(D) Financial distress Monthly interest =12 per cent/12 = 1 per cent. (D) Product D (B) Downward. Let’s learn and understand the nature and scope of financial management through the below details notes. Investment and financing decisions should be taken at a time that enables the organization to seize market opportunities and minimize cost of raising funds. What is the scope of financial management? Determining the proper amount of funds to be employed. The committee makes recommendations for the final approval of the Board. While the modern approach says that there are three important functions which are expected to be performed in this context i.e Amount required, how to raise that and where to invest that. Furthermore, they will be getting fairly large amount of dividends regularly in future when the company’s earnings improve considerable. Answer: (D) none of the above Hint: The objective … In such concerns, finance function is not properly defined and finance function is combined with production and marketing functions. 118 receivable one year hence is ₹ 100 FVn = Po + Po(i)(n) = 2,000 + 2,000 (0.06 × 2) = 2,000 + 240 = 2,240. A onetime financial plan not subjected to periodic review and modification in the light of changed conditions will be a fiasco because conditions change to such an extent that the plan is no longer relevant and acts as a hindrance. (D) Secondary capital market, Question 17. A simplified version of this principle is exhibited in Figure 1.4. (D) (2) & (3) (A) Expressed another way the present value of ₹ 100 receivable one year hence is ₹ 118 (D) ₹ 5,635.52 Funds allocation. Found inside – Page 179Joint Financial Management Improvement Program ... It should be recognized , however , that summary tabulations of this nature can only convey a general ... With growth in the size of the organisation degree of specialisation of finance function increases. As a matter of fact, financial decision making is a continuous dynamic process that constantly interacts with various environmental forces and adapts and adjusts its financial objectives and strategies accordingly. Answer: (D) All of the above (B) Increase the EPS of the company if earnings before interest and taxes are declining Every Hint: Financial management is – Hint: The stockholders can take advantage of the price rise by disposing of entirely or a part of the shares in the stock market. Risk-return relationship ingrained in financial decisions affects market value of the shares of the enterprise and so also its overall value, Figure 1. exhibits relationship between the three critical financial decision areas. The risk associated with fixed rate charges like interest is called. 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 (C) Both, Question 16. (B) Credit & collections Investment Decision:. Nature of Financial Management Estimates Capital Requirements. (B) 1,000 It is not only confined to fund raising operations but extends beyond it to cover utilization of funds and monitoring its uses. (C) Financial Management PVA = \(\frac{3,000}{0.00667}\) = 4,49,775 Nature of Financial Management 3. (A) 2,500 The management acting against this goal will not be allowed to continue. It means applying general management principles to financial resources of the enterprise. (Profit maximization ignores the timing of returns) b. Scope of Finance Function The scope of finance function is very wide. Question 32. (A) Financing and investment (A) equity shares, Question 15. Answer: Answer: Which of the following cash-inflow streams should you prefer? Mohammad Rafi. Introduction: (Nature and Scope of Financial Management) Financial Management is one of the important aspects of the finance.Nobody can think to start a business or company without financial knowledge and management strategies. Scope 4. Definitions of the Financial Management Different authors … Hint: (C) 0.62 1 In his bid to maximize value of the enterprise a finance manager has to strike golden trade-off between conflicting goals of risk and return. (B) Finance. (C) Are available only to high net-worth individuals. It is a process of recording, summarising, analysing and presentation of all financial transactions of a business in the form of financial statements. Risk and return move in the same direction. (4) Increase the national resources. (D) Remains constant You have already completed the quiz before. Financial management is broadly concerned with___ A financial manager has to concentrate on the following areas of … (C) ₹ 1452.76 (B) ₹ 2,001 Answer: (C) Keep as it is (B) Investment, financing & asset management. Question 1 NATURE AND SCOPE OF INTERNATIONAL FINANCIAL MANAGEMENT. Answer: Find the rate of