Financial Management
631. The degree of solvency of two firms can be compared by measuring
- Net worth
- Tangible Net Worth
- Asset coverage ratio
- Solvency Ratio
Correct answer: (D)
Solvency Ratio
632. Current ratio is 2:5.Current liability is Rs.30000.The Net working capital is
- Rs.18,000
- Rs.45,000
- Rs.(-) 45,000
- Rs.(-)18000
Correct answer: (D)
Rs.(-)18000
633. Stock is not included in the current assets when calculating the acid test ratio because:
- Stock is not a liquid asset
- Only debtors can be included, as they will be converted into cash shortly
- It makes comparison easier as only two current liabilities are included in the acid test ratio
- Banks only recognize cash and debtors as liquid assets
Correct answer: (A)
Stock is not a liquid asset
634. Which of the following is not an efficiency ratio?
- Asset turnover
- Stock Turnover
- Debtor days
- Interest cover
Correct answer: (D)
Interest cover
635. The objective of financial management is to maximize ______________ wealth.
- Select correct option:
- Stakeholders
- Shareholders
- Bondholders
- Directors
Correct answer: (C)
Shareholders
636. The four main financial objectives of a firm are:
- Efficiency, effectiveness, strength, and flexibility
- Power, success, efficiency, and effectiveness
- Control, effectiveness, liquidity, and power
- Success, strength, liquidity, and profitability
- Profitability, liquidity, efficiency, and stability
Correct answer: (E)
Profitability, liquidity, efficiency, and stability
637. The job of a finance manager is confined to
- Raising funds
- Management of cash
- Raising of funds and their effective utilization
- None of these
Correct answer: (C)
Raising of funds and their effective utilization
638. The strength and vigor of a firm's overall financial posture is referred to as:
- Liquidity
- Stability
- Effectiveness
- Profitability
- Efficiency
Correct answer: (B)
Stability
639. ______________ reflect past performance and are usually prepared on a quarterly and annual basis
- Chronological financial statements
- Ad-hoc financial statements
- Historical financial statements
- Concurrent financial statement
Correct answer: (C)
Historical financial statements
640. A source of funds is a:
- Decrease in a current asset
- Decrease in a current liability
- Increase in a current liability
- a and c above
Correct answer: (D)
a and c above