MCQ Question for Class 12 Business Studies Chapter 9 Financial Management

Check the below NCERT MCQ Class 12 Business Studies Chapter 9 Financial Management with Answers available with PDF free download. MCQ Questions for Class 12 Business Studies with Answers were prepared based on the latest syllabus and examination pattern issued by CBSE, NCERT and KVS. Our teachers have provided below Financial Management Class 12 Business Studies MCQs Questions with answers which will help students to revise and get more marks in exams

Financial Management Class 12 Business Studies MCQs Questions with Answers

Refer below for MCQ Class 12 Business Studies Chapter 9 Financial Management with solutions. Solve questions and compare with the answers provided below

Question. There is more need of working capital in businesses where the demand to be seasonal. What out of the following is the cause?
(a) Capital remains stuck up for a long time in the raw material
(b) Capital remains stuck up for a long time in the manufactured goods
(c) Both the above
(d) More machines are needed

Question. The objective of working capital is to determine the ________ amount of current assets and current liabilities.
(a) Maximum
(b) Minimum
(c) Optimum
(d) Equal

Question. Fixed assets investment decision is called ________ .
(a) Management of working capital
(b) Capital budgeting
(c) Financing decision
(d) None of these

Question. Why is working capital important?
(a) To buy land
(b) To buy building
(c) To make payment for routine expenses
(d) To buy machine

Question. Financial planning means ________ of financial activities.
(a) Determining
(b) Pre-determining
(c) Later -determining
(d) Not determining

Question. What does affect the value of company?
(a) Capital cost
(b) Market price of shares
(c) Both (a) and (b)
(d) None of these

Question. Under financial management a forecast of receipts and payments is made and the shortage or sufficiency of ________ is ensured.
(a) Capital
(b) Human resource
(c) Material
(d) All the above

Question. ________ is not included in owner’s capital?
(a) Equity share capital
(b) Long-term debt
(c) Preference share capital
(d) Retained profit

Question. Without ________ no business planning can be successfully implemented.
(a) Dividend decision
(b) Investment decision
(c) Both of above
(d) Financial planning

Question. Which branch of management does take care of the efficient planning and controlling of the financial activities of an organisation?
(a) Production management
(b) Financial management
(c) Marketing management
(d) Personnel management

Question. ________ will be the amount of net working capital if the value of current assets is ™ 50,000 and the current liabilities is ™35,000?
(a) ™ 50,000
(b) ™ 35,000
(c) ™15,000
(d) ™ 85,000

Question. What is the chief financial question before an organisation?
(a) How much finance will be required for various business activities.
(b) How much amount can be acquired from various resources.
(c) How the profit of the business will be divided.
(d) All of these

Question. Use of machines makes the use of fixed capital ________ .
(a) More
(b) Nil
(c) Less
(d) Very little

Question. That part of management which is connected with the financial activities is called ________ management.
(a) Personnel
(b) Financial
(c) Production
(d) All the above

Question. When the fixed assets are available on rent the need for fixed capital is ________.
(a) More
(b) Excessive
(c) Nil
(d) Less

Question. What is included in financial planning?
(a) Determining financial objectives
(b) Determining financial policies
(c) Determining financial procedures
(d) All of these

Question. With the help of financial planning capital can be made available at ________ cost.
(a) More
(b) Medium
(c) Minimum
(d) Zero

Question. What out of the following, financial planning helps to achieve?
(a) Arrangement of material
(b) Financial control
(c) Arrangement of machinery
(d) All of above

Question . What capital out of the following is better with reference to control?
(a) Equity Share Capital
(b) Preference Share Capital
(c) Debt Capital
(d) None of these

Question. Which out of the following happens to be a financial decision?
(a) Investment decision
(b) Financing decision
(c) Dividend decision
(d) All of these

Question. Those organisations which make cash sales need ________ working capital.
(a) Less
(b) Nil
(c) More
(d) Very much

Question. Capital Structure is called ________ .
(a) Quantitative aspect
(b) Qualitative aspect
(c) Both (a) and (b)
(d) None of these

Question. Which investment decisions are difficult to be changed?
(a) Fixed capital decision
(b) Working capital decision
(c) Both (a) & (b)
(d) None of these

Question. Keeping in view the high rate of Income Tax the company should give priority to ________ capital.
(a) Debt
(b) Equity
(c) Preference
(d) Owner

Question. With the help of the financial planning a situation of continuous ________ can be maintained.
(a) Minimum Capital
(b) Liquidity
(c) Maximum Capital
(d) (b) and (c)

Question. What is influenced by the financing decision?
(a) Market price of shares
(b) Cost of capital
(c) Both (a) and (b)
(d) None of these

Question. What is the meaning of the management of working capital?
(a) To maintain the continuity of sufficient amount of working capital.
(b) To make cash available in large amount.
(c) To keep the working capital at the minimum level.
(d) To keep the working capital at the maximum level.

