Chapter 1: Nature, Objectives, and Scope of Business Finance

1. Which of the following best describes the primary modern objective of

business finance?
a) Profit maximization
b) Revenue growth
c) Wealth maximization
d) Cost minimization
2. In financial management, the term "optimal capital structure" refers to:
a) Minimizing all forms of debt
b) Balancing debt and equity to minimize WACC
c) Using only retained earnings for financing
d) Maximizing short-term loans
3. Which of the following is NOT a core function of business finance?
a) Dividend policy formulation
b) Human resource recruitment
c) Capital budgeting
d) Working capital management
4. In Bangladesh, which regulatory body oversees corporate financial
compliance?
a) Bangladesh Bank
b) BSEC (Bangladesh Securities and Exchange Commission)
c) NBR (National Board of Revenue)
d) DSE (Dhaka Stock Exchange)
5. Which financial decision involves determining the proportion of
earnings to be paid as dividends?
a) Investment decision
b) Financing decision
c) Dividend decision
d) Liquidity decision
Section 2: Goals and Functions of Business Finance

6. The primary goal of financial management is to:

a) Maximize sales revenue
b) Maximize shareholder wealth
c) Minimize operational costs
d) Maximize employee satisfaction
7. Which function of business finance involves assessing project
feasibility using NPV and IRR?
a) Budgeting
b) Capital structure planning
c) Investment analysis
d) Financial reporting
8. A company in Bangladesh facing liquidity issues would prioritize:
a) Long-term bond issuance
b) Increasing dividend payouts
c) Managing working capital efficiently
d) Expanding into new markets
9. Which of the following is a key risk management tool in finance?
a) SWOT analysis
b) Hedging
c) Break-even analysis
d) Job rotation
10. The controller of a company is primarily responsible for:
a) Managing cash flows
b) Financial reporting and internal controls
c) Raising capital from investors
d) Marketing strategy
Section 3: Role of Financial Manager, Controller, Treasurer

11. The treasurer of a firm is LEAST likely to handle:

a) Cash management
b) Risk management
c) Financial statement audits
d) Banking relationships
12. In a Bangladeshi MNC, the financial manager’s role in strategic
decisions includes:
a) Hiring new employees
b) Evaluating merger opportunities
c) Designing marketing campaigns
d) Overseeing production quality
13. Which role ensures compliance with IFRS and local accounting
standards?
a) Financial manager
b) Treasurer
c) Controller
d) CEO
14. A financial manager prioritizing "value maximization" would
focus on:
a) Short-term profit boosts
b) Increasing stock price over time
c) Cutting all R&D expenses
d) Reducing shareholder dividends
15. In Bangladesh, a treasurer would likely deal with:
a) Tax filing with NBR
b) Securing short-term loans from banks
 c) Preparing annual financial statements
d) Conducting employee training

Section 4: Sources of Financial Information

16. Which source provides the most detailed breakdown of a

company’s financial health?
a) Stock market rumors
b) Annual reports
c) Social media posts
d) Newspaper headlines
17. For a DSE-listed company like BEXIMCO, where would you find
historical stock performance?
a) Bangladesh Bank reports
b) DSE website
c) NBR tax database
d) Ministry of Finance bulletins
18. Which financial statement shows a firm’s liquidity position?
a) Income statement
b) Balance sheet
c) Cash flow statement
d) Statement of retained earnings
19. An investor analyzing "operational efficiency" would primarily
examine:
a) Dividend payout ratio
b) Debt-to-equity ratio
c) Inventory turnover ratio
d) P/E ratio
 20. Which of the following is NOT a reliable source of financial data?
a) Auditor’s report
b) Unverified blog posts
c) Bloomberg Terminal
d) Company press releases

