Free Business Finance MCQs with Answers
975 Business Finance MCQs from Management Sciences, each with the correct answer and a written explanation of why it is correct. Free and unlimited, with no account needed.
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
Last updated
975 questions · page 35 of 49
- A. Cash flow of financing activities
- B. Cash flow per share
- C. Cash flow of investment
- D. Cash flow of operationsTry Prep Courses
Explanation: Adding net income, depreciation, and amortization gives an accounting measure of cash generated, and dividing it by common shares…
Correct answer: Cash flow per share- A. Fixed payment investment
- B. Lump sum amount
- C. Fixed interval investment
- D. Annuity
Explanation: Equal payments of $100 made at regular intervals for a limited number of periods form an ordinary annuity when paid at each year-end.
Correct answer: Annuity- A. Rises
- B. Declines
- C. Equals
- D. None of aboveCompare Exchange Rates
Explanation: Bond prices and market interest rates move in opposite directions because the bond's fixed payments become less attractive when new rates…
Correct answer: Rises- A. Inventories
- B. Short-term investments
- C. Cash equivalents
- D. Long-term investments
Explanation: Cash equivalents are short-term, highly liquid securities that can quickly be converted into a known cash amount with minimal risk of…
Correct answer: Cash equivalents- A. Annual percentage rate
- B. Annual rate of return
- C. Loan rate of return
- D. Local rate of returnCompare Investment Apps
Explanation: The nominal borrowing rate quoted to consumers, without treating intra-year compounding as a separate effective rate, is commonly stated…
Correct answer: Annual percentage rate- A. Amortized loan
- B. Depreciated loan
- C. Appreciated loan
- D. Repaid payments
Explanation: An amortized loan is repaid through regular installments that include both interest and a gradual reduction of principal.
Correct answer: Amortized loan- A. Depreciation
- B. Amortization
- C. Stock amortization
- D. Perishable assets
Explanation: The cost of a finite-life intangible asset is allocated over its useful life through amortization.
Correct answer: Amortization- A. Tangible asset
- B. Non-tangible assets
- C. Financial asset
- D. Financial liability
Explanation: Land, buildings, and factory equipment have physical substance, so they are tangible assets.
Correct answer: Tangible asset689. Non cash revenues and non cash charges if it subtracted from net income is equal to___________?
- A. Free cash flow
- B. Retained cash flow
- C. Net cash flow
- D. Financing cash flow
Explanation: Under the indirect cash-flow method, net income is adjusted by adding non-cash charges and subtracting non-cash revenues to arrive at net…
Correct answer: Net cash flow- A. Investment return rate
- B. Internal rate of return
- C. International rate of return
- D. Intrinsic rate of return
Explanation: The internal rate of return is the discount rate at which an investment's present value of inflows equals its initial cost, giving an…
Correct answer: Internal rate of return- A. Five years report
- B. Annual report
- C. Stock report
- D. Exchange report
Explanation: An annual report combines financial statements, management discussion, and other performance information that investors use to assess…
Correct answer: Annual report- A. Appreciation
- B. Depreciation
- C. Appreciated assets
- D. Appreciated liabilities
Explanation: Depreciation allocates the cost of a tangible asset over its useful life, rather than treating the entire purchase cost as one period's…
Correct answer: Depreciation- A. Preferred equity
- B. Due equity
- C. Common perpetuity
- D. Common equity
Explanation: Common equity consists primarily of common stockholders' contributed capital and retained earnings, which are profits kept in the…
Correct answer: Common equity- A. Compounding
- B. Discounting
- C. Money value
- D. Stock value
Explanation: Compounding moves a present amount forward by applying interest over successive periods, producing its future value.
Correct answer: Compounding- A. Earning per share
- B. Dividends per share
- C. Book value of share
- D. Market value of shares
Explanation: Earnings per share is calculated by dividing net income available to common shareholders by the number of shares outstanding.
Correct answer: Earning per share- A. Preferred stockholders
- B. Common stockholders
- C. Hybrid stockholders
- D. Debt holders
Explanation: Preferred stockholders normally receive a fixed dividend, so they do not directly share in additional earnings growth.
Correct answer: Preferred stockholders- A. Current liabilities
- B. Income expenses
- C. Non-cash revenues
- D. Non-cash charges
Explanation: Depreciation and amortization reduce reported profit but do not involve a current cash payment.
Correct answer: Non-cash charges- A. Depreciation and amortization
- B. Net sales
- C. Net profit
- D. Net income
Explanation: Depreciation and amortization allocate the cost of long-term assets over the periods in which they are used.
Correct answer: Depreciation and amortization- A. Not shown on timeline
- B. Shown on timeline
- C. Multiplied on timeline
- D. Divided on timeline
Explanation: A nominal annual rate must be converted into the periodic rate used for each timeline period, so it is not itself shown as a cash flow on…
Correct answer: Not shown on timeline- A. Preferred stock account
- B. Common stock account
- C. Due stock account
- D. Preceded stock account
Explanation: When a company issues common shares, the proceeds are credited to the common stock account, with any amount above par value usually…
Correct answer: Common stock account