Question. Enough working capital is an index of the ________ of business.
(a) Strength
(b) Weakness
(c) Liquidity
(d) Loss

Question. What out of the following is the effect of optimum capital structure?
(a) Capital cost-minimum
(b) Total value of company-maximum
(c) Both (a) and (b)
(d) Market price of shares minimum

Question. What is included in financial management according to the traditional approach?
(a) Arranging finance
(b) Using finance effectively
(c) Both (a) and (b)
(d) None of these

Question. What capital out of the following should be used in case of low rate of interest on debt?
(a) Equity Share Capital
(b) Preference Share Capital
(c) Debt Capital
(d) None of these

Question. Shareholder’s current wealth in a company = ________ × ________ .
(a) Face value of shares × Market price per share
(b) Number of shares × Face value of shares
(c) Number of shares × Market price per share
(d) Number of shares × Profit per share

Question. The meaning of capital structure relates to the percentage of ________ sources.
(a) Long-term
(b) Medium term
(c) Short-term
(d) Current

Question. Fixed capital means that capital which is used in purchasing ________ assets.
(a) Current assets
(b) Fixed assets
(c) Material
(d) All the above

Question. ________ is the example of a financial decision.
(a) Investment decision
(b) Financing decision
(c) Dividend decision
(d) All of these

Question. The difference between current assets and current liabilities is called ________.
(a) Net working capital
(b) Gross working capital
(c) Fixed capital
(d) Working capital

Question. What out of the following happens because of the optimum amount of working capital?
(a) Profitability increases
(b) No decrease in liquidity
(c) Both (a) & (b)
(d) Decrease in liquidity

Question. In what type of organisations is the investment in fixed assets essential?
(a) Trading
(b) Manufacturing
(c) Both (a) & (b)
(d) None of these

Question. ________ capital should be preferred while arranging for a long-term finance?
(a) Preference share capital
(b) Equity share capital
(c) Debt or borrowed capital
(d) Retained earning

Question. What is the decision to invest in fixed assets called?
(a) Management of working capital
(b) Capital budgeting
(c) Financing decision
(d) None of these

Question. A person buys 100 shares @ ™100 per share of XYZ company. After some time the market price of shares becomes ™120 per share. How much wealth shall he have in the company.
(a) ™12,000
(b) ™ 8,000
(c) ™ 10,000
(d) ™ 10,120

Question. What capital out of the following should be used in case of better cash flow position?
(a) Debt Capital
(b) Equity Share Capital
(c) Both of the above
(d) None of these

Question. Which of the following is not included in current assets?
(a) Cash
(b) Stock
(c) Debtor
(d) Long-term investment

Question. The importance of ‘Trading on Equity’ lies in the fact that if the company is earning more profit, it can make use of borrowed capital and preference share capital and by doing so it can increase the income of ________
(a) Preference Shareholders
(b) Lenders
(c) Equity Shareholders
(d) Government

Question. In case of price-rise ________ working capital is required in order to maintain the previous level of production.
(a) Less
(b) More
(c) Nil
(d) Very little

Question. A company is attracted to what capital out of the following with reference to floatation costs?
(a) Equity Share Capital
(b) Preference Share Capital
(c) Debt Capital
(d) None of these

Fill In The Blanks :

Question. The decision involved in expenditures on advertising campaign or research and development programme is called _____. 

Question. The decision in financial management which affects the growth, profitability and risk of the business is called _____. 

Question. Koby Ltd. is an 87-year-old reputed consumer goods company. It is known for offering good quality electronic products at reasonable prices. It has branches all over India. It has a large shareholder base. The shareholders desired that some dividend is paid every year on their investments. Company’s management understands that it is important to keep the shareholders happy and satisfied. As a matter of policy, they declare a certain amount of dividend every year out of profits rather than reinvesting the whole as retained earnings. The factor affecting dividend decision being highlighted in the above situation is  ________ . 

Question. ___________ is concerned with optimum procurement as well as the usage of finance.

Question. The decision in financial management which influences the overall business risk complexion of the firm is called ______. 

Question. _____________ aims at mobilisation of financial resources at a lower cost and deployment of these in most lucrative activities. 

Question. The primary aim of financial management is _______________. (Complete the sentence)

Question. For optimal procurement of funds, a finance manager identifies different available sources and compares those in terms of costs and associated risks. The concept highlighted in the above lines is ________. 

Question. Capital budgeting decisions need to be taken with utmost care because _______.

Question. The primary aim of financial management is shareholders wealth maximisation, which means __________________ (Complete the sentence) 

Question. _______________ relates to how the firm’s funds are invested in different assets. 

Question. _____________ aims at reducing the cost of funds procured, keeping the risk under control and achieving effective deployment of such funds. (Financial management/Financial planning).

Question. The financial decision which will help a businessman in opening a new branch of its business is called ______. Capital Budgeting decision/Investment decision

Question. A long-term investment decision is also called a _____________________. 

Question. _____________ involves committing the finance on a long-term basis. 

True / False :

Question. The extent of retained earnings also influences the financing decision of the firm. True/False? Give reason. 

Question. Dividend division should be taken keeping in view the overall objective of maximising shareholders wealth. True/False? 

Question. Higher dividends may be declared if tax rates are relatively higher. True/False? Give reason. 

Question. “Other things remaining the same, a company having stable earnings is in a better position to declare higher dividends.” (True/False) 

 Question. The dividend in growth companies is smaller than that in the non-growth companies. True/False? Give reason. 

Question. What is the effect of increased use of debt on the overall cost of capital? 

Question. Name the decision in financial management which determines the overall cost of capital and the financial risk of the enterprise. 

Question. What does a higher business risk indicate? 

Question. The decision to invest in a particular project involves a number of calculations regarding. (Complete the sentence) 

Question. Financial management is concerned with the solution of three major issues relating to the financial operations of a firm, namely decisions.

Question. Avik is the finance manager of Mars Ltd. In the current year, the company earned high profit. However, Avik thinks that it is better to declare smaller dividend as he is unsure about the earning potential of the company in the coming years. Avik’s choice of dividend decision is based on which of the factor that affect it?

Question. During the period when stock market is rising, more people invest in equity. However, depressed capital market may make issue of equity shares difficult for any company. 

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