize the value of the firm's common stock.

C. maximize return on investment.

D. maximize market share.

20. Which of the following are not among the daily activities of financial management?

A. Sale of shares and bonds.

B. Credit management.

C. Inventory control.

D. The receipt and disbursement of funds.

21. Shareholder wealth" in a firm is represented by____________.

A. the number of people employed in the firm.

B. the book value of the firm's assets less the book value of its liabilities.

C. the amount of salary paid to its employees.

D. the market price per share of the firm's common stock.

22. Financial management helps in

A. Short-term planning of company’s activities

B. Estimating the total funds requirement and their proper utilization in fixed assets and working capital

C. Profit planning of the firm

D. All of these

23. Financial management is mainly concerned with

A. Efficient management of every activity of business

B. Arrangement of funds required to the firm

C. Obtaining required funds in the appropriate mix and utilizing them efficiently

D. All of these

24. Which of the following is not a function of finance manager?

A. Mobilization of funds

B. Deployment of funds

C. Control over use of funds

D. Manipulate share price of the Company

25. Which is the following main decision taken by the financial manager in a company?

A. Income decision

B. Financing decision

C. Appraisal decision

D. Budget decision

Page 4

DNYANSAGAR ARTS AND COMMERCE COLLEGE, BALEWADI, PUNE – 45

Subject: Cases in Finance (606 A) CLASS: TYBBA (Sem-VI) (2013 PATTERN)

PROF. KAVITA PAREEK www.dacc.edu.in

26. Which of the following is an example of a financial objective that a company might choose to pursue?

A. Dealing honestly and fairly with customers on all occasions

B. Provision of good working conditions and industrial relations

C. Producing environmentally friendly products

D. Restricting the level of gearing to below a specified target level

27. Which of the following is LEAST likely to fall within financial management?

A. The dividend payment to shareholders is increased

B. Funds are raised to finance an investment project

C. Surplus asset are sold off

D. Non-executive directors are appointed to the remuneration committee

28. Which of the following would you expect to be the responsibility of financial management?

A. Producing annual reports

B. Producing monthly management accounts

C. Advising on investment in non-current assets

D. Deciding pay rates for staff

29. In his traditional role the financial manager was responsible for

A. Arrangement and efficient utilization of funds

B. Arrangement of financial resources

C. Acquiring capital assets for the organization

D. All the above

30. The term ----- refers to the part of the profits of a company which is distributed amongst its

Shareholders.

A. Dividend

B. Interest

C. Capital

D. Profit

31. The dividend decision of the firm is taken by ----

A. Risk manager

B. Marketing manager

C. Purchase manager

D. Finance manager

32. Who strongly supports the doctrine that dividend policy almost always affects the value of the

enterprise?

A. Myron Gordon

B. John Linter

Page 5

DNYANSAGAR ARTS AND COMMERCE COLLEGE, BALEWADI, PUNE – 45

Subject: Cases in Finance (606 A) CLASS: TYBBA (Sem-VI) (2013 PATTERN)

PROF. KAVITA PAREEK www.dacc.edu.in

C. James Walter

D. Modigliani and Miller

33. Which of the following external factors affect the dividend policy?

A. General state of economy

B. State of capital market

C. Legal restrictions

D. All of the above

34. Financial management process deals with

A. Investments

B. Financing decisions

C. Both a and b

D. None of the above

35. Finance Function comprises

A. Safe custody of funds only

B. Expenditure of funds only

C. Procurement of finance only

D. Procurement & effective use of funds

36. The objective of wealth maximization considers

A. Amount of returns expected

B. Timing of anticipated returns

C. Risk associated with uncertainty of returns

D. All of the above

37. Financial management mainly focuses on

A. Efficient management of every business

B. Brand dimension

C. Arrangement of funds

D. All elements of acquiring and using means of financial resources for financial activities

38. Investment can be defined.

A. Person’s dedication to purchasing a house or flat

B. Use of capital on assets to receive returns

C. Usage of money on a production process of products and services

D. Net additions made to the nation’s capital stocks

Page 6

DNYANSAGAR ARTS AND COMMERCE COLLEGE, BALEWADI, PUNE – 45

Subject: Cases in Finance (606 A) CLASS: TYBBA (Sem-VI) (2013 PATTERN)

