AAFM MCQ

Question 1

What is the primary goal of financial management?

Accepted Answer

Maximize shareholder wealth.

Answer

Maximize employee benefits.

Answer

Minimize taxes.

Answer

Support competitors.

Question 2

Which of the following is a component of the capital structure?

Accepted Answer

Debt and equity financing

Answer

Retained earnings

Answer

Operating expenses

Answer

Cash reserves

Question 3

What does ROI stand for in financial analysis?

Accepted Answer

Return on Investment

Answer

Rate of Inventory

Answer

Risk of Inflation

Answer

Revenue over Income

Question 4

Which financial statement shows a company's assets, liabilities, and equity?

Accepted Answer

Balance Sheet

Answer

Income Statement

Answer

Statement of Cash Flows

Answer

Retained Earnings Report

Question 5

Which of the following best defines liquidity?

Accepted Answer

The ease of converting assets to cash.

Answer

The ability to invest in long-term assets.

Answer

The level of debt a company has.

Answer

The company’s profitability.

Question 6

Which term describes the risk associated with a specific company?

Accepted Answer

Unsystematic risk

Answer

Market risk

Answer

Systematic risk

Answer

Inflation risk

Question 7

Which ratio measures a company's ability to cover short-term obligations?

Accepted Answer

Current ratio

Answer

Debt ratio

Answer

Price-to-earnings ratio

Answer

Gross margin ratio

Question 8

Diversification helps in investment by:

Accepted Answer

Spreading risk across different assets.

Answer

Increasing exposure to one asset class.

Answer

Maximizing taxes.

Answer

Guaranteeing higher returns.

Question 9

A company’s profitability is best analyzed using which financial metric?

Accepted Answer

Net profit margin

Answer

Accounts receivable

Answer

Working capital

Answer

Total liabilities