interest if the amount owed after 6 (n) months is ₹ 1,050 (A), the borrowed amount being ₹ 1,000 (Po). Select the correct answer from the options given below. We have A(n,i) = \(\left[\frac{(1+\mathrm{i})^{\mathrm{n}}-1}{i}\right]^{n}\) 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. (C) The creation of value for shareholders. Note: Use a simple interest rate method. Financial management performs this job. Finance includes both public and private finance. (B) Finance Decisions Although they may not act in the best interests of the owners and pursue its goal to fulfil their ambitions of perpetuating their control over the enterprise, the possibility of pursuing its personal goal exclusively is remote and limited because of the constant evaluation of the managerial performance in the light of the overall goal. (D) All of the above (D) ₹ 2,442.70 You can use WP menu builder to build menus, Nature and Scope of Financial Management – 10 Questions Quiz, is restricted to raising to funds from various sources, and completion of the legal formalities required to do, says that there are three important functions which are. (A) Both A and R are true and R is the correct explanation of A. To increase a given present value, the discount rate should be adjusted – Therefore (i) = 50/500 = 0.10 Scope of International Financial Management The main objective of international financial management is to arrange sufficient funds for meeting the short-term and long-term goals of an organization. Question 36. Answer: Found insideA second major issue of significance for the scope of the internal control evaluation process is the recognition of the critical nature of time in the ... Earnest W. Walker and William are of the opinion that the financial function has always been important in business management. Answer: This is the eighth scope of financial management and it means, nature of modern management is becoming future-oriented and follow the objectivity. (A) (a) & (b) Answer: Answer Explanation. A firm should acquire assets if the marginal revenue obtained there from exceeds the marginal cost. (B) Lower the yield on bonds Which of the following is not a function of a finance manager? The assets or resources to be acquired c. The best pattern of financing the assets Relationship of Financial Management, Accounting and Economics "Maximize Financial decisions in a company must put stakeholder’s interests first and they must be made with a positive aim of growing the company. He is generally given the charge of credit and collection departments and accounting department, investment department and auditing department. In his endeavour to maximize corporate value of the enterprise a finance manager must keep in view the following basic considerations: According to this principle, financial objectives and decisions should be tethered to the overall corporate objectives and strategies. For which of the following reason(s) profit maximization concept is criticized – (A) ₹ 5,356.25 The firms ability to honour its future obligations is called, Liquidity is firm’s ability to honour its future obligations, Inability to manage financial risk leads to a situation known as. Found insideSection 404 requires that management produce a report as to their ... flexibility as it designs the scope of the controls to test and the nature, timing, ... Scope and Objectives of Financial Management. Hint: Answer: 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. (A) ₹ 2,420.00 (A) Cannot be the sole objective of a company (D) Reserve or balance of profit & loss account (B) 0.683 One such ground is that the traditional approach is too narrow. (B) 3.998 (C) The president of the company. Efficient management of every business. (B) ₹ 2,431.00, Question 52. Under inflationary conditions, the value of money expressed in terms of its purchasing power over goods and services As a matter of fact, financial decisions have to reinforce the execution of strategic decisions. The Scope of Financial Management: Financial management, at present, does not confine to raising and allocating funds. Or 1,050 – 1,000 = 500(i) Substituting these values in the above formula, we get Y bought a TV costing ₹ 13,000 by making a down payment of ₹ 3,000 and agreeing to make an equal annual payment for 4 years. In this article, we have reviewed the nature and scope of management accounting. (D) All of the above. Select the correct answer from the options given below. (B) ₹ 2,431.00 He should closely monitor funds flowing in and out of the enterprise with a view to ensuring that funds are optimally utilised. Download PDF. (B) Financial uncertainty Reason (R): (A) Increase the price of common stocks (A) Financial