- World's Largest Collection of Interview Questions & Answers, FAQs, queries, sample papers, exam papers, dumps, what, why, how, where, when questions
Our Services
Get 9,000 Interview Questions & Answers in an eBook.

Get it now !!
Send your Resume to 6000 Companies
Financial Management Interview Questions & Answers - Learning Mode

Financial Management Interview Questions & Answers - Learning Mode

Financial management means the efficient and effective management of money(funds) in such a manner so as to accomplish the objectives of the organisation.It refers to that part of managerial activity concerned with the procurement and utilisation of funds for business purposes.It is the specialized function directly associated with the top management.Financial management also means the planning,directing,monitoring,organizing,and controlling of the monetary resources of an organization.

Try Financial Management Interview Questions & Answers - Exam Mode
Subcategories for Financial Management Interview Questions & Answers - Learning Mode

Following are sub categories for which Interview Questions & Answers are available under Financial Management Interview Questions & Answers - Learning Mode. Please select the appropriate sub-category:-

Dividend Decision Interview Questions & Answers (15) Learning Mode | Exam Mode

Financing Decision Interview Questions & Answers (12) Learning Mode | Exam Mode

Investment Decisions Interview Questions & Answers (31) Learning Mode | Exam Mode

Time Value of Money Interview Questions & Answers (8) Learning Mode | Exam Mode

Working Capital Management Interview Questions & Answers (50) Learning Mode | Exam Mode

1 2 Next

Sort By : Latest First | Oldest First | By Rating

Financial Management Interview Questions & Answers - Learning Mode
Try Financial Management Interview Questions & Answers - Exam Mode
Question: what are the advantages and disadvantages of earnings theory?

Answer: Advantages of Earning Theory:- This method correlates the value of a company directly with its earning capacity. Earnings theory acts as a check on the costs of launching a new enterprise.
Disadvantages of Earning Theory:- In the case of new companies it may be difficult to estimate correctly the amount of future earnings. In case, earnings are not correctly estimated, the capitalisation based on earnings might prove to be risky for the company. Source:
Question: State the advantages of wealth maximization.

Answer: 1. It considers the concept of time value of money. The present values of cash inflows and outflows helps the management to achieve the overall objective of a company.
2. The concept of wealth maximization is universally accepted because it takes care of interest of financial institution, owners, employees and society at large.
3. Wealth maximization guides the management in framing consistent strong dividend policy to reach maximum returns to the equity holders. Source:
Question: State the objectives of Financial Management?

Answer: a)Profit Maximization- Earning profits by a corporate or a company is a social obligation. Profit is the only means through which an efficiency of organisation can be measured.
b) Wealth Maximization- Wealth maximization refers to the gradual growth of the value of the assets of the firm in terms of benefits it can produce. The wealth maximization attained by a company is reflected in the market value of shares. This maximizes the wealth of shareholders. Source:
Question: What are the guidelines for financial planning?

Answer: 1. Keep financial programmes sufficiently flexible.
2. Determine the future financial needs of the firm and see that they are met.
3. Make a judicious use of debt and equity capital.
4. Obtain funds in larger amounts rather in a series of installments.
5. Economise indirect expenditure.
6. Practice a proper policy of ploughing backof leanings so as to finance expansion of business. Source:
Question: What is Financial Plan?

Answer: Financial plan implies and involves 3 major sectors , viz., capital structure, capital expenditure and cash flow. It basically refers to the reasonable mixture of owned capital and borrowed capital of a company at its very start. It also means the ways and means of making available the well thought out equity and loan capital of a company. Source:
Question: State the steps in financial planning.

Answer: There are four steps in financial planning:
1. Establishing Objectives
2. Policy Formulation
3. Forecasting
4. Formulation of Procedure Source:
Question: What is cost theory?

Answer: According to this theory, The total amount of capitalisation for a new company is arrived at, by addition up the cost of fixed assets, the amount of working capital and the cost of establishing the business( e.g., preliminary expenses, underwriting commission, expenses on issue of shares etc.) Source:
Question: What is the importance of Financial Management?

Answer: 1. Financial Management Helps Setting Clear Goal
2. Financial Management Helps Efficient Utilization Of Resources
3. Financial Management Helps Deciding Sources Of Financing
4. Financial Management Helps Making Dividend Decision
Question: What is capital budgeting?

Answer: Capital budgeting is a technique through which a finance manager evaluates the investments proposals. Pay back period, ARR, IRR, NPV are some of the modern techniques, very popular in capital budgeting. These techniques are adopted by finance manager according to the need and situation to attain financial objectives of the enterprise. Source:
Question: What is the meaning of Financial Planning?

Answer: Long-term profit planning aimed at generating greater return on assets, growth in market share, and at solving foreseeable problems. Source:
Question: Give the importance of Financial Planning?

Answer: a)Adequate funds have to be ensured.
b)Financial Planning helps in ensuring a reasonable balance between outflow and inflow of funds so that stability is maintained.
c)Financial Planning ensures that the suppliers of funds are easily investing in companies which exercise financial planning.
d)Financial Planning helps in making growth and expansion programmes which helps in long-run survival of the company.
e)Financial Planning reduces uncertainties with regards to changing market tre Source:
Question: What is capitalisation?

Answer: Capitalisation is defined as the sum of the par value of the outstanding stocks and the bonds.It is the sum of a corporation's stock, long-term debt and retained earnings. Capitalization also refers to the number of outstanding shares multiplied by share price.

Question: What are the objectives of Financial Management?

Answer: Profit maximization
Wealth maximization
Proper estimation of total financial requirements
Proper mobilisation
Proper utilisation of finance
Maintaining proper cash flow
Survival of company
Question: What is the need for financial planning?

Answer: The need for financial planning arises to ensure the following:
1. To maintain the liquidity throughout the year.
2. To indicate the surplus resources available for expansion or external investments.
3. To provide for any more funds.
4. To ensure availability of sufficient cash for meeting expenditure,emergencies and fluctuations in the level of working capital.
Question: What is the meaning of Financial Management?

Answer: Financial management refers to the efficient and effective management of money (funds) in such a manner as to accomplish the objectives of the organization. It is the specialized function directly associated with the top management.
Question: What are the principles governing a financial plan?

Answer: 1. Simplicity: The financial plan should envisage a simple financial structure capable of being managed easily.
2. Long- term view: The financial plan should be formulated and conceived by the promoters/ management keeping in view the long- term needs of the company rather than finding out the easiest way of obtaining the original capital.
3. Foresight: The financial plan should be prepared keeping in view the future requirements of capital for the business.
4. Optimum Use: The financia Source:
Question: What are earnings theory?

Answer: According to this theory, the true value of an enterprise depends upon its earning capacity. In other words, the worth of a company is not measured by the capital raised but, by the earnings made out of the productive harnessing of the capital. In the earnings theory, the earnings are forecast and capitalised at a representative rate of return. Source:
Question: What is dividend decision?

Answer: The Dividend Decision is one of the crucial decisions made by the finance manager relating to the payouts to the shareholders. Dividend decision refers to the policy that the management formulates in regard to earnings for distribution as dividends among shareholders. Dividend decision determines the division of earnings between payments to shareholders and retained earnings . Source:
Question: What are the functions of finance manager?

Answer: Functions of finance manager are as follows:
1. He anticipate and estimate the total financial requirements of the firm.
2. He should select the right sources of funds at right time and at right cost.
3. He has to administrate the activities of working capital management.
4. He should analyse financial performance and plan for its growth.
5. He has to protect the interests of creditors, shareholders and the employees.
6. He has to concentrate more on fulfilling the social oblig Source:
Question: Explain the A's of financial management?

Answer: 1. Anticipating Financial Needs: The financial manager has to forecast expected events in business and note their financial implications. He anticipates the financial needs by consulting an array of documents such as cash budget, the proforma income statement etc.
2. Acquiring financial resources: This implies knowing when, where and how to obtain the funds which a business needs.Funds should be acquired well before the need for them is actually felt.
3. Allocating funds in business- Alloc Source:

1 2 Next

India News Network
Latest 20 Questions
Payment of time- barred debt is: (a) Valid (b) Void (c) Illegal (d) Voidable
Consideration is defined in the Indian Contract Act,1872 in: (a) Section 2(f) (b) Section 2(e) (c) Section 2(g) (d) Section 2(d)
Which of the following is not an exception to the rule, "No consideration, No contract": (a) Natural love and affection (b) Compensation for involuntary services (c) Completed gift (d) Agency
Consideration must move at the desire of: (a) The promisor (b) The promisee (c) The promisor or any other party (d) Both the promisor and the promisee
An offer which is open for acceptance over a period of time is: (a) Cross Offer (b) Counter Offer (c) Standing Offer (d) Implied Offer
Specific offer can be communicated to__________ (a) All the parties of contract (b) General public in universe (c) Specific person (d) None of the above
_________ amounts to rejection of the original offer. (a) Cross offer (b) Special offer (c) Standing offer (d) Counter offer
A advertises to sell his old car by advertising in a newspaper. This offer is caleed: (a) General Offer (b) Special Offer (c) Continuing Offer (d) None of the above
In case a counter offer is made, the original offer stands: (a) Rejected (b) Accepted automatically (c) Accepted subject to certain modifications and variations (d) None of the above
In case of unenforceable contract having some technical defect, parties (a) Can sue upon it (b) Cannot sue upon it (c) Should consider it to be illegal (d) None of the above
If entire specified goods is perished before entering into contract of sale, the contract is (a) Valid (b) Void (c) Voidable (d) Cancelled
______________ contracts are also caled contracts with executed consideration. (a) Unilateral (b) Completed (c) Bilateral (d) Executory
A offers B to supply books @ Rs 100 each but B accepts the same with condition of 10% discount. This is a case of (a) Counter Offer (b) Cross Offer (c) Specific Offer (d) General Offer
_____________ is a game of chance. (a) Conditional Contract (b) Contingent Contract (c) Wagering Contract (d) Quasi Contract
There is no binding contract in case of _______ as one's offer cannot be constructed as acceptance (a) Cross Offer (b) Standing Offer (c) Counter Offer (d) Special Offer
An offer is made with an intention to have negotiation from other party. This type of offer is: (a) Invitation to offer (b) Valid offer (c) Voidable (d) None of the above
When an offer is made to the world at large, it is ____________ offer. (a) Counter (b) Special (c) General (d) None of the above
Implied contract even if not in writing or express words is perfectly _______________ if all the conditions are satisfied:- (a) Void (b) Voidable (c) Valid (d) Illegal
A specific offer can be accepted by ___________. (a) Any person (b) Any friend to offeror (c) The person to whom it is made (d) Any friend of offeree
An agreement toput a fire on a person's car is a ______: (a) Legal (b) Voidable (c) Valid (d) Illegal
Cache = 0.016113 Seconds