Worksheet 1

B.com 3rd year OBJECTIVE TYPE QUESTIONS

Financial Management SHIKHA KHANDELWAL MA’M

1. As per modern approach to finance function the following decisions are taken :

a) Investment decision
b) Financing decision
c) Dividend decision
d) All of the above

2. Basic objective of financial management is :

a) Maximization of profit
b) Maximizations of shareholder’s wealth
c) Ensuring financial discipline in the organization
d) All of the above

3. Financial management helps in :

a) The estimation of total requirement of funds and monitoring funds

b) Long term planning of company’s activities
c) Profit planning for the organization
d) None of the above

4. In traditional approach, finance manager is responsible for :

a) Efficient utilization of funds

b) Arrangement of financial resources
c) Acquiring capital asset
d) None of these

5. Financial management is concerned :

a) Arrangement of funds
b) Efficient management
c) All aspects of acquiring and utilization
d) None of these
6. The market value of a firm is the result of :

a) Dividend decision
b) Working capital decision
c) Capital budgeting decisions
d) Trades off between risk and return

7. Financial decisions insolve :

a) Investment, financial and sales decisions

b) Investment financial and dividend decisions
c) Financing, dividend and sales decisions
d) None of the above

8. Financial management has been called sometimes before as :

a) Business finance
b) Corporation finance
c) Institutional finance
d) Both (a) and (b)

9. Traditional approach to finance function was evolved :

a) Before 1920
b) Between 1920 and 1930
c) In 1950
d) None of the above

10. Financial decision is related to :

a) Capital structure
b) Purchase of fixed assets
c) Dividend distribution
d) Maintenance of account

11. Financial management is the application of planning and control function to the finance
function. Whose statement is this ?

a) Howard and upton

b) J.f. Bradley
c) J.l massie
d) Western and Brigham
12. In value maximization objective, value signifies :

a) Value of net assets

b) Market value of equity shares
c) Both (a) and (b) above
d) Social welfare

13. The investment decisions should aim at investment in assets only when they are expected to
earn a return greater than a minimum acceptable return is termed as :

a) Interest rate
b) Hurdle rate
c) Growth rate
d) Interest rate of return

14. Which of the following activities is not included in financial planning ?

a) Preparing capital structure

b) Recruiting the clerks
c) Selling the goods
d) Preparing the accounts

15. Which of the following is not the main component of financial planning as per arthur s.
Dewing ?

a) Capitalization
b) Capital structure
c) Management of capital
d) Developing financial procedures

16. Financial management is the operational activity of a business that is responsible for
obtaining and effectively utilizing the funds necessary for effectively utilizing the funds
necessary for effective operations. “ definition is given by :

a) J.e weston
b) J.l massie
c) E.f brigham
d) Howard and upton

17. What is ignored in profit maximization ?

a) Time value of money

b) Risk
c) Net value
d) Wealth
18. Liquidity and profitability are …….. Goals for finance manager.

a) Different
b) Competing
c) Separate
d) Finance

19. Financial management is :

a) Administrative process
b) Analytical process
c) Centralized process
d) All of the above

20. Financial management is

a) An art
b) A science
c) Both art and science
d) None of the above

21. …… maximization objective considers the risk and time value of money.

a) Profit
b) Value
c) Wealth
d) Growth

22. Adequate and timely financial planning helps the management in :

a) Lowering cost of capital

b) Maximizing the return to owners
c) Elimination of waste of operations
d) All of the above