CBSE Class 12 Business Studies – MCQ and Online Tests – Unit 9 – Financial Management
Every year CBSE conducts board exams for 12th standard. These exams are very competitive to all the students. So our website provides online tests for all the 12th subjects. These tests are also very effective and useful for those who preparing for competitive exams like NEET, JEE, CA etc. It can boost their preparation level and confidence level by attempting these chapter wise online tests.
These online tests are based on latest CBSE Class 12 syllabus. While attempting these our students can identify the weak lessons and continuously practice those lessons for attaining high marks. It also helps to revise the NCERT textbooks thoroughly.
CBSE Class 12 Business Studies – MCQ and Online Tests – Unit 9 – Financial Management
Question 1.
Which one of the following is related to planning, organising, directing and controlling of financial activities?
(a) Financial decision
(b) Capital structure
(c) Investment decision
(d) Financial management
Answer
Answer: (d) Financial management
Question 2.
Wealth maximisation depends on
(a) market price per share.
(b) market price of finished good.
(c) market price of inventory.
(d) market price of fixed assets.
Answer
Answer: (a) market price per share.
Question 3.
Investment decision involves
(a) investment in fixed assets.
(b) investment in current assets.
(c) investment in fixed and current assets.
(d) investment in Government securities.
Answer
Answer: (c) investment in fixed and current assets.
Question 4.
If dividend portion of total earnings is high, portion of retained earnings will be
(a) high.
(b) low.
(c) moderate.
(d) equal.
Answer
Answer: (b) low.
Question 5.
Financial procedures are determined by
(a) financial planning.
(b) financial leverage.
(c) financial decisions.
(d) capital structure.
Answer
Answer: (a) financial planning.
Question 6.
Capital structure shows
(a) Debtor-creditor ratio.
(b) Fixed assets-current assets ratio.
(c) Debt-equity ratio.
(d) Interest coverage ratio.
Answer
Answer: (c) Debt-equity ratio.
Question 7.
Fixed capital requirements are determined by
(a) nature of business.
(b) nature of business environment.
(c) nature of Government control.
(d) nature of marketing efforts.
Answer
Answer: (a) nature of business.
Question 8.
Working capital requirements are low when an organisation has
(a) high technology.
(b) high debtors.
(c) high inventory.
(d) high creditors.
Answer
Answer: (d) high creditors.
Question 9.
___ is concerned with optimum procurement as well as usage of finance.
(a) Financial Analysis
(b) Financial Planning
(c) Financial Management
(d) Budgeting
Answer
Answer: (c) Financial Management
Question 10.
___ represents investment in current assets required for day-to-day operations of the business.
(a) Long-term capital
(b) Working capital
(c) Capital Budgeting
(d) Medium-term capital
Answer
Answer: (b) Working capital
Question 11.
___ involves increasing the proportion of debt and preference shares in total capital.
(a) Trading on equity
(b) Capital Budgeting
(c) Financing decision
(d) Financial Analysis
Answer
Answer: (a) Trading on equity
Question 12.
___ is the time span between acquisition of goods and realisation of sale proceeds.
(a) Working capital
(b) Payback Period
(c) Operating Cycle
(d) Account Receivables Period
Answer
Answer: (c) Operating Cycle
Question 13.
___ Gross working capital represents the total investment in assets.
(a) Current
(b) Fixed
(c) Tangible
(d) Intangible
Answer
Answer: (a) Current
Question 14.
___ capital refers to investment in long-term assets.
(a) Fixed
(b) Variable
(c) Working
(d) Both (b) and (c)
Answer
Answer: (c) Working
Question 15.
The working capital requirement of a business is not likely to be high when?
(a) The nature of business is trading
(b) Scale of operation of business is small
(c) It is difficult to procure raw material
(d) The rate of inflation is low
Answer
Answer: (c) It is difficult to procure raw material
Question 16.
Under which of the following circumstances the fixed capital requirement of a business is not likely to be high?
(a) When the raw material is not easily available
(b) Capital intensive techniques of production are used
(c) The growth prospects of a company a high
(d) When the financial alternatives are easily available
Answer
Answer: (d) When the financial alternatives are easily available
Question 17.
Which of the following statements is not true with regard to use of fixed capital?
(a) It affects the long term growth of the business.
(b) Large amount of funds are involved.
(c) The business risk involved is low.
(d) The investment decisions are irreversible.
Answer
Answer: (c) The business risk involved is low.
Question 18.
Under which of the following situations a company is not likely to issue equity capital?
(a) When the debt service coverage ratio is high.
(b) When the interest coverage ratio is high.
(c) When the cost of debt capital is low.
(d) All of the above
Answer
Answer: (d) All of the above
Question 19.
If the rate of return on investment for a company is 16%, a situation of unfavourable financial leverage will be said to arise when the rate of interest payable on debt capital is
(a) More than 16 %
(b) Less than 16 %
(c) Equal to 16%
(d) None of the above
Answer
Answer: (a) More than 16 %
Question 20.
The total capital of Uranium Private Limited is ?50 lacs. The amount of debt is ?20 lacs. The company has earned a profit of ^10 lacs during the current financial year. Its return on investment (ROI) for the present year is
(a) 20%
(b) 40%
(c) 10%
(d) 80%
Answer
Answer: (a) 20%
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