Financial Management MCQ Questions and Solutions with Explanations | Commerce (2024)

FAQs

What is the ultimate concern of financial management is mcqs with answers? ›

The correct answer is Wealth maximization. Basic objective of financial management is Wealth maximization. It is concerned with optimal procurement as well as the usage of finance. It aims at reducing the cost of funds procured, keeping the risk under control and achieving effective deployment of such funds.

Solution: Financial Management is mainly concerned with all aspects of acquiring and utilizing financial resources for firms activities.

Financial Management is a study of planning, designing, directing and managing the economic activities such as the utilization of capital and acquisition of the firm. To put it in other words, it is applying general management standards to the financial resources of the firm.

With the help of above explanation control function of financial manager include variance between standard costs and actual cost. Hence the correct answer is to analyse variance between standard costs and actual costs.

Typically, the primary goal of financial management is profit maximization. Profit maximization is the process of assessing and utilizing available resources to their fullest potential to maximize profits. This has the greatest benefit for company shareholders hoping for the highest possible return on their investment.

Answer and Explanation: Wealth maximization is objective of any firm. The wealth is increase in value of the firm in long run. The value could be represented as profit also.

Among the options provided, keeping an up-to-date record of past operations (option A) is generally considered the least important of the financial manager's responsibilities.

The correct answer is investment, financing, and asset management. There are three major decision areas in financial management i.e. investment decision, financing decision, and dividend decision. It's asset creation for revenue. Investment decisions involve asset selection.

The term financial management means obtaining and managing funds. And the primary objective of financial management is to increase the firm's value. So, what is the concept of financial management? There are two basic concepts of financial management, obtaining funds and utilising these funds.

What is the father of financial management? ›

Eugene F. Fama, 2013 Nobel laureate in economic sciences, is widely recognized as the "father of modern finance." His research is well known in both the academic and investment communities.

The long run objective of financial management is to maximize the value of the firm's common stock.

Wealth maximization (shareholders' value maximization) is also a main objective of financial management. Wealth maximization means to earn maximum wealth for the shareholders.

The financial manager must decide how much money is needed and when, how best to use the available funds, and how to get the required financing. The financial manager's responsibilities include financial planning, investing (spending money), and financing (raising money).

Financial structure-

In order to meet the company's long-term and short-term capital needs, the financial structure refers to the sources of capital and the percentage of financing that comes from short-term liabilities, short-term debt, long-term debt, and equity.

Financial management is the business function concerned with profitability, expenses, cash and credit. These are often grouped together under the rubric of maximizing the value of the firm for stockholders.

Therefore, the goal of financial management is to maximise the current value per share of the existing stock.

Financial management is concerned with the acquisition, financing, and management of assets with some overall goal in mind. Thus, the function of financial management can be broken down into 3 major decision areas: Investment, financing, and asset management decisions.

with acquiring, financing and managing assets to accomplish the overall goal of a business enterprise (mainly to maximise the shareholder's wealth). “Financial management is concerned with the efficient use of an important economic resource, namely capital funds”.