MCQ on Financial Management:

• Financial management refers to the management of investment, financing and working capital, and profit distribution under certain overall objectives.
• Financial management is an integral part of enterprise management. 
• It is an economic management work that organizes enterprise financial activities and deals with financial relations in accordance with financial laws and regulations and the principles of financial management.
• The main contents of financial management include financial goals and functions, the concept of valuation, market risk and rate of return, multi-variable and factor valuation models, option valuation, capital investment principles, risk and practical options in capital budgeting, etc. 
• Its goals are maximization of output value, maximization of profits, maximization of shareholder wealth, maximization of enterprise value and maximization of interests of related parties.

Financial Management Questions and Answers Pdf: 

1. What is financial management?

A. Financial Management is a study of planning, designing, directing and managing the economic activities such as the utilization of capital and acquisition of the firm. 

B. Financial management is strategic planning, organising, directing, and controlling of financial undertakings in an organisation or an institute.

C. Both A and B

D. Only B

Answer: C

2. Financial management is mainly concerned with________

A. All aspects of acquiring and utilizing financial resources for firms activities

B. Arrangement of funds

C. Efficient Management of every business

D. Profit maximisation

Answer: A

3. Financial management deals with_________

A. Investments

B. Financing decisions

C. Profit Maximization 

D. Arrangement of Loss

Answer: B

4. Financial Planning helps in_________

A. Managing Business

B. Managing Human Resources

C. Forecasting Business Situations

D. All of the above

Answer: C

5. The long-run objective of financial management is to________.

A. maximize earnings per share

B. maximize the value of the firm’s common stock

C. maximize return on investment

D. maximize market share

Answer: B

6. The only feasible purpose of financial management is__________

A. wealth maximization

B. sales maximization

C. profit maximization

D. asset maximization

Answer: A

7. Financial management process deals with_________

A. Investments

B. Financing decisions

C. Both a and b

D. None of the above

Answer: B

8. Financial management mainly focuses on_________

A. Efficient management of every business

B. Brand dimension

C. Arrangement of funds

D. All elements of acquiring and using means of financial resources for financial activities

Answer: D

9. Which are financial assets?

A. Cash, 

B. stocks, 

C. bonds and mutual funds

D. All of these 

Answer: D

10. The essence of funding is________

A. The value of a commodity B. Money funds

C. The value of the property 

D. value in motion during reproduction

Answer: D

11. The core work link of financial management is_______

A. financial forecast 

B. financial decision 

C. financial budget 

D. Financial Control

Answer: B

12. The goals of business management can be summarized as_________

A. survive  

B. develop 

C. profit

D. All of these 

Answer: D

13. The concept of Financial management is________

A. Profit maximization

B. All features of obtaining and using financial resources for company operations

C. Organization of funds

D. Effective Management of every company

Answer: B

14. The basic condition for enterprises to survive in the market is__________

A. Incentive for business operators 

B. To offset expenses 

C. Debt repayment when due D. Both B and C

Answer: C

15. What is the primary goal of financial management?

A. To minimise the risk

B. To maximise the owner’s wealth

C. To maximise the return

D. To raise profit

Answer: B

16. In the following various viewpoints, the financial management goal that can not only consider the time value of money and investment risk, but also help to overcome one-sidedness and short-term behavior in management is_______

A. Profit maximization. 

B. Enterprise value maximization 

C. Earnings per share maximization 

D. Capital return maximization

Answer: B

17. CAPM stands for_________

A. Capital asset pricing model.

B.cCapital amount printing model.