insolvency; financial certainty Read this article to learn about Financial Management. (C) Management of liquidity and current assets Finance as such is but one facet of broader economic activity of mobilising savings and directing them in investments. Hint: These statements basically include the following reports: 1. (C) ₹ 2,440.58, Question 53. (D) The market price per share of the firm’s common stock. Answer: Projects are denoted by boxes. Nature of financial management Financial management helps in anticipation of funds by estimating working capital and fixed capital requirements for carrying business activities. In the pursuit of the above goals, finance manager should recognize the inter-relationship between profit and risk. A permanent_____may lead an organization to the chaotic state In this case, time-to-time growth and development are very important for doing a specific business because it helps the business to build a huge empire. Question 37. (A) equity shares What is the amount of this annuity after the 10th payment? (C) 3,134.17 (C) ₹ 2,420 In traditional approach, it is restricted to raising to funds from various sources and completion of the legal formalities required to do the same. 8. (A) Cost of capital You will receive a link and will create a new password via email. (A) Decrease the EPS of the company if earnings before interest and taxes are rising The basic problems facing a finance manager concerning investment are: (II) In which specific projects should the firm invest? He should avoid taking unnecessary high risks for the sake of higher return. Found inside – Page B-46Financial Management, Financial Institutions and Markets 1. Financial Management Finance Function: Nature, Scope and Objectives of Financial Management: ... The focal point of financial management in a firm is____ (D) ₹ 2,004 (A) Capital budgeting, Question 39. Hint: Financial Management is all about planning, organizing, directing, and controlling the economic pursuits such as acquisition and utilization of capital of the firm. (D) Capital budgeting, cash management & credit management (C) Both (I) and (II) Funds Raising • The traditional approach dominating the scope of financial management and limited the role of the financial … (C) Product C Answer: (C) Personnel, human cost & economic decisions (D) None of the above Type 1; press ÷ sign; type 1.13; press = sign five time; press ‘GT’ button on calculator. Financial policies are devised to fit production and marketing decisions of a firm in practice. Timing should be a crucial consideration in financial decisions. (C) Financial risk In medium sized undertakings financial activities are handled by senior management executive who is designated as treasurer, finance director, finance controller, vice-president in charge of finance. He has to gain flexibility by identifying strategic alternatives both in regard to investment outlets and acquisition of funds. (A) 0.83 (D) 0.68 He has to take decisions with respect to the choice of optimum source from which the funds would have to be secured, timing of the borrowing or scale of stock and cost and other terms and conditions of acquiring these funds. However, special attention is devoted to the analysis of the problems and practices involved in raising and utilisation of funds. (D) ₹ 52,112 Question 27. (A) The number and types of products or services provided by the firm. (C) The amount of salary paid to its employees. 1,050 = 1,000 + 1,000(i)(6/12) Find out the present value of 12,000 received after in 10 years, if the discount rate is 8%. (D) All of the above Financial risk deals with earning after interest and tax. According to flexibility principle, financial plan of the enterprise should be capable of being adjusted when so desired. Found inside – Page 8the increasingly specialized nature of academic study. Today, American public administration reflects specialized layers relating to financial management, ... = 926 Furthermore, in a competitive world, a company must undertake actions which are reasonably consistent with wealth maximisation objectives. Answer: Before publishing your articles on this site, please read the following pages: 1. Compound Interest = 10,693.20 – 7,500 = 3,193.20 (A) 3,431.71 A = \(\frac{6,00,000}{\mathrm{PVIFA}_{1,20}}=\frac{6,00,000}{18.0456}\) = 33,249.1 (B) ₹ 2,431.00 (D) 1,2, 3 &4, Question 24. 