(D) None Decides capital structure. Question 32. Any organization needs finances to obtain physical resources, carry out the production activities and other business operations, pay compensation to the suppliers, etc. Brand dimension. Answer: (B) Statement II is correct but Statement I is incorrect. (C) 2,440.58 (D) 4,47,975 (D) 5,635.52 Answer: \(\frac{\mathrm{FV}_{\mathrm{n}}}{(1+\mathrm{i})^{\mathrm{n}}}=\frac{1}{1.1^{2}}=\frac{1}{1.21}\) = 08264 = 0.83 In most of cases a finance manager holds the rank of vice-president reporting directly to the president and Board of Directors. (B) Finance Decisions (D) Financial distress; financial insolvency, Question 33. Found inside Page 202Nature,. principles. and. scope Although financial accounts are of interest to management, their principal function is to satisfy the information needs (i) = 10% (D) 2,442.70 The term satisfier here means a person willing to settle for something less. Determine the present value of 700 each paid at the end of each of the next 6 years. Answer: Question 5. The basic role of corporate finance is to In this article, we have reviewed the nature and scope of management accounting. Answer: Optimal investment decisions need to be made taking into consideration such factors as___ Found inside Page 8the increasingly specialized nature of academic study. Today, American public administration reflects specialized layers relating to financial management, Related Papers. Proper balance between debt and equity should be attained, which minimizes the cost of capital. 3. Since finance functions are intimately connected with other business functions, finance manager should call upon the advice of other functional executives of the firm while making decisions particularly in regard to investment. (C) A is true but R is false Financial management is management principles and practices applied to finance. How much will be the balance at the end of 2 years? Financial management helps in anticipation of funds required for running the business. Question 37. 2. Under inflationary conditions, the value of money expressed in terms of its purchasing power over goods and services (C) Keep as it is Definitions of the Financial Management Different authors (C) 4% FinancialManagementis concerned with (b) Determination of finance mix (B) 2,001 Financial management refers to the effective planning, organising, and controlling of monetary resources. (C) Strategic implementation Investment decisions encompass___ (C) Identified risk; financial insolvency (C) 2,440.58 (C) The amount of salary paid to its employees. (D) All of the above, Question 7. Procurement of funds inter alia includes___ (D) 0.513 Every beginner needs to start a business or a company with financial knowledge and management strategies. In investment decision, a finance manager has to decide about total amount of assets to be held in the enterprise and kinds of the assetsthe proportion of fixed assets and current assets. (B) 0.91 (A) 926 N Thus, ploughing back offers the best means of the organizational future growth. Answer: Answer: Decisions in regard to kinds of fixed assets to be acquired for the firm, level of inventories to be kept in hand, type of customers to be granted credit facilities, terms of credit, etc., should be made after consulting production and marketing executives. CS Executive Jurisprudence, Interpretation & General Laws, CS Executive Economic Business and Commercial Laws, CS Executive Setting Up of Business Entities and Closure, CS Executive Securities Laws and Capital Markets, CS Executive Corporate and Management Accounting MCQ, 2. It varies from enterprise to enterprise depending essentially on the characteristics of the firm, size, nature, convention, etc. Answer: But at the same time the enterprise is exposed to more risk. Found inside Page 38Concepts related to Income Measurement, Profit Planning, Cost Control and Finance Function: Nature, Scope and Objectives of Financial Management: Risk ______ensures that the firm utilizes its available resources most efficiently under conditions of competitive markets. A = \(\frac{6,00,000}{\mathrm{PVIFA}_{1,20}}=\frac{6,00,000}{18.0456}\) = 33,249.1 You have to finish following quiz, to start this quiz: The objective of financial management whereby the business strives to increase the wealth of shareholders by maximising the market price per share is. Nature and Scope of Financial Management 1. But if the enterprise carries large amount of funds in cash, it loses opportunity cost of the funds and, therefore, goal of high level of profit suffers. (A) Are also known as finance companies 3) Financial management mainly focuses on. Decisions related to working capital is another crucial scope of financial management. 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(B) Creating value to the assets of the business enterprise Found inside Page 5The Nature of Nonprofit Organizations Financial management is perhaps more test and because the scope of their activities is restricted by governments. Privacy Policy 8. (B) (a), (c) & (d) Reason (R): (D) 20% Find out the present value of projects cash flow from the following data if the cost of capital of the firm is 12%: (A) 51,112 (A) 0.83, Question 56. As hinted in the preceding paragraphs, views of traditional and modern scholars regarding finance function differ markedly. Dividend decision is the decision that takes into account the manner in which the surplus generated is to be distributed and how much to retain. 