What is the main objective of financial management?

The main objective of financial management is to maximize shareholder wealth by ensuring optimum capital structure and proper utilization of funds.

Investment decisions can be categorized into long-term and ___ investment decisions.

Short-term

True or False: The cost of raising funds from different sources is the same for all organizations.

False. The cost of raising funds varies among different sources.

Fill in the blank: The process of estimating fund requirements and specifying sources of funds is called ___ planning.

Financial

Riddle: I help companies decide how to invest their money wisely, ensuring funds are available without being idle. What am I?

Financial management

What does the term 'working capital' refer to?

Working capital refers to the capital required for the day-to-day operations of a business, specifically the funds needed for current assets.

What is the significance of the interest coverage ratio in financing decisions?

Interest coverage ratio indicates debt capacity.

• Measures earnings vs. interest payments.

• Assesses financial health for lenders.

• Affects borrowing terms and rates.

True or False: A high rate of interest makes debt financing more attractive than equity financing.

False. A high rate of interest increases the risk associated with debt financing compared to equity financing.

Fill in the blank: The part of profit distributed to shareholders is known as a ___.

Dividend

Which factors influence a company's dividend decision?

Several factors influence dividends.

• Earnings stability impacts payouts.

• Growth prospects shape future dividends.

• Cash flow ensures payment capability.