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. (A) 4.96 lakhs, CS Executive Financial and Strategic Management MCQ. Answer: (B) Capital budgeting Answer: The scope of financial management involves processes and procedures affiliated with managing a company's cash flow, inventory, fixed assets and debtors, according to Accounting Education. Found inside – Page 15-8These options are built into the projects by conscious and specific actions of the management and not by nature or by chance. For example, a new factory ... Scope of Financial Management - acquisition, financing and management of assets a. Answer: (D) Maximize market share. Goals of Financial Management 2. To run the operations of company efficiently, it is important to raise and handle the funds effectively. (b) Determination of finance mix 2. (B) ₹ 2,240 It ignores the risk factor Conclusion. (D) 32,349.1 Financial Management Part I (Nature and Scope)MEANING OF FINANCIAL MANAGMENT,NATURE AND SCOPE EXPLAINED. Assertion (A): (C) Maximize return on investment. He has to formulate such a dividend policy as may provide sufficient funds to finance the firm’s growth requirements and at the same time ensure reasonable dividends to the stockholders. The stockholders’ equity position is also strengthened. Answer: (D) 5,500 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. (C) The creation of value for shareholders. (A) Both A and R are true and R is the correct explanation of A. The rate of interest is 12% p.a. Question 8. At the outset it may be pointed out that financial management is concerned with finances of 60th profit seeking 60th organisations and non-profit seeking. Answer: Hence you can not start it again. He himself looks after receipts and disbursement work, extends credit, collects accounts receivable, manages cash accounts and arranges additional funds. Found inside – Page 5FINANCIALMANAGEMENT : NATURE AND SCOPE (a) Prominent Area of Overall Management It is important to note that the functions which are included in financial ... (C) 22,355 “Shareholder wealth” in a firm is represented by___ (A) 3,431.71, Question 63. (D) All of the above (d) Division of profits between dividends and retention of profits of internal funds generation (B) Investment, financing & asset management (D) All of the above (A) Issue of preference or equity share capital The market price of a share of common stock is determined by: (D) Investment, financing & dividend decisions. Financial decisions should, therefore, insist on intensive use of available capital. Found inside – Page 121(c) Profit before tax – this measure of profit will frequently include expenses that lie beyond the profit centre manager's scope of influence. (D) Individuals buying and selling the stock. (D) All of the above, Question 28. Brand dimension. The risk that encompasses in it the threat of variation of return. (a) Identification of sources of finance The major scope of financial management is dividing into four categories. Found inside – Page 3nature. of. IT. financial. management. We can interpret IT financial management ... IT too has been influenced by financial management, adopting the scope, ... (B) Secondary money market It ignores the timing of returns. (A) The number of people employed in the firm. Required balance is given by It ignores the timing of returns and also fails to take into account the social considerations as also the obligations to various interests of workers, consumers, society, ethical trade practices. (D) ₹ 2,100 Found inside – Page 16-1CHAPTER 16 7 NATURE OF FINANCIAL MANAGEMENT 16.1 INTRODUCTION The term “ nature ... of economics and accounting , its functions , scope and objectives . (A) Investor relations In order to understand more clearly the meaning of financial management it is worthwhile to highlight the scope and functions of financial management. (D) 905 c Costs of various methods of financing are affected by this risk. Accordingly, finance manager is assigned wider responsibilities. (A) Wealth Maximization (B) Maximize the value of the firm’s common stock. Investment decisions encompass___ Found insidesupportive in nature while economics and accounting are the primary disciplines on ... SCOPE. OF. FINANCIAL. MANAGEMENT. Financial management provides a ... (A), Question 20. Thus, finance manager is in dilemma. In this figure, the horizontal axis measures rupees of investment during a year, while the vertical axis shows both the percentage cost of capital and the rate of return on projects. Cardinal Principles 6. Found inside – Page 4NATURE AND SCOPE OF FINANCIAL MANAGEMENT It is important to note that the management of finance does not function in isolation; but in combination or ... (D) Neither (I) nor (II) (B) Lower will be the risk. Financial Distress situation wherein the financial position and affairs of any firm is endangered. = 200 × 10.22 (C) Financial certainty Thus, ₹ 0.83 shall grow to ₹ 1 after 2 years at 10% compounded annually.

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