2,000 is invested at an annual rate of interest of 10%. It should be remembered that the same principles of finance apply to large and small and proprietary and non-proprietary organisations nevertheless there are sufficient differences of a specific operating nature justifying separate consideration of each of these organisations. Found inside Page 2Management Accounting also comprises the preparation of financial reports for non ( a ) From the point of view of objects and scope Management (D) Secondary capital market, Question 17. (B) 2,044 (A) Increase the price of common stocks (B) Increase the EPS of the company if earnings before interest and taxes are declining Question 9. Determine the compound interest for an investment of 7,500 at 6% compounded half-yearly. (C) 3.517 It means applying general management principles to financial resources of the enterprise. Answer: The heart of the financial management lies in decision making in the areas of investment, finance and dividend. There are many theories around financial management: Download PDF. Found inside Page 895 by enhancing the absorptive capacity and financial management of recipient on the nature, scope, priorities and institutional arrangements for a Using _in the capital structure of a company is called financial gearing. (B) 1 & 2 Lets learn and understand the nature and scope of financial management through the below details notes. (A) 3,431.71, Question 63. (A) Investment Decisions (C) Primary capital market He can earn an interest of 8% compounded annually. (B) 33,249.1, Question 55. (D) All of the above Scope of Financial Management - acquisition, financing and management of assets a. Answer: (B) 10%, Question 49. What will be the amount of monthly loan amortization? Found inside Page 13Summarise the functions of Strategic Financial Management. An Indicative Outline Solution 1. Nature. and. Scope. of. Financial. Strategy. Copyright 10. Country* (A), Question 60. (D) Neither (I) nor (II) Estimates capital requirements; Financial management helps in anticipation of funds by estimating working capital and fixed capital requirements for carrying business activities. Another major financial goal of a firm is imparting sufficient liquidity and profitability of the enterprise. As the present value of an annuity of 700 has to be computed. Download Full PDF Package. The objective of this chapter is to describe the evolving functions and scope of financial management. Financial policies are devised to fit production and marketing decisions of a firm in practice. Statement (I): Answer: The finance of non-profit organisation deals with the practices, procedures and problems involved in the financial management of educational, charitable and religious and the like organisations. This is the eighth scope of financial management and it means, nature of modern management is becoming future-oriented and follow the objectivity. Question 45. Financial management can further be split into three categories: 1. Financial Management can be judged by the study of the nature of___ Wasteful utilisation of funds is as dangerous as inadequacy of funds. Nature of financial management Financial management helps in anticipation of funds by estimating working capital and fixed capital requirements for carrying business activities. Finance as such is but one facet of broader economic activity of mobilising savings and directing them in investments. (Profit maximization ignores the timing of returns) Hint: Answer: Question 11. Found inside Page 179Joint Financial Management Improvement Program It should be recognized , however , that summary tabulations of this nature can only convey a general Financial management performs this job. A strong and stable organization will obviously enlist the support of investors as well as creditors that will enable the firm to procure funds from external sources at reasonable rate conveniently. (B) 3,413.17 Other activities can decentralize but there is only one department for financial management. (C) Efficient allocation of funds (A) equity shares, Question 15. Answer: Found insideBALANCE OF FINANCIAL POSITION OF THE ECONOMY and the remuneration policy; delicate communicating vessels on which the financial management of any The management acting against this goal will not be allowed to continue. (B) Wealth Maximization, Question 25. (D) Maximize market share. Determining the proper amount of funds to be employed. = 2,000 (0.463) (B) Issue of debentures Conclusion. (B) Lower the yield on bonds How much will he need to set aside to achieve his perpetuity goal? Which of the following is/are the basic aspects of financial management? (A) Efficient allocation of funds to specific assets, Question 22. FVA = R\(\left[\frac{(1+\mathrm{i})^{\mathrm{n}}-1}{i}\right]^{n}\) (D) Control inflation (B) Formulation of Functional Strategy Select the correct answer from the options given below. Therefore, the present value of an annuity of 700 will be: 4.623 700 = 3,236.10 Scope of Finance Function The scope of finance function is very wide. As a matter of fact, financial decisions have to reinforce the execution of strategic decisions. (D) 52,112 (D) 23,255 According to them, it is not sufficient for a finance manager to see that firm has sufficient funds to carry out its plans but at the same time he has to ensure wise application of funds in the productive process. For monthly compounding, n = 12 2 = 24, 7 = 0.1/12 = 0.00833 Business risk is also known as operating risk. (D) None of the above (A) Science Compound Interest = 10,693.20 7,500 = 3,193.20 (A), Question 20. ABCL Company has issued debentures of 50 lakhs to be repaid after 7 years. Profit planning. 4. (C) both (A) & (B) Given this strategy, return and risk are the functions of decision relating to size of the firm, kinds of assets to be acquired, types of funds to be employed, extent of funds to be kept in liquid form etc.. (C) Allocate savings efficiently, Question 21. Capital Structure Management: Making financial decision related to long-term assets is known as long-term investment decision or capital budgeting. (A) 0.83 Answer: To increase a given present value, the discount rate should be adjusted ie. i.e Amount required, how to raise that and where to invest that. Answer: Question 44. Found inside Page 76760 Monitor the nature , scope , and results of remedial or other action taken and implementation . programs of financial , management , and Directs the These functions influence the operations of other crucial functional areas of the firm such as production, marketing and personnel. (C) Financial risk (C) 22,355 The focal point of financial management in a firm is____ Finally, imperativeness of the continuous review of the financial decisions explains generic nature of the financial management. Answer: (A) Wealth Maximization The market price of a share of common stock is determined by: Personal finance seeks to analyse the principles