Financial Management MCQs with Answers for MBA BBA exams

41. Objective function under the linear programming approach is ___.
Ans. Maximisation of the sum of NPVs of the projects

42. When the project is not divisible ___ can be employed to avoid the changes in accepting a fraction of a project.
Ans. Integer programming

43. The programming techniques of capital rationing are ___ and ___.
Ans. Linear programming and integer programming

44. The selection is done mainly in the view that which investment proposal earns ___than compared to the other proposals.
Ans. More profits

45. The proposal should have the potentiality of making large ___.
Ans. Anticipated profits

46. Maintaining adequate working capital at a satisfactory level is very crucial for the ___ and ___ of a firm.
Ans. Maintaining, Competitiveness.

47. Pre-paid expenses are ___.
Ans. Current assets.

48. Provision for tax is___.
Ans. Current Liabilities

49. A firm must have ___ neither excess nor shortage.
Ans. Adequate working capital

50. List any two components of current assets.
Ans. Inventories

51. List any two components of current liabilities.
Ans. Sundry debtors

52. ___ refers to the amounts invested in current assets.
Ans. Gross working capital

53. To ___ and monitor the utilisation of funds of a firm ___ is to be given top priority.
Ans. Plan, working capital management as applied.

54. When current assets exceed current liabilities the net working capital is ___.
Ans. Positive

55. Permanent working is called ___ working capital.
Ans. Fixed

56. Objective of working capital management is to achieve a trade-off between ___ and___.
Ans. Liquidity, Profitability.

57. Credit obtained by a firm from its suppliers is known as ___.
Ans. Spontaneous finance.

58. An aggressive policy of working capital management means depending on ___ to the maximum extent.
Ans. Spontaneous finance.

59. To prevent the competitors from snatching any market for their products the firm may have ___ a policy of holding ___ of current assets.
Ans. Conservative, Large quantum.

60. To finance the operations in ___ of firm working capital is required.
Ans. Operating cycle

61. To finance operations during the time gap between ___ and ___ time gap is required.
Ans. Sale of goods on credit, the realisation of money from customers.

62. The time gap between the acquisition of resources from suppliers and the collection of cash from customers is known as ___.
Ans. Operating cycle

63. ___ is the average length of time required to produce and sell the product.
Ans. Inventory conversion period

64. ___ is the average length of time required to convert the firms’ receivables into cash.
Ans. Receivables conversion period

65. ___ conversion cycle is the length of time between firms’ actual cash expenditure and its own receipt.
Ans. Cash Conversion cycle

66. Capital intensive industries require ___ amount of working capital.
Ans. Higher

67. There is a ___ between the volume of sales and the size of the working capital of a firm.
Ans. Positive direct correlation.

68. Under inflationary conditions the same level of inventory will require ___ investment in working capital.
Ans. Increased

69. Longer the manufacturing cycle, ___ the investment in working capital.
Ans. Larger

70. ___ is used to estimate the working capital requirements of a firm.
Ans. Operating cycle

71. Operating cycle approach is based on the assumption that production and sales occur on a ___.
Ans. Continuous bases

72. The factors involved in the estimation of the current liabilities are ___, ___ and ___.
Ans. Trade creditors, Direct wages and Overheads

73. Management of cash balances can be done by ___ and ___.
Ans. Deficit financing or investing surplus cash

74. The four motives for holding cash are ___, ___, ___ and ___.
Ans. The transaction, speculative, precautionary and compensating

75. The greater the creditworthiness of the firm in the market lesser is the need for ___ balances.
Ans. Precautionary

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