Introduction to Financial Management MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Introduction to Financial Management, a fundamental topic in the field of IC 89 Management Accounting. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Introduction to Financial Management MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of Introduction to Financial Management mcq questions that explore various aspects of Introduction to Financial Management problems. Each MCQ is crafted to challenge your understanding of Introduction to Financial Management principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC 89 Management Accounting tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Introduction to Financial Management MCQs are your pathway to success in mastering this essential IC 89 Management Accounting topic.

Note: Each of the following question comes with multiple answer choices. Select the most appropriate option and test your understanding of Introduction to Financial Management. You can click on an option to test your knowledge before viewing the solution for a MCQ. Happy learning!

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Introduction to Financial Management MCQs | Page 3 of 12

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Q21.
What is the key objective of the financial manager in using funds effectively?

a.

Generating income equal to cost of capital

b.

Generating income more than cost of capital

c.

Minimizing income

d.

Maximizing income

Discuss
Answer: (b).Generating income more than cost of capital Explanation:The key objective of the financial manager in using funds effectively is to generate income more than the cost of capital at which funds are procured.
Q22.
What specialized knowledge and experience are required for decisions on employment of funds in financial management?

a.

Marketing analysis

b.

Capital budgeting, working capital management, liquidity and solvency management

c.

Human resource management

d.

Sales analysis

Discuss
Answer: (b).Capital budgeting, working capital management, liquidity and solvency management Explanation:Decisions on employment of funds in financial management require specialized knowledge and experience in capital budgeting, working capital management, liquidity and solvency management, investment analysis, and portfolio management.
Q23.
What areas should the financial manager update their knowledge and understanding on in financial management?

a.

Only financial risks analysis

b.

Only relationship between cost of capital and ROI

c.

Both a and b

d.

None of the above

Discuss
Answer: (c).Both a and b Explanation:The financial manager should update their knowledge and understanding on areas such as financial risks analysis, relationship between cost of capital and ROI, and other relevant financial aspects.
Q24.
How are the decisions taken by the financial manager in Financial Management broadly classified?

a.

Investment decisions, Financing decisions, Dividend Decisions

b.

Marketing decisions, Production decisions, HR decisions

c.

Research decisions, Development decisions, Sales decisions

d.

Asset allocation decisions, Procurement decisions, Control decisions

Discuss
Answer: (a).Investment decisions, Financing decisions, Dividend Decisions Explanation:The decisions taken by the financial manager in Financial Management are broadly classified as Investment decisions, Financing decisions, and Dividend Decisions.
Q25.
What does the scope of Financial Management involve?

a.

Only financial decisions

b.

Only financial analysis

c.

Both financial decisions and financial analysis

d.

None of the above

Discuss
Answer: (c).Both financial decisions and financial analysis Explanation:The scope of Financial Management involves both financial decisions and financial analysis of a company.
Q26.
How has the scope of Financial Management expanded with the globalization of companies?

a.

It has narrowed down

b.

It has remained the same

c.

It has expanded, especially with the use of foreign capital in the global market

d.

It has become less relevant

Discuss
Answer: (c).It has expanded, especially with the use of foreign capital in the global market Explanation:The scope of Financial Management has expanded, especially with the use of foreign capital in the global market and the multinational nature of companies.
Q27.
What has broadened the scope and objectives of financial management in the last decade or two?

a.

Advancement of technology

b.

Advent of limitless financial derivatives

c.

Decline in global markets

d.

Increase in internal capital structuring

Discuss
Answer: (b).Advent of limitless financial derivatives Explanation:The advent of limitless financial derivatives has broadened the scope and objectives of financial management in the last decade or two.
Q28.
How can the scope of Financial Management be analyzed in the present expansion of the capital market?

a.

Traditional Phase and Modern Phase

b.

Capital Structuring Phase and Acquisition Phase

c.

Marketing Phase and Production Phase

d.

Internal Phase and External Phase

Discuss
Answer: (a).Traditional Phase and Modern Phase Explanation:The scope of Financial Management can be analyzed under two phases: Traditional Phase and Modern Phase.
Q29.
In the Traditional Phase, what financial decisions were considered necessary and important?

a.

Only Internal capital structuring

b.

Only Takeovers

c.

Merger, Amalgamation, Takeovers, Acquisitions, Expansions, Liquidation, Internal capital structuring, and Financial statement analysis

d.

Only Financial statement analysis

Discuss
Answer: (c).Merger, Amalgamation, Takeovers, Acquisitions, Expansions, Liquidation, Internal capital structuring, and Financial statement analysis Explanation:In the Traditional Phase, financial decisions considered necessary and important included Merger, Amalgamation, Takeovers, Acquisitions, Expansions, Liquidation, Internal capital structuring, and Financial statement analysis.
Q30.
In the Modern Phase, what critical issues does financial management encompass for the maximization of wealth?

a.

Only Determination of size and growth rate of the enterprise

b.

Only Working Capital Management

c.

Determination of size and growth rate of the enterprise, Financing and Capital Structure/Capital budgeting Decisions, Procurement of funds and analysis of cost of capital, Management of funds for better ROI, Working Capital Management, Investment Decisions, Dividend Decisions, and more

d.

Only Investment Decisions

Discuss
Answer: (c).Determination of size and growth rate of the enterprise, Financing and Capital Structure/Capital budgeting Decisions, Procurement of funds and analysis of cost of capital, Management of funds for better ROI, Working Capital Management, Investment Decisions, Dividend Decisions, and more Explanation:In the Modern Phase, financial management encompasses critical issues for the maximization of wealth, including Determination of size and growth rate of the enterprise, Financing and Capital Structure/Capital budgeting Decisions, Procurement of funds and analysis of cost of capital, Management of funds for better ROI, Working Capital Management, Investment Decisions, Dividend Decisions, and more.
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