Financial Management

Financial Management MCQs with Answers and Explanations | Corporate Finance & Investment Objective Questions

Master the core concepts of Financial Management with our comprehensive set of MCQs with answers and detailed explanations. Covering topics such as time value of money, capital budgeting, cost of capital, working capital management, capital structure, dividend policy, risk and return, portfolio management, and financial planning, these questions are ideal for students, teachers, and candidates preparing for professional and competitive exams (CA, ACCA, ICMA, CFA, MBA, BBA, CSS, PMS, NTS, FPSC, PPSC, UPSC, etc.). Each MCQ is followed by a clear explanation to build strong concepts, sharpen decision-making skills, and enhance exam readiness. Perfect for practice, revision, and self-assessment in the field of Financial Management and Corporate Finance.

141. Number of shares outstanding if it is divided by net income for using to calculate

by
earning per share
dividends per share
book value of share
market value of shares
✅ The correct answer is A.
Number of shares outstanding if it is divided by net income for using to calculate earning per share. Earnings per share or EPS is an important financial measure, which indicates the profitability of a company. It is calculated by dividing the company’s net income with its total number of outstanding shares.

142. Other factors held constant, greater project liquidity is because of

by
less project return
greater project return
shorter payback period
greater payback period
✅ The correct answer is C.
Other factors held constant, greater project liquidity is because of shorter payback period. The payback period is the cost of the investment divided by the annual cash flow. The shorter the payback, the more desirable the investment.

144. Securities with less predictable prices and have longer maturity time is considered as

by
cash equivalents
long-term investments
inventories
short-term investments
✅ The correct answer is D.
Securities with less predictable prices and have longer maturity time is considered as short-term investments. Short-term investments are designed to provide considerable returns in a short period of time, which could be a few months or even a year.

145. Required increasing in current assets and an increasing in current liabilities is subtracted to calculate

by
change in net working capital
change in current assets
change in current liabilities
change in depreciation
✅ The correct answer is A.
Net working capital is the aggregate amount of all current assets and current liabilities. It is used to measure the short-term liquidity of a business, and can also be used to obtain a general impression of the ability of company management to utilize assets in an efficient manner.

146. An unlimited liability for business debts and less capital for growth are limitations of

by
proprietorship
personal business
Private Corporation
personal ownership
✅ The correct answer is A.
An unlimited liability for business debts and less capital for growth are limitations of proprietorship. Since the owner takes all the profits, he must also accept full personal responsibility for all the losses, even to the extent of his personal possessions.

150. All partners have limited liability in

by
unlimited liability partnership
limited liability partnership
controlled partnership
uncontrolled partnership
✅ The correct answer is B.
All partners have limited liability in limited liability partnership. LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership.