Financial Management MCQ Questions for Class 12 Business Studies Chapter 9 with Answers

We have completed the NCERT/CBSE chapter-wise Multiple Choice Class 12 Business Studies Chapter 9 Financial Management with Answers by expert subject teacher for latest syllabus and examination. Prepare effectively for the exam taking the help of the Class 12 Business Studies Objective Questions PDF free of cost from here. Students also can take a free test of the Multiple Choice Questions of Financial Management. Each Questions has four options followed by the right answer. Download the Business Studies Quiz Questions with Answers for Class 12 Pdf and prepare to help students understand the concept very well.

MCQ Questions for Class 12 Business Studies with Answers

Q1. Which of the following affects the Dividend Decision of a company?

(i) Taxation Policy
(ii) Cash Flow Position
(iii) Earnings
(iv) All of the above

(iv) All of the above

Q2. Companies with a higher growth potential are likely to

(i) Pay lower dividends
(ii) Pay higher Dividends
(iii) Dividends are not affected
(iv) None of the above

(i) Pay lower dividends

Q3. A decision to acquire a new and modern plant to upgrade an old one is a:

(i) financing decision
(ii) working capital decision
(iii) investment decision
(iv) None of the above

(ii) working capital decision

Q4. If dividend portion of total earnings is high, portion of retained earnings will be

(i) high.
(ii) low.
(iii) moderate.
(iv) equal.

(ii) low.

Q5. Primary aim of financial management is to

(i) Maximise shareholder’s wealth
(ii) Wealth maximisation concept
(iii) Maximisation of the market value of equity shares
(iv) All of the above

(iv) All of the above

Q6. Higher working capital usually results in:

(i) Higher equity, lower risk, and lower profits
(ii) Lower current ratio, higher risk, and profits
(iii) Lower equity, lower risk, and higher profits
(iv) Higher current ratio, higher risk, and higher profits

(iv) Higher current ratio, higher risk, and higher profits

Q7. Higher debt – equity ratio results in:

(i) Lower financial risk
(ii) Higher degree of operating risk
(iii) Higher degree of financial risk
(iv) Higher EPS.

(iii) Higher degree of financial risk

Q8. Current assets are those assets which get converted into cash:

(i) within six months
(ii) within one year
(iii) between one and three years
(iv) between three and five years

(i) within six months

Q9. Capital structure shows

(i) Debtor-creditor ratio.
(ii) Fixed assets-current assets ratio.
(iii) Debt-equity ratio.
(iv) Interest coverage ratio.

(iii) Debt-equity ratio.

Q10. Purchasing a new machine to replace an existing one is an example of

(i) Financing decision
(ii) Dividend decision
(iii) Working capital decision
(iv) Capital budgeting decision

(iv) Capital budgeting decision

Q11. Which of the following is not concerned with the Long term investment decision

(i) Management of fixed capital
(ii) Inventory management
(iii) Research and Development Programme
(iv) Opening a new branch

(ii) Inventory management

Q12. Current assets are those assets which get converted into cash:

(i) Within six months
(ii) Within one year
(iii) Between one year and three years
(iv) Between three and five years.

(ii) Within one year

Q13. A fixed asset should be financed through:

(i) a long-term liability
(ii) a short-term liability
(iii) a mix of long and short-term liabilities
(iv) None of Above

(iii) a mix of long and short-term liabilities

Q14. Working capital requirements are low when an organisation has

(i) high technology.
(ii) high debtors.
(iii) high inventory.
(iv) high creditors.

(iv) high creditors.

Q15. These decisions affect the liquidity as well as profitability of a business.

(i) Capital budgeting decision
(ii) Financing decision
(iii) Working capital decision
(iv) Dividend decision

(iii) Working capital decision

Q16. Other things remaining the same, an increase in the tax rate on corporate profits will:

(i) Make the debt relatively cheaper
(ii) Make the debt relatively the dearer
(iii) Have no impact on the cost of debt
(iv) None of the above

(i) Make the debt relatively cheaper

Q17. Current assets of a business firm should be financed through:

(i) Current liability only
(ii) Long term liability only
(iii) Fixed liabilities only
(iv) None of Above

(i) Current liability only

Q18. The working capital requirement of a business is not likely to be high when?

(i) The nature of business is trading
(ii) Scale of operation of business is small
(iii) It is difficult to procure raw material
(iv) The rate of inflation is low

(iii) It is difficult to procure raw material

Q19. The inability of a business to meet its fixed financial obligations, like payment of interest, is known as

(i) Business risk
(ii) Financial risk
(iii) Long-term risk
(iv) Market risk

(ii) Financial risk

Q20. Financial planning arrives at:

(i) Doing only what is possible with the funds that the firms have at its disposal
(ii) Entering that the firm always have significantly more funds than required so that there is no paucity of funds
(iii) Minimising the external borrowing by resorting to equity issues
(iv) Ensuring that the firm faces neither a shortage nor a glut of unusable funds

(iv) Ensuring that the firm faces neither a shortage nor a glut of unusable funds

Q21. Which of the following statements is not true with regard to use of fixed capital?

(i) It affects the long term growth of the business.
(ii) Large amount of funds are involve(iv)
(iii) The business risk involved is low.
(iv) The investment decisions are irreversible.

(iii) The business risk involved is low.

Q22. Which of the following sources of capital should not be selected by a business if its fixed cost is high?

(i) Equity shares
(ii) Preference shares
(iii) Debentures
(iv) All of the above

(iii) Debentures

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MCQ Questions for Class 12 Business Studies with Answers

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