C214 Financial
Management Exam
Questions And Correct
Answers (Verified
Answers) Plus
Rationales 2025/2026
Q&A | Instant
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1. What is the primary goal of financial management?
A. Maximize employee satisfaction
B. Maximize shareholder wealth
C. Minimize taxes
D. Maximize revenue
,Rationale: Financial management focuses on increasing the
value of the firm for its owners (shareholders), typically
reflected in stock price.
2. Which financial statement shows a company’s financial
position at a specific point in time?
A. Income statement
B. Cash flow statement
C. Balance sheet
D. Statement of retained earnings
Rationale: The balance sheet shows assets, liabilities, and
equity at a specific date.
3. What does liquidity measure?
A. Profitability
B. Long-term debt
C. Ability to meet short-term obligations
D. Market value
Rationale: Liquidity refers to how easily a company can pay
short-term liabilities.
4. Which ratio measures profitability relative to sales?
A. Current ratio
B. Debt ratio
,C. Profit margin
D. Quick ratio
Rationale: Profit margin shows net income as a percentage
of sales.
5. The time value of money concept means:
A. Money loses value over time
B. Money today is worth more than the same amount in the
future
C. Inflation is constant
D. Interest rates do not change
Rationale: Money today can earn returns, making it more
valuable than future money.
6. What is the formula for simple interest?
A. P × r × t
B. P × r × t
C. P / (1 + r)^t
D. FV - PV
Rationale: Simple interest equals principal times rate times
time.
7. Net present value (NPV) is:
A. Future value minus cost
B. Present value of inflows minus initial investment
, C. Total profit
D. Accounting income
Rationale: NPV evaluates profitability by discounting future
cash flows.
8. A positive NPV means:
A. Reject the project
B. Accept the project
C. Break-even
D. Increase debt
Rationale: Positive NPV indicates value creation.
9. Which is a non-current asset?
A. Cash
B. Inventory
C. Equipment
D. Accounts receivable
Rationale: Non-current assets are long-term assets like
equipment.
10. What is leverage?
A. Profit increase
B. Revenue growth
C. Use of debt financing
D. Cash flow management
Management Exam
Questions And Correct
Answers (Verified
Answers) Plus
Rationales 2025/2026
Q&A | Instant
Download Pdf
1. What is the primary goal of financial management?
A. Maximize employee satisfaction
B. Maximize shareholder wealth
C. Minimize taxes
D. Maximize revenue
,Rationale: Financial management focuses on increasing the
value of the firm for its owners (shareholders), typically
reflected in stock price.
2. Which financial statement shows a company’s financial
position at a specific point in time?
A. Income statement
B. Cash flow statement
C. Balance sheet
D. Statement of retained earnings
Rationale: The balance sheet shows assets, liabilities, and
equity at a specific date.
3. What does liquidity measure?
A. Profitability
B. Long-term debt
C. Ability to meet short-term obligations
D. Market value
Rationale: Liquidity refers to how easily a company can pay
short-term liabilities.
4. Which ratio measures profitability relative to sales?
A. Current ratio
B. Debt ratio
,C. Profit margin
D. Quick ratio
Rationale: Profit margin shows net income as a percentage
of sales.
5. The time value of money concept means:
A. Money loses value over time
B. Money today is worth more than the same amount in the
future
C. Inflation is constant
D. Interest rates do not change
Rationale: Money today can earn returns, making it more
valuable than future money.
6. What is the formula for simple interest?
A. P × r × t
B. P × r × t
C. P / (1 + r)^t
D. FV - PV
Rationale: Simple interest equals principal times rate times
time.
7. Net present value (NPV) is:
A. Future value minus cost
B. Present value of inflows minus initial investment
, C. Total profit
D. Accounting income
Rationale: NPV evaluates profitability by discounting future
cash flows.
8. A positive NPV means:
A. Reject the project
B. Accept the project
C. Break-even
D. Increase debt
Rationale: Positive NPV indicates value creation.
9. Which is a non-current asset?
A. Cash
B. Inventory
C. Equipment
D. Accounts receivable
Rationale: Non-current assets are long-term assets like
equipment.
10. What is leverage?
A. Profit increase
B. Revenue growth
C. Use of debt financing
D. Cash flow management
