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Commerce Exam  >  Commerce Notes  >  Business Studies (BST) Class 12  >  Worksheet: Financial Management

Worksheet: Financial Management

Multiple Choice Questions


Q1: What is the primary goal of financial management?
(a) Profit maximization
(b) Wealth maximization
(c) Revenue maximization
(d) Market share maximization

Q2: Which financial statement reflects the financial position of a company at a specific point in time?
(a) Income statement
(b) Cash flow statement
(c) Balance sheet
(d) Statement of changes in equity

Q3: Which financial ratio measures a company's ability to meet its short-term obligations?
(a) Return on investment (ROI)
(b) Current ratio
(c) Debt to equity ratio
(d) Gross profit margin

Q4: What is the purpose of financial planning in an organization?
(a) To increase expenses
(b) To reduce profits
(c) To achieve financial goals
(d) To complicate decision-making

Q5: Which financial instrument represents ownership in a corporation?
(a) Bonds
(b) Debentures
(c) Equity shares
(d) Preference shares

Very Short Answers


Q1: Define working capital.

Q2: Explain the concept of 'Time Value of Money'.

Q3: List any five sources of short-term finance.

Q4: Differentiate between fixed capital and working capital. 

Q5: What is the significance of the 'Dividend Decision' in financial management?

Short Answers 


Q1: Discuss the importance of financial ratios in evaluating a company's performance.

Q2: Explain the factors influencing the capital structure of a company.

Q3: Elaborate on the role of financial planning in minimizing business risks.

Q4: Discuss the steps involved in the capital budgeting process.

Q5: Examine the role of financial markets in facilitating economic growth.

Long Answers 


Q1: Discuss the objectives and importance of financial management in a business organization.

Q2: Explain the concept of working capital cycle and its significance for business operations.

Q3: Describe the factors influencing dividend policy decisions in a company. 

Case-Based Questions


Q1: Case 1: Working Capital Management
ABC Ltd. is facing challenges in managing its working capital efficiently. Answer the following sub-questions:
Evaluate the consequences of ineffective working capital management on ABC Ltd.'s financial performance.

Q2: Explain the role of financial ratios in assessing ABC Ltd.'s working capital position.

Q3: Discuss the importance of considering the time value of money in capital budgeting decisions.

Q4: Discuss the impact of LMN Ltd.'s dividend policy on its shareholders and overall financial health.

You can access the solutions to this worksheet here.

The document Worksheet: Financial Management is a part of the Commerce Course Business Studies (BST) Class 12.
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FAQs on Worksheet: Financial Management

1. What is the definition of financial management?
Ans.Financial management refers to the strategic planning, organizing, directing, and controlling of financial activities such as procurement and utilization of funds, ensuring the effective management and allocation of resources for an organization.
2. Why is financial management important for businesses?
Ans.Financial management is crucial for businesses as it helps in making informed financial decisions, optimizing the use of resources, ensuring liquidity, managing risks, and ultimately contributing to the growth and profitability of the organization.
3. What are the key functions of financial management?
Ans.The key functions of financial management include financial planning, budgeting, capital structure management, investment decision-making, and working capital management, all aimed at ensuring the financial health and sustainability of the organization.
4. How does financial management impact decision-making in a company?
Ans.Financial management impacts decision-making by providing critical data and analysis related to costs, revenues, and investment opportunities, enabling managers to make informed choices that align with the company’s financial goals and objectives.
5. What are the common financial management tools used by businesses?
Ans.Common financial management tools include financial statements (income statement, balance sheet, cash flow statement), budgeting software, financial forecasting tools, and ratio analysis, which help in assessing performance and guiding strategic decisions.
About this Document
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Apr 30, 2026 Last updated
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