Class 12 Business Studies MCQ Questions Financial Management with Answers are made by the subject matter experts for utmost precision and accuracy. At Sarthaks eConnect, Students will get an in-depth understanding of all of the class 12 business studies. Most importantly, all the questions are designed as per the syllabus of CBSE guidelines. There are also NCERT solutions available for the students to give a better perspective about the subject.

Students need to attempt more objective questions from all the chapters if they want to excel in business studies. The important mcq questions for class 12 deal with every chapter in detail. It offers length-wise solutions to all the important questions of the chapters makes it reliable for exam preparation. Check your preparation level on MCQ Questions for Class 12 Business Studies with Answers. 

1. Business finance is needed to

(a) Establish a business
(b) Run a business
(c) Expand a business
(d) All of the above

2. Which of the following is not a tangible asset?

(a) Machinery
(b) Trademarks
(c) Factories
(d) Offices

3. Financial Management aims at

(a) Reducing the cost of funds procured
(b) Keeping the risk under control
(c) Achieving effective deployment of such funds
(d) All of the above

4. Primary aim of financial management is to

(a) Maximise shareholder’s wealth
(b) Wealth maximisation concept
(c) Maximisation of the market value of equity shares
(d) All of the above

5. This decision relates to how the firm’s funds are invested in different assets,

(a) Investment decision
(b) Financing decision
(c) Dividend decision
(d) None of the above

6. Purchasing a new machine to replace an existing one is an example of

(a) Financing decision
(b) Dividend decision
(c) Working capital decision
(d) Capital budgeting decision

7. Which one of the following is related to planning, organising, directing and controlling of financial activities?

(a) Financial decision
(b) Capital structure
(c) Investment decision
(d) Financial management

8. Wealth maximization depends on

(a) market price per share.
(b) market price of finished good.
(c) market price of inventory.
(d) market price of fixed assets.

9. Investment decision involves

(a) investment in fixed assets.
(b) investment in current assets.
(c) investment in fixed and current assets.
(d) investment in Government securities.

10. If dividend portion of total earnings is high, portion of retained earnings will be

(a) high.
(b) low.
(c) moderate.
(d) equal.

11. Financial procedures are determined by

(a) financial planning.
(b) financial leverage.
(c) financial decisions.
(d) capital structure.

12. Capital structure shows

(a) Debtor-creditor ratio.
(b) Fixed assets-current assets ratio.
(c) Debt-equity ratio.
(d) Interest coverage ratio.

13. Which of the following affects the Dividend Decision of a company?

(i) Taxation Policy
(ii) Cash Flow Position
(iii) Earnings
(iv) All of the above

14. Companies with a higher growth potential are likely to

(i) Pay lower dividends
(ii) Pay higher Dividends
(iii) Dividends are not affected
(iv) None of the above

15. A decision to acquire a new and modern plant to upgrade an old one is a:

(i) financing decision
(ii) working capital decision
(iii) investment decision
(iv) None of the above

16. If dividend portion of total earnings is high, portion of retained earnings will be

(i) high.
(ii) low.
(iii) moderate.
(iv) equal.

17. Primary aim of financial management is to

(i) Maximise shareholder’s wealth
(ii) Wealth maximisation concept
(iii) Maximisation of the market value of equity shares
(iv) All of the above

18. Higher working capital usually results in:

(i) Higher equity, lower risk, and lower profits
(ii) Lower current ratio, higher risk, and profits
(iii) Lower equity, lower risk, and higher profits
(iv) Higher current ratio, higher risk, and higher profits

19. Other things remaining the same, an increase in the tax rate on corporate profit will

(a) Make the debt relatively cheaper
(b) Make the debt relatively the dearer
(c) Have no impact on the cost of debt
(d) We can’t say 

20. Current assets of a business firm should be financed through:

(a) Current liability only
(b) Long term liability only
(c) Fixed liabilities only
(d) Both types (i.e., long- and short-term liabilities) 

21. Companies with a higher growth potential are likely to

(a) Pay lower dividends
(b) Pay higher Dividends
(c) Dividends are not affected 
(d) None of the above 

22. Higher debt – equity ratio results in:

(a) Lower financial risk
(b) Higher degree of operating risk
(c) Higher degree of financial risk
(d) Higher EPS. 

23. Higher Working capital usually results in:

(a) Higher current ratio, higher risk and higher profits
(b) Lower current ratio, higher risk and profits
(c) Higher equity, lower risk and lower profits
(d) Lower equity, lower risk and higher profits. 

24. The Cheapest source of finance is :

(a) Debenture
(b) Equity share capital
(c) Preference share
(d) Retained earnings 

25. Current assets are those assets which get converted into cash:

(a) Within six months
(b) Within one year 
(c) Between one year and three years
(d) Between three and five years.

Answer:

1. Answer (d) All of the above

2. Answer (b) Trademarks

3. Answer (d) All of the above

4. Answer (d) All of the above

5. Answer (a) Investment decision

6. Answer (d) Capital budgeting decision

7. Answer (d) Financial management

8. Answer (a) market price per share.

9. Answer (c) investment in fixed and current assets.

10. Answer (b) low.

11. Answer (a) financial planning.

12. Answer (c) Debt-equity ratio.

13. Answer (iv) All of the above

14. Answer (i) Pay lower dividends

15. Answer (ii) working capital decision

16. Answer (ii) low.

17. Answer (iv) All of the above

18. Answer (iv) Higher current ratio, higher risk, and higher profits

19. Answer (a) Make the debt relatively cheaper

20. Answer (a) Current liability only

21. Answer (a) Pay lower dividends

22. Answer (c) Higher degree of financial risk

23. Answer (a) Higher current ratio, higher risk and higher profits

24. Answer (d) Retained earnings 

25. Answer (b) Within one year