PROF. KAVITA PAREEK www.dacc.edu.in

39. The finance manager is accountable for.

A. Earning capital assets of the company

B. Effective management of a fund

C. Arrangement of financial resources

D. Proper utilization of funds

40. The focal point of financial management in a firm is:

A. The number and types of products or services provided by the firm.

B. The minimization of the amount of taxes paid by the firm.

C. The creation of value for shareholders.

D. The dollars profits earned by the firm.

Answer Key:

1 2 3 4 5 6 7 8 9 10

C A D D A B A C D B

11 12 13 14 15 16 17 18 19 20

B D B C C A A B A A

21 22 23 24 25 26 27 28 29 30

D B C D B D D C B A

31 32 33 34 35 36 37 38 39 40

D C D B D D D B C C

Page 7

DNYANSAGAR ARTS AND COMMERCE COLLEGE, BALEWADI, PUNE – 45

Subject: Cases in Finance (606 A) CLASS: TYBBA (Sem-VI) (2013 PATTERN)

PROF. KAVITA PAREEK www.dacc.edu.in

Unit 2: - Techniques of Financial Statement Analysis

1. The term financial statement refers to…

A. Income statement

B. Cash flow and Fund Flow

C. Balance sheet

D. All

2. Which of the following is the main objective of a financial statement?

A. to know the solvency

B. to know the debt capacity

C. to know the earning capacity

D. All

3. In financial statements, the fixed assets are shown at …

A. Market price

B. Cost price

C. Replacement price

D. None

4. What is followed while preparing the financial statements?

A. Accounting conventions

B. Accounting principles

C. Accounting concepts

D. All

5. In financial statement the stock is valued at cost or market price whichever is less on the basis of…

A. Accounting concepts

B. Accounting conventions

C. Accounting principles

D. None

6. Which of the following statement is true?

Statement (I): Financial statements are prepared on the basis of accounting principles.

Statement (II): Any changes in the accounting principles or method will affect the utility of the financial

statements.

Page 8

DNYANSAGAR ARTS AND COMMERCE COLLEGE, BALEWADI, PUNE – 45

Subject: Cases in Finance (606 A) CLASS: TYBBA (Sem-VI) (2013 PATTERN)

PROF. KAVITA PAREEK www.dacc.edu.in

A. I is true but not II

B. II is true but not I

C. Both are true

D. Both are false

7. The balance sheet shows …

A. the source of working capital

B. the change in working capital

C. Both

D. None

8. The analysis and interpretations of the financial statement will reveal …

A. the financial position

B. the profitability

C. None

D. Both

9. The process of explaining the meaning, significance and relationship between two financial factors is called

…

A. Summarization

B. Analysis

C. Interpretation

D. None

10. The process of comparing various financial factors of a company over a period of time is known as …

A. Inter‐firm comparison

B. Ratio Analysis

C. Intra‐firm comparison

D. Inter‐industry comparison

11. Which of the following is technique of financial statement analysis?

A. Common‐size statement

B. Comparative statement

C. Trend analysis

D. All

Page 9

DNYANSAGAR ARTS AND COMMERCE COLLEGE, BALEWADI, PUNE – 45

Subject: Cases in Finance (606 A) CLASS: TYBBA (Sem-VI) (2013 PATTERN)

PROF. KAVITA PAREEK www.dacc.edu.in

12. Which technique used for figures of two or more periods are placed side by side to facilitate easy and

meaningful comparisons?

A. Comparative statement

B. Common‐size statement

C. Trend Analysis

D. None

13. ________is a simply the amount of cash coming in to a business.

A. cash flow

B. inflow

C. both a and b

D. none of the above.

14. If value of opening inventories increases, what happens to the value of gross profit?

A. decreases

B. increases

C. stays the same

D. gets closer to net profit

15. Which of these is NOT a limitation of ratio analysis:

A. They are calculated on past data and there is may not be a true reflection of the business current performance

B. Financial records may have been manipulated and there are the ratios calculated could be based on

potentially mis leaked

C. Ratios only consider qualitative matters, making than hard to calculate

D. inter-firm comparisons can be difficult to not firms report their performance/ generate accounts in the Way

16. Incorrect cash flow planning can lead to ________

A. solvency

B. insolvency

C. bankruptcy

D. failure

17. The 3 Ps, i.e. the three objectives of analysis and interpretation of financial statements are : Progress,

Position and Prospects.

A. True

B. False

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Cases in Finance MCQs

Cases in Finance MCQs

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