#1
Which of the following is a characteristic of a fixed budget?
It remains unchanged regardless of activity levels.
It adjusts based on changes in activity levels.
It is flexible and can be modified at any time.
It is not based on historical data.
#2
What does the term 'ROI' stand for in financial management?
Return on Investment
Rate of Inflation
Revenue of Income
Risk of Investment
#3
What is the primary objective of financial management in an organization?
Maximizing shareholder wealth
Minimizing employee turnover
Increasing market share
Reducing operational costs
#4
Which financial statement provides a snapshot of a company's financial position at a specific point in time?
Income statement
Balance sheet
Cash flow statement
Statement of retained earnings
#5
What is the purpose of a cash flow statement?
To show the profitability of a company.
To present the changes in equity over a period.
To display the movement of cash into and out of a business.
To provide information about a company's assets and liabilities.
#6
What is the main purpose of variance analysis in budgeting?
To identify deviations from the budgeted figures and analyze the reasons behind them.
To compare actual performance with competitors.
To calculate the total budget for a project.
To forecast future financial trends.
#7
Which budgeting technique involves estimating costs and revenues for each department or division within an organization?
Zero-based budgeting
Incremental budgeting
Activity-based budgeting
Top-down budgeting
#8
What is the purpose of a SWOT analysis in the context of financial planning?
To assess an organization's strengths, weaknesses, opportunities, and threats.
To calculate the return on investment (ROI) for a project.
To evaluate the financial performance of competitors.
To forecast future cash flows.
#9
What is the role of a budget committee in the budgeting process?
To approve the final budget proposal.
To prepare the budget estimates for each department.
To monitor and evaluate budget performance.
To conduct variance analysis.
#10
Which of the following is a key principle of effective budgeting?
Setting unrealistic targets to motivate employees.
Involving only top management in the budgeting process.
Using historical data as the sole basis for budget estimates.
Ensuring participation from relevant stakeholders.
#11
What is the formula to calculate the payback period of an investment?
Payback Period = Initial Investment / Net Cash Inflow per Period
Payback Period = Initial Investment * Net Cash Inflow per Period
Payback Period = Net Cash Inflow per Period / Initial Investment
Payback Period = Initial Investment - Net Cash Inflow per Period
#12
Which of the following is a disadvantage of using debt financing?
Increased financial leverage
Tax advantages
Risk of bankruptcy
Flexibility in repayment
#13
What is the significance of the time value of money in financial decision-making?
It helps in evaluating investments based on their cash flows over time.
It determines the market value of a company's stock.
It calculates the total return on investment.
It measures the liquidity of an asset.
#14
What is the primary focus of strategic financial management?
Short-term financial planning
Managing day-to-day expenses
Long-term financial sustainability and growth
Maximizing shareholder dividends
#15
Which financial ratio measures a company's ability to meet its short-term obligations with its most liquid assets?
Debt-to-Equity ratio
Current ratio
Return on Investment (ROI)
Earnings per Share (EPS)