Section 5: Sources of Financing

21. Which short-term financing option allows a firm to withdraw

beyond its account balance?
a) Trade credit
b) Bank overdraft
c) Commercial paper
d) Debenture
22. In Bangladesh, SMEs most commonly rely on:
a) Venture capital
b) Equity financing
c) Short-term bank loans
d) Corporate bonds
23. Which long-term financing method avoids interest payments but
dilutes ownership?
a) Term loans
b) Leasing
c) Equity shares
d) Debentures
24. A company leasing machinery instead of buying it is an example
of:
a) Intermediate-term financing
 b) Trade credit
c) Factoring
d) Venture capital
25. Which source of financing is typically the most expensive for a
firm?
a) Retained earnings
b) Bank loans
c) Venture capital
d) Commercial paper

26.  Which function of business finance deals with analyzing project profitability?
(A) Budgeting (B) Capital Structure (C) Investment Analysis (D) Reporting
27.  What is the primary focus of business finance?
(A) Fundraising (B) Risk avoidance (C) Managing funds (D) Marketing strategy
28.  In the financial department, who monitors internal controls and budgeting?
(A) Financial Manager (B) Controller (C) Treasurer (D) Auditor
29.  Which of these sources would give forward-looking market data?
(A) Balance Sheet (B) Bloomberg Terminal (C) Income Statement (D) Audit
Report
30.  Why are audit reports important in financial decision making?
(A) Verify legal ownership (B) Ensure brand loyalty (C) Assure financial
reliability (D) Increase revenue
31.  Which financial role is mainly responsible for cash management and investment
activities?
(A) Controller (B) Treasurer (C) Internal Auditor (D) Managing Director
32.  Which goal of business finance ensures that a company can meet its short-term
obligations?
(A) Liquidity (B) Innovation (C) Productivity (D) Asset Rotation
33.  Which role makes strategic decisions about dividends and financing?
(A) Controller (B) CFO (C) Treasurer (D) Shareholder
34.  Which of these sources would give forward-looking market data?
(A) Balance Sheet (B) Bloomberg Terminal (C) Income Statement (D) Audit
Report
35.  Which of these is a long-term source of finance?
(A) Trade Credit (B) Debentures (C) Overdraft (D) Commercial Paper
36.  Which financial objective focuses on maximizing stockholder wealth over time?
(A) Profit Maximization (B) Liquidity (C) Value Maximization (D) Risk
Avoidance
37.  A capital budgeting decision is primarily concerned with:
(A) Payroll (B) Supplier contracts (C) Long-term investments (D) Loan
repayments
38.  What financial role focuses most on tax planning and reporting?
(A) Controller (B) CEO (C) Treasurer (D) HR Manager
39.  Which of the following is an example of short-term financing?
(A) Equity Shares (B) Commercial Paper (C) Debentures (D) Leasing
40.  Which is NOT a function of the financial manager?
(A) Investment Planning (B) Marketing Strategy (C) Dividend Policy (D) Cash
Flow Analysis
41.  Which statement best describes the role of working capital management?
(A) Maximizing long-term debt (B) Managing daily cash needs (C) Preparing
budgets (D) Creating IPO documents
42.  The goal of sustainability in finance focuses on:
(A) Shareholder voting rights (B) Long-term solvency and ethics (C) Reducing
production time (D) Tax exemptions
43.  Retained earnings are considered a:
(A) Debt source (B) Short-term liability (C) Internal source of finance (D)
Market investment
44.  Which of the following is a medium-term financing option?
(A) Bank Overdraft (B) Trade Credit (C) Leasing (D) Debentures
45.  Which document summarizes revenues, expenses, and net profit over time?
(A) Balance Sheet (B) Cash Flow Statement (C) Income Statement (D) Audit
Report
46.  What is the purpose of capital structure planning?
(A) Setting product prices (B) Managing production timelines (C) Choosing
between debt and equity (D) Budgeting travel costs
47.  Which goal of financial management ensures compliance with local laws like
those set by BSEC?
(A) Liquidity (B) Risk Management (C) Governance (D) Capital Expansion
48.  A treasurer in a Bangladeshi company will likely focus more on:
(A) Product testing (B) Long-term equity investments (C) Foreign exchange and
cash flow (D) Advertising
49.  Why is value maximization considered a superior goal to profit maximization?
(A) Focuses only on revenues (B) Reflects long-term shareholder wealth (C)
Emphasizes tax avoidance (D) Targets employee satisfaction
50.  Which is NOT a common function of business finance?
(A) Budgeting (B) Cost Control (C) Managing Customer Feedback (D) Capital
Structure Planning
51.  Which of these roles would most likely prepare tax returns and financial
statements?
(A) Marketing Manager (B) Controller (C) Sales Executive (D) Investor
52.  Which of the following is considered a short-term source of finance?
(A) Equity Shares (B) Trade Credit (C) Bonds (D) Leasing
53.  What is the purpose of the dividend decision area in finance?
(A) Determine pricing (B) Set employee bonuses (C) Allocate profits to
shareholders or reinvestment (D) Analyze risk-return
54.  Which role is responsible for investment of surplus funds?
(A) Controller (B) Sales Head (C) Treasurer (D) HR Director
55.  Which body in Bangladesh regulates listed companies and securities markets?
(A) Bangladesh Bank (B) BSEC (C) NBR (D) Ministry of Commerce
56.  The best example of a source of financial information is:
(A) Television Ads (B) Annual Reports (C) Sales Invoices (D) Exit Interviews
57.  Which financial decision deals with how much debt vs. equity a company should
use?
(A) Dividend Decision (B) Investment Decision (C) Financing Decision (D)
Budgeting Decision
58.  Cash flow management ensures that a business has:
(A) Sufficient working capital (B) A high market share (C) Good advertising
reach (D) Diversified inventory
59.  What does IRR stand for?
(A) Internal Rate of Return (B) Indexed Risk Ratio (C) Interest Rate Rule (D)
Internal Revenue Requirement
60.  If NPV > 0, what does it imply about a project?
(A) It is not profitable (B) Break-even point is unclear (C) The project should be
rejected (D) It is financially viable
61.  Which of the following is NOT a reliable source of financial data?
(A) Stock Market Ticker (B) Annual Report (C) Social Media Comments (D)
Income Statement
62.  What’s a key use of working capital?
(A) Expand product line (B) Pay long-term liabilities (C) Fund daily operations
(D) Acquire other companies
63.  Which function involves forecasting income and expenses?
(A) Budgeting (B) Controlling (C) Auditing (D) Investing
64.  Which of the following is an example of internal financing?
(A) Bank Loan (B) Retained Earnings (C) Bonds (D) Debentures
65.  Which of the following focuses on short-term financing in a volatile market?
(A) Controller (B) Marketing Director (C) Treasurer (D) Production Manager
66.  Commercial Paper is generally issued by:
(A) Government (B) Individuals (C) Corporations (D) NGOs
67.  A firm with high liquidity can:
(A) Avoid taxes (B) Borrow more cheaply (C) Meet short-term obligations
easily (D) Pay dividends regularly
68.  What is the strategic role of finance in M&A?
(A) Recruiting new staff (B) Approving supplier contracts (C) Evaluating financial
viability of mergers (D) Conducting surveys
69.  A key feature of business finance is its:
(A) Static nature (B) Isolation from other fields (C) Dynamic and interdisciplinary
scope (D) Exclusivity to large firms
70.  In Bangladesh, companies like Grameenphone must balance:
(A) Profits and liquidity (B) Imports and exports (C) Political ties (D)
Advertising and HR
71.  Which financial decision affects capital budgeting directly?
(A) Marketing (B) Investment (C) Dividend (D) Inventory
72.  Which is NOT typically included in investment analysis?
(A) NPV (B) IRR (C) Market Share (D) Risk Assessment
73.  Which type of financing is most affected by capital market development in
Bangladesh?
(A) Short-term loans (B) Equity financing (C) Bank overdrafts (D) Trade credit
74.  Which financial document tracks inflows and outflows of cash over a period?
(A) Balance Sheet (B) Cash Flow Statement (C) Income Statement (D) Trial
Balance
75.  Which of the following decisions is made by the Controller?
(A) Cash investment (B) Risk hedging (C) Preparing financial statements (D)
Product diversification
 Chapter 2
Section 1: Funds Flow Analysis (20 Questions)

