Font size
WorksheetsFINANCIAL MANAGEMENT - PART-1
Total questions: 50
Worksheet time: 25mins
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
The primary goal of financial management is
to maximize the return
to minimize the risk
to maximize wealth of owners
to maximize profit
Market value of shares is influenced by
financing decision
investment decision
dividend decision
financial decision
A decision to acquire a new and modern plant to upgrade an old one is a
financing decision
working capital decision
investment decision
none of the above
Cost of advertising, printing prospectus etc incurred at the time of raising funds is called-----------------
(a)
Which of the following can't be a Capital Structure?
Equity + Debentures
Equity only
Preference Shares only
Equity + Preference
Which is the cheapest Source of Finance
Debt
Equity
A firm should use .............. when evaluating an investment
the least costly source of financing
the most costly source of financing
the weighted average cost of all financing sources
the current opportunity cost
The degree of combined leverage is
The percentage change in sales divided by the percentage change in earnings per share
The percentage change in earnings before interest and taxes divided by the percentages change in sales
The degree of operating leverage divided by the degree of financial leverage
The percentage change in earnings per share divided by the percentage change in sales
Financial management is concerned with managerial activities relating to
Planning
Procurement and administration of funds
Optimum utilisation of funds
All of the above
Which of the following is an external source of finance
Retained earnings
Equity shares
Preference shares
Debentures
What are the components of capital structure
Debts and equity
Debts, preference shares and equity
Debts, revenue and equity
None of the above
Optimal capital structure consists of both the mix of debt and equity
True
False
While designing capital structure a finance manager should choose a pattern of capital which-
Minimizes cost of capital
Maximizes the owners return
Maximizes cost of capital and minimizes owners return
Both (a) and (b)
Cost of the company fund is the cost of capital
True
False
Capital structure is a part of the liability side of a balance sheet.
True
False
Which one of the following is not a financial objective of a firm
Timeliness
Profitability
Liquidity
Efficiency
The primary goal of Financial Management is
To maximise the return
To minimise the risk
Wealth maximisation
Profit maximisation
Which of the following is a function of the finance manager
Mobilizing funds
Risk return trade off
Deployment of funds
All of the above
The formula to calculate future value.
FV= (P+i)^n
FV= P(1+i)^n/m
FV= P(1+i)^n
FV= P/(1+i)^n
What is the compound value if you invest Rs. 1,000 at 10% for 3 years?
Rs. 1,331
Rs. 133.1
Rs. 13.31
Rs. 1.331
Present value of Rs. 1 received after 2 years with 10% discounting rate.
0.268
0.628
0.826
0.286
What is the present value of perpetual annuity of Rs. 1,00,000 p.a. at the discounting rate of 10%?
Rs. 10,000
Rs. 10,00,000
Rs. 1,00,00,000
Rs. 1,000
You'll get Rs. 110 after one year if you invest Rs. 100 at 10% interest rate.
True
False
Finance functions are
Planning for funds
Raising of funds
Allocation of funds
All of the above
Which one is source of raising of funds?
Equity Shares
Preference Shares
Debentures
Tax
Portion of Profit distributed to the shareholder is
Interest
Dividend
Tax
Earnings
The higher the degree of operating leverage, the more sensitive operating income is to the changes in sales.
TRUE
FALSE
Operating Leverage indicates the impact of changes in sales on operating income.
TRUE
FALSE
Operating leverage occurs due to the existing of ______ in the firm
variable cost
operating cost
fixed cost
EBIT
Degree of operating leverage is calculated with the help of:
Percentage change in EBT and percentage change in EBIT
Percentage change in EBIT and percentage change in sales
Percentage change in EBT and percentage change in sales
None of these
The average of a firm's cost of equity and after tax cost of debt that is weighted based on the firm's capital structure is called the:
weighted capital gains rate.
structured cost of capital.
subjective cost of capital
weighted average cost of capital.
In weighted average cost of capital the term "weight" refers to
Rate of interest.
portion of total capital raised by the firm
income tax consideration.
proportion of each source of capital raised.
A portion of profits, which a company distributes among its shareholders is known as:
Dividends
Capital gain
Retained earnings
interest
What do you mean by indifference point ?
Level of EBIT at which there is no profit no loss to equity share holders
Level of EBIT at which company has same EPS in all financial plans
When EBIT is zero.
None of these
The cost of raising finance is
promotion cost
venture cost
sinking cost
floatation cost
Advertising campaign is an example of
short term investment decision
financial decision
long term investment decision
dividend decision
Long term investment decisions are also called
capital investment decision
capital budgeting decision
capital management decision
capital decision borrowing
______________ is money supplied by investors, banks, or owners of a business.
Equity
Capital
Income statement
Property
What is the major objective of financial management?
Profit Maximization
Wealth Maximization
None of them
The formula for compound value is :
FVn = PV (1+i)
FVn = PV/(1+i)
FVn = PV (1+i)n
FVn = (1+i)/PV
Computing the future value of an amount of money for any specified time period requires knowledge of the amount of principal and the interest rate
True
False
Compound Value also Called
Present Value
Future Value
Net Value
Both a & b
What is the life blood of a business?
Accounts
Decisions
Reports
Finance
What are the financial objectives of a business?
Profitability, Liquidity, Solvency, Growth and Efficiency
Profit and Growth
Profitability, Solvency, Efficiency and Growth
Growth, Profit, Efficiency and Income
Sources of finance are broken down into two categories. What are they?
Loans and Crowdfunding
Debt and Finance
Equity and Debt
Equity and Borrowing
What does this describe?
When a person contributes their own funds to a business or enterprising activity, with the goal of making a return on their money
Investment
Debt
Equity
Self Fundinging
When is a private investor considered an angel investor?
When the investor provides equity finance to a charity
When the investor lends money at a lower interest than the banks
When a private investor provides equity finance to a private company in the start up stage.
Finance functions are
Planning for funds
Raising of funds
Allocation of funds
All of the above
