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 4 of 12

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Q31.
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.
Q32.
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.
Q33.
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.
Q34.
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?
Q35.
How is financial management related to corporate management?

a.

Financial management is not related to corporate management

b.

Financial management is only concerned with financial statements analysis

c.

Financial management is an integrated part of corporate management, associated with business strategy, growth, profitability, and more

d.

Financial management is concerned with keeping records and preparing financial statements

Discuss
Answer: (c).Financial management is an integrated part of corporate management, associated with business strategy, growth, profitability, and more Explanation:Financial management is an integral part of corporate management, associated with business strategy, growth, profitability, and various other functions.
Q36.
What is the main focus of financial accounting?

a.

Keeping records and preparing financial statements

b.

Analysis of financial statements

c.

Risk and return analysis

d.

Business proposal and capital budgeting

Discuss
Answer: (a).Keeping records and preparing financial statements Explanation:The main focus of financial accounting is keeping records and preparing financial statements.
Q37.
What three aspects must a financial manager have thorough knowledge, understanding, expertise, and exposure in?

a.

Thorough knowledge of marketing, sound understanding of macro and international economics, expertise in human resource management

b.

Thorough knowledge of financial accounting, sound understanding of production processes, expertise in sales strategies

c.

Thorough knowledge of financial accounting, sound understanding of macro and international economics, expertise and exposure in money market and capital market operations

d.

Thorough knowledge of production processes, sound understanding of marketing, expertise in financial accounting

Discuss
Answer: (c).Thorough knowledge of financial accounting, sound understanding of macro and international economics, expertise and exposure in money market and capital market operations Explanation:A financial manager must have thorough knowledge of financial accounting, sound understanding of macro and international economics, expertise and exposure in money market and capital market operations.
Q38.
In a large public limited company or a multinational company, what makes the roles and responsibilities of a financial manager more emerging and demanding?

a.

Decreased separation between business management and ownership

b.

Increased separation between business management and ownership

c.

Increased importance of financial accounting

d.

Decreased importance of macro and international economics

Discuss
Answer: (b).Increased separation between business management and ownership Explanation:In a large public limited company or a multinational company, the roles and responsibilities of a financial manager are more emerging and demanding due to increased separation between business management and ownership.
Q39.
What is the primary goal of a financial manager in a large public limited company or a multinational company?

a.

Minimizing costs

b.

Maximizing shareholders' wealth

c.

Maximizing revenue

d.

Achieving operational efficiency

Discuss
Answer: (b).Maximizing shareholders' wealth Explanation:The primary goal of a financial manager in a large public limited company or a multinational company is maximizing shareholders' wealth.
Q40.
How is Financial Management related to other disciplines or areas of management functions?

a.

It is unrelated to other disciplines

b.

It is only related to financial accounting

c.

It is closely related to production, marketing, accounting, and administration

d.

It is unrelated to accounting

Discuss
Answer: (c).It is closely related to production, marketing, accounting, and administration Explanation:Financial Management is closely related to other disciplines or areas of management functions such as production, marketing, accounting, and administration.
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