BBA Finance Financial Management — practice questions
110 free MCQs with worked solutions. Tap any question for the answer + explanation, or practice them all in the app.
Practice BBA Finance Financial Management in the app →Money required for carrying out business activities is called:Financial management is concerned with the optimal procurement and:The primary aim of financial management is to maximise:The three broad financial decisions are investment, financing and:A long-term investment decision, such as buying a new machine, is called a:Decisions about levels of cash, inventory and receivables are:Two projects carry the same risk but return 10 and 12 per cent. Normally the firm picks:Shareholders' funds refer to equity capital and:Interest must be paid whether or not a firm earns profit, so debt brings:The cost incurred in raising funds is called:Debt is considered the cheapest source partly because interest is:A company afraid of a takeover bid, wanting no dilution of control, will prefer:The portion of profit distributed to shareholders is the:Companies with good growth opportunities generally pay dividends that are:Even a profitable company may not declare a dividend if it is short of:Investors generally view an increase in dividend as:Preparing a financial blueprint of a firm's future operations is:Financial planning is typically done for a period of:Financial plans made for a period of one year or less are called:Financial planning usually begins with the preparation of a:The mix between owners' funds and borrowed funds is called:The chance that a firm fails to meet its payment obligations is called:Funds needed to buy land, buildings, plant and machinery are the firm's:Funds used to hold stock, bills receivable and to pay wages and rent are the firm's:A trading concern usually needs how much fixed capital compared with a manufacturing concern?A firm selling on credit with a slow turnover needs more:Sources that meet needs for a period exceeding five years are:Funds required for more than one year but less than five years come from:Trade credit, bank loans and commercial paper mainly provide funds for:Short-term financing is most common for financing:Seasonal businesses that build stock before the selling season typically need:Funds provided by the owners of an enterprise, including reinvested profits, are:Which pair are the two important sources of owner's funds?Loans from banks, debentures, public deposits and trade credit together form:A burden of borrowed funds is that interest must be paid even when:Collecting receivables faster, selling surplus stock and ploughing back profit are examples of:Suppliers, lenders and investors outside the firm are:A limitation of internal sources of funds is that they:Profits kept back in the business instead of paid as dividend are:Which is a merit of retained earnings?Excessive ploughing back of profits may cause dissatisfaction because shareholders get:Credit extended by one trader to another for buying goods is:In the buyer's records, trade credit appears as sundry creditors or:Trade credit is granted to customers who have reasonable financial standing and:The idea that money available now is worth more than the same amount later is the:A friend puts 1,000 in an account paying 4% a year. After one year the balance is:Leaving that same money for a second year at 4% gives a balance of:The extra 1.60 earned in that second year is interest on:Interest earned in later periods on interest already earned is called:A person deposits 300 in an account paying 5% a year. After one year they have:A company earning 2.50 per share sees a 10% rise the next year. New earnings per share are:A shop raising a 50 rupee item by 3% next year will price it at:The value a present sum grows to at a future date is called its:The value today of a sum to be received later is called its:The interest rate used to bring a future cash flow back to today is called the:Bringing a future amount back into today's rupees is described as the exact opposite of:A house listed at 400,000 today, with prices rising 4% a year for six years, needs which calculation?A shortcut that estimates how long money takes to double is the:Using that shortcut, savings earning 9% a year will take about how long to double?Using the same shortcut at 6% a year, money doubles in about:Using it at 12% a year, money doubles in about:When compounding happens more often within a year, the interest income is received:Because of that, 200 at a given rate compounded quarterly rather than annually will grow to:A single one-time receipt or payment of cash is described as a:The time value of money is linked to inflation because rising prices:Someone seeking the highest interest rate available should remember that investments are usually:A sports shop spends 16,000 on a machine and expects inflows of 2,000, 4,000, 5,000, 5,000 and 5,000. Its paybOn that machine, the accumulated inflow at the end of year two is:At the end of year three, the accumulated inflow on that machine reaches:The principal advantage claimed for the payback method is its:The first shortcoming of the payback method is that it ignores the:A second disadvantage of that method is that it lacks a clearly defined:The method that fixes that flaw by discounting each inflow before adding it is the:Spending money today hoping for more money later means inflows and outflows occur in different:The measure that converts all a project's cash flows into today's rupees and nets them is the:The rate a firm should theoretically use when discounting for that measure is its:On the graph of that measure against discount rates, lower rates give a value that is:The discount rate at which that measure equals zero is the:In the worked example, that crossing point sits at about:The measure that divides the present value of benefits by the present value of costs is the:In that ratio, the numerator is the present value of the project's:When the net present value of a project is greater than zero, that ratio will be:Two machines that cannot both be bought, so only one may be chosen, are described as:In the comparison offered, the heavy-duty machine costs:The reason a firm might still prefer that costlier machine is that it will generate more:The payback measure is described as giving managers information about how long money will be:When using the payback method, a company must itself set a length of time as its:Compared with payback, both the net present value and the internal rate of return take account of:Resources that are cash, near cash, or expected to become cash within a year are:Excess cash parked in short-term investments is held in:Working capital equal to the whole of current assets is called:The more refined measure, found by subtracting current liabilities, is:One stated goal of working capital management is to satisfy obligations as they:Another goal is keeping an optimal level of current assets, noting that cash itself provides:Working capital management covers all decisions involving current assets and:The time between beginning production and collecting cash from customers is the:That cycle is measured in:The number of days it takes to collect cash from a credit sale is the:The time taken to convert inventory into sales is also called the:The average number of days a company takes to pay its suppliers is the:That payables period is described as the element that probably cannot be optimised without:The first step in working out the inventory conversion period is to calculate the:Working capital needs that rise and fall with the season are described as:Working capital needs that stay in place all year round are described as:Better inventory management, better collections and longer supplier terms together will:Credit taken from suppliers, recorded as accounts payable, is called:Cash held by a business is needed above all to pay the bills and meet the:Assets that turn into cash within a year through normal operations are contrasted with capital that is:Because payments for purchases are usually made on credit, cash outflows in a month often do not equal:Excess cash invested in cash alternatives is said to create: