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Business Studies MCQ Class 12 Chapter 9

1. Arrange the following steps involved in the process of financial planning in the correct sequence.
(a) Estimation of expected profit, Preparation of a sales forecast, Preparation of financial statements
(b) Preparation of a sales forecast, Preparation of financial statements, Estimation of expected profit
(c) Preparation of a sales forecast, Estimation of expected profit, Preparation of financial statements
(d) Preparation of financial statements, Estimation of expected profit, Preparation of a sales forecast

2. The working capital requirement of a business is not likely to be high when?
(a) The nature of business is trading
(b) Scale of operation of a business is small
(c) It is difficult to procure raw material
(d) The rate of inflation is low

3. It is essentially the preparation of a financial blueprint of an organisation’s future operations. Identify the related concept.
(a) Financial management
(b) Financial planning
(c) Capital budgeting decisions
(d) Dividend decision

4. Under which of the following circumstances the fixed capital requirement of a business is not likely to be high?
(a) When the raw material is not easily available
(b) Capital intensive techniques of production are used
(c) The growth prospects of a company a high
(d) When the financial alternatives are easily available

5. 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

6. Which of the following statements is not true with regard to the use of fixed capital?
(a) It affects the long-term growth of the business
(b) A large number of funds are involved
(c) The business risk involved is low
(d) The investment decisions are irreversible

7. Wealth maximisation depends on
(a) market price per share
(b) market price of finished good
(c) market price of inventory
(d) market price of fixed assets

8. Under which of the following situations a company is not likely to issue equity capital?
(a) When the debt service coverage ratio is high
(b) When the interest coverage ratio is high
(c) When the cost of debt capital is low
(d) All of the above

9. Which of the following is not an objective of financial planning?
(a) Ensuring enough funds are available at the right time
(b) Ensuring excess availability of funds at the right time
(c) Ensuring smooth business operations
(d) All of the above

10. If in a particular situation, the earnings per share (EPS) falls with the increased use of debt, it indicates that _____.
(a) The rate of return on investment (Rol) is less than the cost of debt
(b) The rate of return on investment is more than the cost of debt
(c) The cost of debt is less than the rate of return on investment
(d) None of the above

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