Financial & Strategic Management - Past year Question Paper MCQ's - Chapter -1




1. Which of the following is true regarding financial decisions of a firm? (DEC 2019)

(A) Investment Decisions are dependent on Financing Decisions.

(B) Financing Decisions are dependent on Dividend Decisions.

(C) Dividend Decisions are dependent on Investment Decisions.

(D) All the three decisions are inter-related.

Option-(D) All the three decisions are inter-related.


2. The competing objectives of financial management have been: (DEC 2019)

(A) Profit Maximization and Wealth Maximization

(B) Profit Maximization and Economic Value Maximization

(C) Economic Value Maximization and Wealth Maximization

(D) EPS Maximization and Economic Value Maximization

Option-(A) Profit Maximization and Wealth Maximization


3. Capital Budgeting Decisions are part and parcel of: (DEC 2019)

(A) Financing and Investing Decisions

(B) Investing and Dividend Decisions

(C) Financing and Dividend Decisions

(D) Only Investing Decisions

Option-(D) Only Investing Decisions


4. Find the correct statement regarding the profit maximization: (DEC 2020)

(A) Profit maximization considers the firm’s risk level.

(B) Profit maximization will not lead to increasing short-term profits at the expense of lowering expected future profits.

(C) Profit maximization does consider the impact on individual shareholder’s EPS.

(D) Profit maximization is concerned more with maximizing net income than the stock price.

Option-(D) Profit maximization is concerned more with maximizing net income than the stock price.


5. From which of the following, Economic Value Added (EVA) will not increase: (DEC 2020)

(A) Operating profits grow without employing additional capital

(B) Unproductive capital is liquidated

(C) Cash flow generated by a business equal to the cost of the capital

(D) Additional capital is invested in the projects, that give higher returns than the cost of procuring new capital

Option-(C) Cash flow generated by a business equal to the cost of the capital


6. ……….is the most appropriate goal of the firm. (DEC 2020)

(A) Shareholder wealth maximization

(B) Profit maximization

(C) Stakeholder maximization

(D) EPS maximization

Option-(A) Shareholder wealth maximization


7. Earnings per share can be calculated as: (DEC 2020)

(A) Use the income statement to determine earnings after taxes (net income) and divide by the previous period’s earnings after taxes. Then subtract 1 from the previously calculated value.

(B) Use the income statement to determine earnings after taxes (net income) and divide by the number of common shares outstanding.

(C) Use the income statement to determine earnings after taxes (net income) and divide by the number of common and preferred shares outstanding.

(D) Use the income statement to determine earnings after taxes (net income) and divide by the forecasted period’s earnings after taxes. Then subject 1 from the previously calculated value.

Option-(B) Use the income statement to determine earnings after taxes (net income) and divide by the number of common shares outstanding.


8. The main function of a financial manager include the following except: (DEC 2020)

(A) Asset Management

(B) Capital Structure Planning

(C) Fund Management

(D) Internal Control and Audit

Option-(D) Internal Control and Audit

9. ............means the management of an organization maximizes the present value not only for shareholders but for all including employees, customers, suppliers and community at large. (AUG 2021)

(A) Profit Maximisation

(B) Wealth Maximisation

(C) EVA

(D) MVA

Option-(B) Wealth Maximisation


10. Financial Management is mainly concerned with: (AUG 2021)

(A) Acquiring and developing assets to forfeit its overall benefit

(B) Acquiring, financing and managing assets to accomplish the overall goal of a business enterprise

(C) Efficient management of the business

(D) Sole objective of profit maximization

Option-(B) Acquiring, financing and managing assets to accomplish the overall goal of a business enterprise


11. Which of the following need not be followed by the finance manager for measuring and maximizing shareholders’ wealth? (AUG 2021)

(A) Accounting profit analysis

(B) Cash Flow approach

(C) Cost benefits analysis

(D) Application of time value of money

Option-(A) Accounting profit analysis

12. From the following calculate Economic Value Added (EVA): Capital invested 50,000; operating profit after tax 20,000; opportunity cost is 10%. (DEC 2021)

(A) ₹ 15,000

(B) ₹ 20,000

(C) ₹ 30,000

(D) ₹ 50,000

Option-(A) ₹ 15,000 

Working Note: EVA = 20,000 – (50,000 × 10%) = 20,000 – 5,000 = 15,000

13. Efficiency of production operations and the relationship between production cost and selling price is resulting of: (DEC 2021)

(A) Net profit before taxes

(B) Net profit before taxes and deferred expenses

(C) Gross profit margin

(D) Gross profit plus realization from production wastages

Option-(C) Gross profit margin

14. The goal of Economic Value Added (EVA) is to take into account the in the company. (DEC 2021)

(A) Cost of investments

(B) Cost of insurance

(C) Cost of capital invested

(D) Cost of non-service capital invested

Option-(C) Cost of capital invested

15. The finance manager of the company can take care of duties such as:

(1) Forecasting of sales

(2) Raising funds

(3) Managing funds

(4) Managing board of directors meeting

Correct combinations of emerging roles of finance manager are: (DEC 2021)

(A) 1, 2 and 3

(B) 1, 2 and 4

(C) 2 and 3

(D) 2, 3 and 4


Option-(C) 2 and 3

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