1. Funds Flow Analysis primarily examines:

a) Only cash transactions
b) Changes in working capital
c) Long-term liabilities
d) Shareholder dividends
2. Which of the following is a source of funds?
a) Purchase of fixed assets
b) Repayment of loans
c) Profit from operations
d) Payment of dividends
3. A decrease in creditors (payables) affects working capital by:
a) Increasing it
b) Decreasing it
c) No effect
d) Depends on cash flow
4. Funds Flow Statement is prepared using data from:
a) Only income statement
b) Balance sheets of two periods
c) Cash book
d) Trial balance
5. Which transaction is non-cash but impacts working capital?
a) Cash sale of goods
b) Credit purchase of inventory
c) Dividend payment in cash
d) Repayment of bank loan

*(Answers: 1-b, 2-c, 3-a, 4-b, 5-b)*

Section 2: Financial Forecasting (20 Questions)

6. Qualitative forecasting relies on:

a) Historical data
b) Expert judgment
c) Regression models
d) Time-series analysis
7. The Delphi Method is used for:
a) Cash budgeting
b) Consensus-based forecasting
c) Inventory management
d) Capital budgeting
8. Which method assumes expenses vary directly with sales?
a) Regression analysis
b) Percent of sales method
c) Scenario analysis
d) Moving averages
9. Pro forma financial statements are:
a) Historical records
b) Projected future statements
c) Tax filings
d) Audit reports
10. Sensitivity analysis helps in:
a) Reducing fixed costs
b) Testing impact of assumption changes
c) Calculating payback period
d) Issuing new shares

*(Answers: 6-b, 7-b, 8-b, 9-b, 10-b)*

Section 3: Managing Cash Position (20 Questions)

11. The primary goal of cash management is to:

a) Maximize long-term debt
b) Balance liquidity and profitability
c) Minimize shareholder equity
d) Avoid all short-term investments
12. Float management refers to:
a) Delaying all payments indefinitely
b) Reducing time gaps in cash movements
c) Ignoring receivables
d) Holding excess inventory
13. Lockbox systems are used to:
a) Delay payables
b) Speed up collections
c) Manipulate financial ratios
d) Issue new shares
14. The Miller-Orr Model is used for:
a) Capital budgeting
b) Determining optimal cash balance
c) Forecasting sales
d) Calculating ARR
15. A cash budget helps a company to:
a) Plan long-term investments
b) Predict cash surpluses/shortages
c) Issue bonds
d) Calculate depreciation

*(Answers: 11-b, 12-b, 13-b, 14-b, 15-b)*

Section 4: Working Capital Management (20 Questions)

16. Working capital is calculated as:

a) Fixed Assets – Current Liabilities
b) Current Assets – Current Liabilities
c) Total Debt – Equity
d) Revenue – Expenses
17. An aggressive working capital policy aims to:
a) Hold excess inventory
b) Minimize current assets
c) Avoid all short-term debt
d) Maximize accounts payable
18. The cash conversion cycle measures:
a) Time to turn inventory into cash
b) Dividend payout period
c) Asset depreciation rate
d) Bond maturity period
19. JIT (Just-in-Time) inventory system reduces:
a) Sales revenue
b) Holding costs
c) Shareholder equity
d) Long-term debt
20. A high current ratio indicates:
a) Poor liquidity
b) Strong liquidity
c) High profitability
d) Low leverage

*(Answers: 16-b, 17-b, 18-a, 19-b, 20-b)*

Section 5: Capital Budgeting (20 Questions)

21. Capital budgeting evaluates:

a) Daily cash flows
b) Long-term investments
c) Short-term loans
d) Marketing strategies
22. Payback period ignores:
a) Initial investment
b) Time value of money
c) Project risk
d) Salvage value
23. NPV > 0 implies the project is:
a) Rejected
b) Profitable
c) Break-even
d) High-risk
24. IRR is the discount rate where:
a) NPV = 0
b) Payback period = 0
c) ARR = 100%
d) PI = 1
25. Profitability Index (PI) < 1 suggests:
a) Accept the project
b) Reject the project
c) Delay the project
d) Increase investment

*(Answers: 21-b, 22-b, 23-b, 24-a, 25-b)*