What is the primary objective of financial management? MCQ with Answer and Explanation

Question
What is the primary objective of financial management?
A. Maximizing shareholder wealth
B. Maximizing sales
C. Maximizing profits
D. Maximizing market share
Answer: Option A
Solution (By JKSSB Mock Tests)
The primary objective of financial management is to maximize the wealth of shareholders, reflected in the market price of shares.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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Question #1
In financial management, the 'Degree of Operating Leverage' (DOL) at a given level of sales is calculated as:
A. EBIT / Net Profit
B. Contribution / Net Profit
C. Sales / Contribution
D. Contribution / EBIT
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Correct Answer: Option D

Explanation:
The Degree of Operating Leverage (DOL) measures the sensitivity of EBIT to changes in sales. It is calculated as Contribution divided by EBIT (Earnings Before Interest and Taxes).
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #2
Which of the following is an example of a fixed cost?
A. Direct material
B. Direct labour (piece rate)
C. Factory rent
D. Carriage outward
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Correct Answer: Option C

Explanation:
Factory rent remains constant irrespective of production volume, hence fixed cost.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #3
The 'Integrated Reporting' framework is developed by:
A. FASB
B. IFRS Foundation
C. ICAI
D. International Integrated Reporting Council (IIRC)
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Correct Answer: Option D

Explanation:
IIRC (now part of IFRS Foundation) developed the International Framework.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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