C. Capital amount pricing model.

D. Capital asset printing model.

Answer: A

18. The advantages of taking the maximization of enterprise value as the goal of enterprise financial management are________

A. The time value of money is considered 

B. The risk value of the investment is considered

C. Conducive to the rational allocation of social resources D. All of these 

Answer: D

19. Objectives of financial planning are________

A. determining capital structure

B. framing loan policies

C. determining cash requirement

D. determining finance ratio

Answer: A

20. Profit maximization cannot be a corporate financial goal for a reason_______

A. Does not consider the time when the profit is obtained 

B. Does not consider the relationship between profit and invested capital

C. Does not consider the size of profit and risk

D. All of these 

Answer: D

21. Financial manager would not supervise on the following area________

A. cost analyst

B. working capital advisor

C. financial accounting and auditing

D. cash flow advisor

Answer: C

22. Taking shareholder wealth maximization as the general goal of financial management has the advantages of__________

A. Taking into account the time factor of earnings 

B. Can overcome short-term behavior

C. Consider the risk-return relationship

D. All of these 

Answer: D

23. Financial management attaches great importance to the level of stock prices, because of its________

A. Represents the public’s evaluation of the company’s value 

B. Reflects the relationship between capital and profitability

C. Reflect the size of earnings per share and risk 

D. Reflects the degree to which financial management objectives have been achieved

E. All of these 

Answer: E

24. What is the task of finance manager?

A. Financial managers are responsible for the financial health of an organization. B. They produce financial reports, direct investment activities.

C. Develop strategies and plans for the long-term financial goals of their organization

D. All of these 

Answer: D

25. Profit maximization is not the optimal financial management goal of an enterprise for reasons including_______

A. It cannot directly reflect how much surplus products the company creates

B. Does not take into account the relationship between profit and the amount of invested capital

C. Does not consider the time of profit and the size of the risk

D. Both B and C

Answer: D

26. The disadvantage of maximizing the rate of return on capital as a financial objective is________

A. Does not reflect the level of profitability of capital 

B. Risk factors and time value are not considered 

C. Nor can the short-term behavior of enterprises be avoided

D. Both B and C

Answer: D

True or False on Financial Management:

1. The maximization of profit rate on capital takes into account the relationship between profit and invested capital, and overcomes the shortcomings of profit maximization to a certain extent. 

A. True

B.  False

Answer: A

2. The distribution activities of the enterprise only have an impact on the interests of shareholders and have no impact on the financing structure of the company. 

A. True

B.  False

Answer: B

3. Enterprise value is the market value of all the assets of the enterprise, which reflects the level of cash profit that the enterprise has obtained.

A. True

B.  False

Answer: B

4. “Dismissal” is a way to restrain operators through the market. 

A. True

B.  False

Answer: A

5. According to the principle of symmetry between risk and return, high-risk investment projects will inevitably obtain high returns. 

A. True

B.  False

Answer: B

6. The so-called shareholder wealth maximization refers to the maximization of the value of corporate shareholders’ equity. 

A. True

B.  False

Answer: B

7. If the enterprise is exposed to greater risks, then the enterprise value may decrease. 

A. True

B.  False

Answer: A

8. The purpose of a legal person shareholder holding another company’s stock may be for controlling or stabilizing the purchase and sale relationship, but there is not enough interest in the company’s stock price maximization goal. 

A. True

B.  False

Answer: A

9. Profit maximization goals and corporate value maximization goals cannot coexist. 

A. True

B.  False

Answer: B

10. In the method of reconciling the contradiction between the owner and the operator, “receiving” is a method of restraining the operator through the owner. 

A. True

B.  False

Answer: B

11. Financial management is based on the objectively existing production activities and financial relations in the production and operation process of an enterprise.

A. True

B.  False

Answer: B

12. The capital movement of an enterprise not only reflects the increase or decrease of money and things, but also reflects the economic interest relationship between people. 

A. True

B.  False

Answer: A

13. Taking the maximization of enterprise value as the goal of financial management is conducive to the rational allocation of social resources. 

A. True

B.  False

Answer: A

14. Financial analysis can improve financial forecasting, decision-making, budgeting and control, improve the management level of enterprises, and improve the economic benefits of enterprises. Therefore, financial analysis is the core of financial management. 

A. True

B.  False

Answer: B

15. If the existing funds of the enterprise cannot meet the needs of the enterprise’s operation, it is necessary to take short-term borrowing to raise the required funds, which will result in the receipt and payment of the enterprise’s funds, which is a financing activity. 

A. True

B.  False

Answer: B