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.

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Introduction to Financial Management MCQs | Page 3 of 12

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Q21.
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.
Q22.
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.
Q23.
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.
Q24.
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.
Q25.
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.
Q26.
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.
Q27.
What are the areas covered by the scope and objectives of financial management?

a.

Only Financial Analysis and Planning

b.

Financing and Capital Structure/Capital budgeting Decisions, Procurement of funds and analysis of cost of capital, Management of funds raised, Working Capital Management, Investment Decisions, Dividend Decisions, and more

c.

Only Analysis of relationship between Return and Risk

d.

Only Merger, Amalgamation, Takeovers, Expansions, Liquidation, etc.

Discuss
Answer: (b).Financing and Capital Structure/Capital budgeting Decisions, Procurement of funds and analysis of cost of capital, Management of funds raised, Working Capital Management, Investment Decisions, Dividend Decisions, and more Explanation:The scope and objectives of financial management cover areas such as Financing and Capital Structure/Capital budgeting Decisions, Procurement of funds and analysis of cost of capital, Management of funds raised, Working Capital Management, Investment Decisions, Dividend Decisions, and more.
Q28.
What is the ultimate objective of financial management?

a.

Profit maximization

b.

Revenue maximization

c.

Wealth maximization for shareholders

d.

Cost minimization

Discuss
Answer: (c).Wealth maximization for shareholders Explanation:The ultimate objective of financial management is wealth maximization for shareholders.
Q29.
How does financial management contribute to the value of the firm in a capital investment decision?

a.

By increasing initial cash outlay

b.

By decreasing net cash inflow

c.

By ensuring the present value of the future stream of net cash inflow expected from the proposed investment is greater than the initial cash outlay

d.

By ignoring the analysis of investments and inflows

Discuss
Answer: (c).By ensuring the present value of the future stream of net cash inflow expected from the proposed investment is greater than the initial cash outlay Explanation:Financial management contributes to the value of the firm in a capital investment decision by ensuring the present value of the future stream of net cash inflow expected from the proposed investment is greater than the initial cash outlay.
Q30.
What questions arise in general when considering any investment in a business proposal or project?

a.

Only What is expected return of investment (ROI)?

b.

What is the financial risk exposure?

c.

What is the cost of capital involved in the new business proposal or project?

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:Questions that arise in general when considering any investment in a business proposal or project include What is expected return of investment (ROI)?, What is the financial risk exposure?, What is the cost of capital involved in the new business proposal or project?
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