Finals FM

It is a decision-making process concerned with planning, acquiring and utilizing funds in a manner that achieves the firm’s desired goals.

• Financial Position

• Financial Statements

• Financial Freedom

• Financial Management

• All of the above

What is the primary goal of Financial Management?

• Increase earnings

• Maximizing cash flow

• Maximizing shareholder’s wealth

• Minimizing risk of the firm

• None of the Above

It requires no formal charter and is inexpensive to form and dissolve.

• Entry Barriers

• Ease of Entry and Exit

• Tax savings

• Full Ownership and control

• None of the above

Proper-risk return management means that

• the firm should take as few risks as possible

• consistent with the objectives of the firm, an appropriate trade-off between risk and return should be determined

• the firm should earn highest return possible

• the firm should value future profits more highly than current profits

• None of the above

Sole Proprietorship has the greatest freedom as compared to any form of business organization because of this advantage.

• Tax savings

• Full Ownership and control

• Entry Barrier

• Few government Regulations

• Ease of Entry and Exit

The owner is personally liable for any and all business debts

• Limited liability

• Limitations in raising capital

• Unlimited liability

• Tax implication

• Regulation

Which of the following is not a major area of concern and emphasis in modern financial management?

• Inflation and its effect on profits

• Stable short-term interest rates

• Changing international environment

• Increased reliance on debt

• All of the above

Which of the following is not a major area of concern and emphasis in modern financial management?

• Marginal Analysis

• Risk-return trade-of

• Commodity Trading

• Changing financial institutions

• A and D

Partnership may be dissolved upon the withdrawal or death of a general partner – known as one of its disadvantages.

• Unlimited liability

• Lack of Continuity

• Difficulty of transferring ownership

• Limitations in raising capital

• Tax implications

A financial manager’s goal of maximizing current or short-term earnings may not be appropriate because

• It fails to consider the timing of the benefits

• Increased earnings may be accompanied by unacceptably higher levels of risk

• Earnings are subjective; they can be defined in various ways such as accounting or economic earnings

• All of the above

• None of the above