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Financial Management MCQ Questions and Solutions with Explanations | Commerce

Financial Management MCQ Questions and answers with easy and logical explanations. Commerce provides you all type of quantitative and competitive aptitude mcq questions with easy and logical explanations. Financial Management MCQ is important for exams like B.COM, M.COM, BBA, BBM, CA, CS, CMA, CPA, CFA, UPSC, NET, Banking and other commerce department exam. Page-9 section-3

Each section contains 100 MCQs on Financial Management .
81
Price per share is Rs 25 and cash flow per share is Rs 6 then price to cash flow ratio would be
Discuss
Answer & Solution
Answer: Option B
Solution:
Price to cash flow ratio = Price per share ÷ Cash flow per share = Rs. 25 ÷ Rs. 6 = 4.16 times
82
Low price for earning ratio is result of
Discuss
Answer & Solution
Answer: Option A
Solution:
Low price for earning ratio is result of low risky firms. The price-earnings ratio, also known as P/E ratio, P/E, or PER, is the ratio of a company's share price to the company's earnings per share.
83
Profit margin = 4.5%, assets turnover = 2.2 times, equity multiplier = 2.7 times then return on equity will be
Discuss
Answer & Solution
Answer: Option A
Solution:
Return on Equity (ROE) = Net Profit Margin x Asset Turnover Ratio x Equity Multiplier.
= 4.5% x 2.2 x 2.7
= 26.73%
84
Formula such as net income available for common stockholders divided by total assets is used to calculate
Discuss
Answer & Solution
Answer: Option A
Solution:
Formula such as net income available for common stockholders divided by total assets is used to calculate return on total assets. The ratio is considered to be an indicator of how effectively a company is using its assets to generate earnings.
85
Price per ratio is divided by cash flow per share ratio which is used for calculating
Discuss
Answer & Solution
Answer: Option D
Solution:
Price per ratio is divided by cash flow per share ratio which is used for calculating price to cash flow ratio. The price-to-cash flow (P/CF) ratio is a stock valuation indicator or multiple that measures the value of a stock's price relative to its operating cash flow per share.
86
A techniques uses to identify financial statements trends are included
Discuss
Answer & Solution
Answer: Option D
Solution:
A techniques uses to identify financial statements trends are included in common size analysis and percent change analysis.
87
Net income available to stockholders is Rs 150 and total assets are Rs 2,100 then return on total assets would be
Discuss
Answer & Solution
Answer: Option B
Solution:

Net income available to stockholders = 150
Total assets = 2100
Return on common equity rate shows the net income earned per every rupee invested.It acts as a yardstick of profitability.
Return on common equity
= (net income - preferential stock)/Average common stock holder's equity
No further information is available
= (150/2100)×100
= 7.14%
88
A formula such as net income available to common stockholders divided by common equity is used to calculate
Discuss
Answer & Solution
Answer: Option C
Solution:
A formula such as net income available to common stockholders divided by common equity is used to calculate return on common equity. The Return on Common Equity (ROCE) ratio refers to the return that common equity investors receive on their investment.
89
Companies that help to set benchmarks are classified as
Discuss
Answer & Solution
Answer: Option B
Solution:
Companies that help to set benchmarks are classified as benchmark companies. Benchmarking is the practice of comparing business processes and performance metrics to industry bests and best practices from other companies.
90
Total assets divided common equity is a formula uses for calculating
Discuss
Answer & Solution
Answer: Option A
Solution:
Total assets divided common equity is a formula uses for calculating equity multiplier. The equity multiplier is a financial leverage ratio that measures the amount of a firm's assets that are financed by its shareholders by comparing total assets with total shareholder's equity.