Do you need some help in preparing for your upcoming Class 12 Business Studies exams? We’ve compiled a list of MCQ on Financial Management Class 12 MCQs Questions with Answers to get you started with the subject. You can download NCERT MCQ Questions for Class 12 Business Studies Chapter 9 Financial Management with Answers Pdf free download, and learn how smart students prepare well ahead with MCQ Questions for Class 12 Business Studies with Answers.
Financial Management Class 12 MCQs Questions with Answers
Question 1.
Higher debt-equity ratio results in:
(a) a Higher degree of financial risk
(b) a Higher degree of operating risk
(c) Higher EPS
(d) Lower financial risk
Answer
Answer: (a) a Higher degree of financial risk
Question 2.
Cost of advertising and printing prospectus is called__________
(a) Floatation cost
(b) Debt cost
(c) Equity cost
(d) Dividend cost
Answer
Answer: (a) Floatation cost
Question 3.
The primary goal of the financial management is ____________
(a) To maximize the return
(b) To minimize the risk
(c) To maximize the wealth of owners
(d) To maximize profit
Answer
Answer: (c) To maximize the wealth of owners
Question 4.
Which of the following affects the Dividend Decision of a company?
(a) Taxation Policy
(b) Cash Flow Position
(c) Earnings
(d) All of the above
Answer
Answer: (d) All of the above
Question 5.
Which of the following affects capital budgeting decision?
(a) Investment Criteria and interest rate
(b) Rate of Return
(c) Cash Flow of the Project
(d) All of the above
Answer
Answer: (d) All of the above
Question 6.
Higher working capital usually results in:
(a) Higher equity, lower risk, and lower profits
(b) Lower current ratio, higher risk, and profits
(c) Lower equity, lower risk, and higher profits
(d) Higher current ratio, higher risk, and higher profits
Answer
Answer: (d) Higher current ratio, higher risk, and higher profits
Question 7.
Which of the following is not concerned with the Long term investment decision
(a) Management of fixed capital
(b) Inventory management
(c) Research and Development Programme
(d) Opening a new branch
Answer
Answer: (b) Inventory management
Question 8.
Favourable financial leverage is a situation where _____
(a) ROI is higher than the rate of interest on debt
(b) ROI is Equal to the Rate of interest on debt
(c) ROI is lower than the rate of interest on debt
(d) None of the above
Answer
Answer: (a) ROI is higher than the rate of interest on debt
Question 9.
Other things remaining the same, an increase in the tax rate on corporate profits will:
(a) Make the debt relatively cheaper
(b) Make the debt relatively the dearer
(c) Have no impact on the cost of debt
(d) None of the above
Answer
Answer: (a) Make the debt relatively cheaper
Question 10.
Higher dividend per share is associated with:
(a) High earnings, high cash flows, stable earnings, and high growth opportunities
(b) High earnings, high cash flows, stable earnings, and lower growth opportunities
(c) High earnings, low cash flows, stable earnings, and lower growth opportunities
(d) High earning, high cash flows, unstable earnings, and higher growth opportunities
Answer
Answer: (b) High earnings, high cash flows, stable earnings, and lower growth opportunities
Question 11.
The main objective of financial planning is to ensure that_________
(a) Enough funds are available at the right time
(b) Dividend is paid to shareholders at the right time
(c) Purchase of raw material
(d) Purchase of fixed assets
Answer
Answer: (a) Enough funds are available at the right time
Question 12.
Financial planning arrives at:
(a) Doing only what is possible with the funds that the firms have at its disposal
(b) Entering that the firm always have significantly more funds than required so that there is no paucity of funds
(c) Minimising the external borrowing by resorting to equity issues
(d) Ensuring that the firm faces neither a shortage nor a glut of unusable funds
Answer
Answer: (d) Ensuring that the firm faces neither a shortage nor a glut of unusable funds
Question 13.
Which of the following is not a financial Decision?
(a) Financing Decision
(b) Investment Decision
(c) Staffing Decision
(d) Dividend Decision
Answer
Answer: (c) Staffing Decision
Question 14.
The cheapest source of finance is:
(a) Preference share
(b) Retained earning
(c) Equity share capital
(d) Debenture
Answer
Answer: (b) Retained earning
Question 15.
Financial leverage is called favourable if:
(a) Return on Investment is lower than the cost of debt
(b) If the degree of existing financial leverage is low
(c) Debt is easily available
(d) ROI is higher than the cost of debt
Answer
Answer: (d) ROI is higher than the cost of debt
Question 16.
Short-term Investment Decision is also known as ____
(a) Working capital
(b) Dividend Decision
(c) Capital Budgeting
(d) None of the above
Answer
Answer: (a) Working capital
Question 17.
Which of the following affects the Dividend Decision of a company?
(a) Earnings
(b) Cash Flow Position
(c) Taxation Policy
(d) All of the above
Answer
Answer: (d) All of the above
Question 18.
Short term investment decisions affect the ___________
(a) Purchase of fixed assets
(b) Long term profitability
(c) Day to Day working of the business
(d) Large amount of funds for future
Answer
Answer: (c) Day to Day working of the business
Question 19.
Financial Management is mainly concerned with ______________
(a) All aspects of acquiring and utilizing financial resources for firms activities
(b) Arrangement of funds
(c) Efficient Management of every business
(d) Profit maximization
Answer
Answer: (a) All aspects of acquiring and utilizing financial resources for firms activities
Question 20.
A fixed asset should be financed through:
(a) A long-term liability
(b) A short-term liability
(c) A mix of long and short-term liabilities
(d) None of the above
Answer
Answer: (a) A long-term liability
Question 21.
Long term investment decision is also known as _____________
(a) Capital Budgeting
(b) Working Capital
(c) Dividend Decision
(d) None of the above
Answer
Answer: (a) Capital Budgeting
Question 22.
Current assets of a business firm should be financed through:
(a) Current liability only
(b) Long-term liability only
(c) Both of the above
(d) None of the above
Answer
Answer: (c) Both of the above
Question 23.
Companies with a higher growth pattern are likely to:
(a) Dividends are not affected by growth considerations
(b) Pay higher dividends
(c) Pay lower dividends
(d) None of the above
Answer
Answer: (c) Pay lower dividends
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