Financial Management (2024)

What is Financial Management?

Financial Management stands for the business work worried about the benefit, costs, money, and credit, such that the “association might possess the ability to complete its level-headed as agreeably as could be expected;” the last option is frequently characterized as boosting the worth of the firm for investors. Financial managers (FM) are specific experts straightforwardly answering to senior administration, frequently the monetary chief (FD); the capacity is viewed as ‘Staff’ and not ‘Line’.

Its Functions are:

1. Benefit augmentation happens when the negligible expense is equivalent to peripheral income. This is the fundamental goal of the Monetary Administration.
2. Keeping up with appropriate income is a short run objective of monetary administration. It is fundamental for activities to pay the everyday costs, for example natural substance, power bills, compensation, lease and so on. A decent income guarantees the endurance of an organization; see capital figure.
3. Minimization of capital expense in monetary administration can assist activities with acquiring benefits.

MCQs (Multiple Choice Questions)

Q.1. What does investment stand for?

1. 1. approximate increase in the national stocks
   2. the application of funds for the products and services employed for the production process
   3. use of funds for the assets with the purpose to earn returns
   4. applying money to buy a flat or a house

Answer: Option C.

Solution: A financial resource bought with the possibility that the resource will turn out revenue later on or will later be sold at a greater cost of the benefit is called investment.

Q.2. The ultimate concern of Financial Management is:

1. 1. to arrange the funds
   2. effective management of all the business
   3. receiving the maximum profit
   4. to acquire and utilize every aspect of financial resources in order to maintain the firm activities

Answer: Option D.

Solution: Financial Management is the use of general standards of the board to the monetary assets of a venture.

Q.3. The finance manager’s role is to:

1. 1. ensures that the funds are properly utilized
   2. maintains the financial health
   3. effective supervision of capital
   4. obtains capital assets of the organization

Answer: Option B.

Solution: In his conventional job, the money director is liable for the course of action of monetary assets.

Q.4. In the share market, the market value of any share is decided by:

1. 1. shareholders
   2. the government
   3. investment market
   4. the respective companies

Answer: Option C.

Solution: The market worth of the offers is chosen by the venture market. Market esteem is the value a resource would get in the commercial centre.

Q.5. The ultimate purpose of Financial management is:

1. 1. to get a maximum return
   2. to increase the wealth of owners
   3. to have a maximum risk factor
   4. to get a maximum profit

Answer: Option B.

Solution: All organizations mean to expand their benefits, limit their costs, and augment their piece of the pie.

Q.6. what is Capital Budgeting related to?

1. 1. short term assets
   2. long term assets
   3. long term as well as short term assets
   4. fixed assets

Answer: Option B.

Solution: Capital budgeting relates to long terms resources. Capital planning is the cycle a business attempts to assess likely significant tasks or speculations.

Q.7. CAPM stands for:

1. 1. Capital asset pricing model
   2. Capital asset printing Model
   3. Capital amount princing model
   4. Capital amount printing model

Answer: Option A.

Solution: The capital resource evaluating model (CAPM) is utilized to work out the expected pace of return for any hazardous resource.

Q.8. Among the following options which one is not included in money market security?

1. 1. Treasury bills
   2. Certificate deposit
   3. Commercial paper
   4. National savings certificate

Answer: Option D.

Solution: Public investment funds declaration isn’t a currency market protections.

Q.9. What does Working capital management, manage?

1. 1. long term assets
   2. long term liabilities
   3. short term assets and liabilities
   4. only short term liabilities

Answer: Option C.

Solution: Working capital administration is overseeing transient resources and liabilities.

Q.10. Any company’s average cost of capital is the average of:

1. 1. cost of equity preference shares
   2. cost of short term funds
   3. cost of shares and all sources of long term funds
   4. cost of equity shares and debentures

Answer: Option C.

Solution: The organization’s typical expense of capital is the typical expense of offers and all wellsprings of long haul reserves.

Q.11. What does present value take?

1. 1. Compounding rate
   2. Inflation rate
   3. Deflation rate
   4. Discounting rate

Answer: Option D.

Solution: Present value considers Discounting rate. Present worth (PV) is the ongoing worth of a future amount of cash or stream of incomes given a predetermined pace of return.

Q.12. What does future value interest factor take?

1. 1. Discounting rate
   2. Inflation rate
   3. Compounding rate
   4. Deflation rate

Answer: Option C.

Solution: Future worth premium element takes Accumulating rate. Future worth (FV) is the worth of an ongoing resource at a predefined date later on in light of an expected pace of development.

Q.13. What does the underwriter take up?

1. 1. a fixed part of the issued capital
   2. the unregistered portion of the agreed capital
   3. the guaranteed part or can refuse it
   4. the unfixed part of the issue capital

Answer: Option B.

Solution: The underwriter is bound to take the unsubscribed portion of the fund.

Q.14. Which one is/are financial assets?

1. 1. bonds
   2. machines
   3. stocks
   4. both a and c

Answer: Option D.

Solution: A financial asset is said to be a fluid resource which achieves its worth from an authoritative right or proprietorship guarantee. Cash, stocks, securities, shared assets, and bank stores are all are examples of financial assests.