and practices of managing ones own daily affairs. Answer: (B) (2) & (4) Lost your password? (A) 2,420.00 Disclaimer 9. (A) Upward 1,050 = 1,000 + 1,000(i)(6/12) (D) (2) & (3) ______is the lifeblood of a business. Found inside Page 1571These sections involve the Finance Committee , the Compensation Committee accountant and reviews the nature , scope , and results of the work to be General management functions include planning, execution and control. (A) Decrease the EPS of the company if earnings before interest and taxes are rising (C) 17,500 What is the annuity factor for 13% at 5 years? (A) 2,500, Question 66. Monthly interest =12 per cent/12 = 1 per cent. (B) 2,431.00 Found inside Page 667Depending upon the nature and substance of any articulated concern, a compromise may the involvement of other allied financial planning professionals, Financial Management is all about planning, organizing, directing, and controlling the economic pursuits such as acquisition and utilization of capital of the firm. Compound amount = P (1 + i)n = 1,000 (1 + 3%)12 = 1,000 1.42576 = 1,425.76 (B) 425.76 (C) 5,365.25, Question 58. Which of the following cash-inflow streams should you prefer? Evaluating the risk involved, measuring the cost of fund and estimating expected benefits from 2. Note: Use simple interest rate method Reason (R): After reading this article you will learn about: 1. (B) The book value of the firms assets less the book value of its liabilities. Financial management is an integral part of overall management and not a staff function. (A) Statement I is correct but Statement II is incorrect. Read Paper. A 30-year bond issued by Reliance Ltd. in 2007 would now trade in the Accordingly, finance manager is assigned wider responsibilities. Answer: (A) 12,100, Question 47. Traditional approach to finance function has been bitterly criticized by modern scholars on various cogent grounds. The risk associated with fixed rate charges like interest is called. He must, therefore, strike satisfactory trade-off between profitability and liquidity. Even the existence of the management is linked to the maximisation goal. The term financial management, managerial finance, corporation finance and business finance are virtually equivalent and are used inter-changeably, most financial managers however seems to prefer either financial management or managerial finance. Select the correct answer from the options given below. Select the correct answer from the options given below. We have A(n,i) = \(\left[\frac{(1+\mathrm{i})^{\mathrm{n}}-1}{i}\right]^{n}\) Thus, according to this principle, each asset should be offset with a financing instrument of the same approximate maturity. Select the correct answer from the options given below. In such concerns, finance function is not properly defined and finance function is combined with production and marketing functions. (D) The market price per share of the firms common stock. Financial Distress situation wherein the financial position and affairs of any firm is endangered. (D) Investment, financing & dividend decisions. Answer Explanation. Scope and Objectives of Financial Management. He is also responsible for preparing annual financial reports. Answer: Find out the present value of projects cash flow from the following data if the cost of capital of the firm is 12%: (A) 1,200 (D) 3,236.10 Another shortcoming of the traditional approach is that it gave concentrated attention to problems of corporation finance while problems of unincorporated organisations like sole trading concerns and partnership firms were altogether ignored. In view of this, overall survival of the firm is influenced by its financial operations. (B) Financial distress; Identified risk (A) 2,000 In financing decision, finance manager has to decide as to how much funds the firm should raise to fund its operations and in what form-debt, equity shares, preference shares and other sources. More profit is at Product B; hence it should be selected. (A) Greater will be the risk. An entrenched management desirous of perpetuating its existence for years to come may like to play safe and seek an acceptable level of growth rather than take the risk to maximise the wealth of stockholders. i being the interest rate (in decimal) per payment period over n payment period. Found inside Page 196What is the nature and scope of financial management ? 12. The goal of capital management is the maximisation of long term or long run earnings to present Question 26. Finally, modern authorities charged that the traditional approach laid relatively more Stress Oil problems of long- term financing as if business enterprises did not have to encounter any financial trouble in the short run. Prohibited Content 3. Understanding capital market. (D) All of the above (A) Investor relations Decides capital structure Assertion (A): Financial management is one of the important aspects of finance. Higher the return, higher the risk and the vice-versa is evident from the following figure. However, organisation of these functions is not standardized one. Projects are denoted by boxes. (B) 10% (A) Profit Maximization 35. Goals of financial management should be so articulated as to help achieve the objective of wealth maximization and maximisation of profit pool. Hence you can not start it again. (A) 1,425.76 (A) Both A and R are true and R is the correct explanation of A. Financial Decisions: These are the decisions related to equalization of funds, utilization of those funds, forecasting the returns based on the investment, etc. Costs of various methods of financing are affected by this risk. It viewed finance as a staff specialty. The decision function of financial management can be broken down into decisions. It provides information regarding the results of its operations and the financial status of the business. (A) 3,431.71 = 5,000(4.507) Answer: Financial Management is study Or 1,050 1,000 = 500(i) Financial statements are basically reports that depict financial and accounting information relating to businesses. It is not only confined to fund raising operations but extends beyond it to cover utilization of funds and monitoring its uses.

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