MBA Financial Management — practice questions
120 free MCQs with worked solutions. Tap any question for the answer + explanation, or practice them all in the app.
Practice MBA 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:A clerk records each day's sales and payments in a routine ledger. That routine work is:The three main accounting elements were defined in the late 15th century by:Cash, equipment and buildings a firm owns are its:What a firm owes to its creditors is recorded as its:Total investment in a firm minus its liabilities is called owners' equity, also known as:You open a shop with 10,000 in cash and no debt. Owners' equity at that moment is:You then borrow 10,000 from a bank. Your total assets become:That bank loan is entered as a liability of 10,000, keeping the equation balanced. This method is called:The process running from a business transaction through to the finished report is the accounting:Assets a firm can turn into cash quickly are classed as:Machinery a bakery uses in production for more than a year is recorded under:A patent or copyright a firm owns is recorded as an:Debts a firm must pay within a year of the balance sheet date are:Profits kept in the business since it started, rather than paid out, are called:The total expense of buying or producing what a firm sells is the:Net sales minus the cost of goods sold gives:Salaries and commissions paid to salespeople and the cost of advertising fall under:Cash a firm generates from producing and selling its goods appears under cash flow from:Cash movements tied to debt and equity funding appear under cash flow from:A lender divides a firm's current assets by its current liabilities. That measure is the:The same ratio worked out after leaving inventory out is called the:Net profit divided by net sales gives the net profit margin, also called:People with vision, drive and creativity willing to risk starting a business for profit are:Entrepreneurs who start a whole series of companies are called:Founders who start small and deliberately plan to stay small are:Employees who apply creativity and risk-taking inside a large corporation are:An entrepreneur who is competitive with a high need for achievement is described as:An individualist and self-starter who prefers to lead rather than follow is:Successful entrepreneurs mostly prefer opportunities carrying:The ability to spot trends and act on them sets entrepreneurs apart. That trait is being:A firm with under 500 employees, independently managed and not dominant in its industry, is a:A formal written statement describing a new business idea and how it will be carried out is a:Which of these belongs inside such a plan?Borrowed funds that must be repaid with interest over a stated period are a form of:Funds raised by selling ownership in the business are a form of:Individual investors who put their own funds into start-ups are:Investment firms specialising in financing small high-growth companies for an ownership stake supply:Compared with the earliest individual backers, venture capitalists typically invest:The federal body that helps people start and manage small firms and win contracts is the:Retired executives who volunteer to advise small-business owners work through:A facility giving start-ups workspace and support in their earliest days is a business:Investment companies licensed by that federal body to provide long-term small-business finance are:Having a great concept alone is not enough, because the entrepreneur must also:A person with every entrepreneurial trait may still fail because they lack: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: