Financial Management - 20
LIST OF ATTEMPTED QUESTIONS AND ANSWERSMultiple Choice Single Answer*Question The effect of Bonus paid in the form of fully paid shares on funds ( cash concept ) is
Correct Answer No change in cash
Your Answer No change in cash
Multiple Choice Multiple Answer*Question The function of Bill of Materials are
Correct Answer It may serve as a base for the Production department for placing the material requisition slips , It gives an indication about the orders to be executed to all the persons concerned , A bill of material prepared and valued in advance may serve as base for quoting the price for the job or production order
Your Answer It gives an indication about the orders to be executed to all the persons concerned , A bill of material prepared and valued in advance may serve as base for quoting the price for the job or production order , It may serve as a base for the Production department for placing the material requisition slips
Multiple Choice Multiple Answer*Question Disadvantages of Net Present value
Correct Answer It presupposes that the discounting rate is known , It may give dissatisfactory results if the alternative projects involve varying investment outlay , It presupposes that cash inflows can be reinvested immediately to yield the return equivalent to the discounting rate which may not be possible
Your Answer It presupposes that the discounting rate is known , It may give dissatisfactory results if the alternative projects involve varying investment outlay , It presupposes that cash inflows can be reinvested immediately to yield the return equivalent to the discounting rate which may not be possible
Multiple Choice Single Answer*Question From the following data, work out the Economic order quantity : Annual Demand : 5000 units, Ordering cost Rs. 60 per order, Price per unit Rs. 100, Inventory carrying cost is 15% on average inventory
Correct Answer 200 units
Your Answer 200 units
True/False*Question An ideal investor makes an comparison between the current market price and future Earning per share as the market value of shares depends upon the future Earnings per share
Correct Answer True
Your Answer True
True/False*Question One of the most common methods to monitor the receivables on macro basis is to calculate age-wise analysis of receivables
Correct Answer False
Your Answer False
Match The Following*Question Correct Answer Your Answer
Financial leverage indicates firm's ability to use fixed financial charges to magnify the effects of changes in earning before interest and tax on the firm's earning per share indicates firm's ability to use fixed financial charges to magnify the effects of changes in earning before interest and tax on the firm's earning per share
Earnings per share ratio to measure the profits available to the equity shareholders on a per share basis ratio to measure the profits available to the equity shareholders on a per share basis
Price earning ratio indicates the price currently being paid in the stock market for every one rupee of Earning per share indicates the price currently being paid in the stock market for every one rupee of Earning per share
Operating leverage measures the effect of change in sales quantity on earnings before interest and taxes measures the effect of change in sales quantity on earnings before interest and taxes
Select The Blank*Question Inflow of funds may not necessarily result in ________
Correct Answer Inflow of cash
Your Answer Inflow of cash
True/False*Question If the customer fails to pay the amount due from him the legal action should be initiated against the customer after the limitation period is over
Correct Answer False
Your Answer True
Select The Blank*Question Debt Equity ratio is alternatively called ________ ratios
Correct Answer Leverage
Your Answer Leverage
True/False*Question In case of lease transactions, neither the assets side nor the liabilities side of the balance sheet of lessee gets affected
Correct Answer True
Your Answer True
Multiple Choice Single Answer*Question The company which pays a fixed amount of dividend irrespective of the fluctuations in income is categorised under
Correct Answer Stable Dividend policy
Your Answer Stable Dividend policy
True/False*Question Wages/salaries is considered under Operating cashinflow
Correct Answer False
Your Answer False
Select The Blank*Question Investment of the venture capitalist does not exceed ________ so that the effective control of the project remains with the entrepreneur
Correct Answer 0.49
Your Answer 0.49
True/False*Question Wealth maximization goal is only an extension of Profit maximization goal of the organisation
Correct Answer True
Your Answer True
True/False*Question It is only after crossing the break even point that the profit generating capacity of the company starts
Correct Answer True
Your Answer True
Select The Blank*Question Liquidity ratios indicate the ________ position of the organisation
Correct Answer Short term
Your Answer Short term
Multiple Choice Single Answer*Question Current assets are also referred to as
Correct Answer Working Capital
Your Answer Working Capital
True/False*Question Debt equity ratio indicates the stake of share holders and creditors in the organisation
Correct Answer True
Your Answer True
Multiple Choice Single Answer*Question The Investment decisions are mainly concerned with
Correct Answer Application of funds
Your Answer Application of funds
Multiple Choice Single Answer*Question Which of the following assets get generated during course of operations or get utilized within one year
Correct Answer Current assets
Your Answer Current assets
Multiple Choice Single Answer*Question Net Working Capital means
Correct Answer Current assets less Current liabilities
Your Answer Current assets less Current liabilities
Select The Blank*Question The mathematical expression of ________ is ( Minimum level + Maximum level ) / 2
Correct Answer Average level
Your Answer Average level
Match The Following*Question Correct Answer Your Answer
Credit rating symbol for Commercial Paper of Default by Investment Information and Credit rating agency A5 A5
Credit rating symbol for Debentures of Inadequate safety by CRISIL BB BB
Credit rating symbol for Fixed Deposits of High risk by CRISIL FC FC
Credit rating symbol for Fixed Deposits of Adequate safety by Investment Information and Credit rating agency MA MA
Multiple Choice Single Answer*Question The Capital Structure decision mainly refers to the decision of
Correct Answer Financing
Your Answer Financing
Multiple Choice Multiple Answer*Question If Profit maximization is accepted as the only goal of finance function, it is criticised on the following grounds
Correct Answer Ignores risk factor , Does not consider social obligation , Ignores quality aspect of benefits associated with a financial course of action
Your Answer Does take into consideration time value of money , Ignores risk factor , Does not consider social obligation
Multiple Choice Multiple Answer*Question Advantages of Centralised disbursements
Correct Answer It increases the transit time , Minimum cash balance can be maintained only in case of central bank account instead of four different branches , To maintain the bank accounts at different branches may prove to be administratively difficult
Your Answer Minimum cash balance can be maintained only in case of central bank account instead of four different branches , To maintain the bank accounts at different branches may prove to be administratively difficult , Consideration of the convinience of the customers
Select The Blank*Question Preparation of Financial plan at the time of company promotion is ________ duty of the finance executive
Correct Answer Non-recurring
Your Answer Sole
Multiple Choice Multiple Answer*Question The techniques of Analysis and Interpretation of financial statements are
Correct Answer Ratio Analysis , Cash flow Analysis
Your Answer Ratio Analysis , Cash flow Analysis
Multiple Choice Multiple Answer*Question Undue increase in Gross Profit ratio may indicate
Correct Answer Over-valuation of closing stock , Consideration of non-sales transactions as sales transaction
Your Answer Over-valuation of closing stock , Consideration of non-sales transactions as sales transaction
Select The Blank*Question The following data are extracted from the published accounts of a company : Sales Rs. 38,00,000/-, Net Profit after tax Rs. 2,50,000/-, Equity capital Rs. 10,00,000/-,General Reserve Rs. 6,50,000/-, Rs. Long term debt Rs. 7,00,000/-, Creditors Rs. 6,90,000/-, Bank credit/short term loan Rs. 2,30,000/-, Fixed Assets Rs. 17,50,000/-, Inventories Rs. 7,25,000/-, Other Current assets Rs. 5,25,000/-. The Fixed assets turnover ratio is ________ .
Correct Answer 2.17
Your Answer 2.17
Select The Blank*Question Carriage Inward is normally debited to ________
Correct Answer Manufacturing Account
Your Answer Profit and Loss Account
Multiple Choice Single Answer*Question Purchases of raw material appear in the cash budget under the head
Correct Answer Operating cash outflow
Your Answer Operating cash outflow
Multiple Choice Multiple Answer*Question The characteristics of Debentures are
Correct Answer Funds raised by the company by way of debentures are required to be repaid during the lifetime of the company at the time stipulated by the company , The interest on debentures is payable even if the company does not earn the profits , In financial terms, debentures prove to be a cheap source of funds from the company's point of view
Your Answer Funds raised by the company by way of debentures are required to be repaid during the lifetime of the company at the time stipulated by the company , The interest on debentures is payable even if the company does not earn the profits , In financial terms, debentures prove to be a cheap source of funds from the company's point of view
Multiple Choice Single Answer*Question The formula for Fixed assets turnover ratio is
Correct Answer Net Sales / Fixed Assets
Your Answer Net Sales / Fixed Assets
Multiple Choice Multiple Answer*Question External sources of cash are as follows :
Correct Answer Issue of new shares , long term loans , short term borrowings
Your Answer long term loans , short term borrowings
Multiple Choice Single Answer*Question Revenue from sale of products ordinarily is reported as part of the earning in the period
Correct Answer the sale is made
Your Answer the sale is made
Multiple Choice Single Answer*Question The main function of finance under the traditional approach comprises of
Correct Answer Procurement of funds
Your Answer Procurement of funds
True/False*Question As per the SEBI guidelines revaluation reserve can be used for issue of bonus share
Correct Answer False
Your Answer False
Multiple Choice Multiple Answer*Question Top management who can accept or reject capital expenditure proposals may be in the form of
Correct Answer Board of Directors , Executive committee , Management committee
Your Answer Board of Directors , Executive committee
Multiple Choice Single Answer*Question The traditional approach to financial management refers only to the procurement of funds by
Correct Answer Corporate entity
Your Answer Corporate entity
Multiple Choice Single Answer*Question Net cash inflow is arrived at
Correct Answer Revenue after tax add depreciation
Your Answer Sales revenue less cost
Select The Blank*Question ________ is an example of Intangible asset
Correct Answer Goodwill
Your Answer Goodwill
Multiple Choice Single Answer*Question The capability of the organisation to repay the dues arising as a result of long term borrowing is caculated by
Correct Answer Debt Service coverage ratio
Your Answer Debt Service coverage ratio
Multiple Choice Single Answer*Question Financing consists of the raising, providing, managing of all the money, capital or funds of any kind to be used in connection with the business' is defined by
Correct Answer Bonneville and Dewey
Your Answer Bonneville and Dewey
Select The Blank*Question ________ of the company should authorise the company to buy back its own shares
Correct Answer Articles of Association
Your Answer Articles of Association
Multiple Choice Multiple Answer*Question External sources of funds are
Correct Answer Funds from long term loans , Sale of fixed assets
Your Answer Funds from long term loans , Sale of fixed assets
Financial Management - 19
LIST OF ATTEMPTED QUESTIONS AND ANSWERSTrue/False*Question The assumptions of capital structure theories is that Corporate Income Tax does not exist
Correct Answer True
Your Answer True
Multiple Choice Single Answer*Question The technique which tries to find out the present value of Re 1 if received or spent after n years, provided that the interest rate of I can be earned on investment is termed as
Correct Answer Discounting
Your Answer Discounting
Multiple Choice Multiple Answer*Question Limitations of Average collection period
Correct Answer Average Collection period assumes that the credit sales are evenly spread throughout the year. In practical circumstances, credit sales are not evenly spread throughout the year , The amount of credit sales made by company or the normal credit period offered by the company are not available in the published financial statements
Your Answer Average Collection period assumes that the credit sales are evenly spread throughout the year. In practical circumstances, credit sales are not evenly spread throughout the year , The amount of credit sales made by company or the normal credit period offered by the company are not available in the published financial statements
True/False*Question Debtors turnover ratio is normally supported by the calculations of average collection period
Correct Answer True
Your Answer True
Multiple Choice Single Answer*Question The main function of finance under the traditional approach comprises of
Correct Answer Procurement of funds
Your Answer Procurement of funds
Multiple Choice Single Answer*Question An increase in current asset
Correct Answer increases working capital
Your Answer increases working capital
True/False*Question Financial statements do not provide information about sources of raising funds as well as the applications of these funds
Correct Answer True
Your Answer False
Multiple Choice Multiple Answer*Question The disadvantages of a Partnership firm are
Correct Answer Unlimited liability , Capacity to raise funds to meet complex business operations is limited
Your Answer Unlimited liability , Capacity to raise funds to meet complex business operations is limited
Multiple Choice Single Answer*Question The traditional approach to financial management refers only to the procurement of funds by
Correct Answer Corporate entity
Your Answer Corporate entity
Multiple Choice Multiple Answer*Question Factoring can be classified as
Correct Answer Without Recourses factoring , With Recourse factoring
Your Answer Without Recourses factoring , With Recourse factoring
Multiple Choice Multiple Answer*Question Advantages of Debentures from Investor's point of view
Correct Answer They earn a stable rate of return , They are protected by the various provisions of the debenture Trust Deed , They generally have a fixed maturity period
Your Answer They earn a stable rate of return , They are protected by the various provisions of the debenture Trust Deed , They generally have a fixed maturity period
Multiple Choice Single Answer*Question Financing consists of the raising, providing, managing of all the money, capital or funds of any kind to be used in connection with the business' is defined by
Correct Answer Bonneville and Dewey
Your Answer Bonneville and Dewey
Multiple Choice Single Answer*Question Interest and Dividend are categorised under
Correct Answer Non-operating expenses
Your Answer Non-operating expenses
True/False*Question Retained earnings involves cost in terms of dividend foregone by or withheld from the equity shareholders
Correct Answer True
Your Answer True
Multiple Choice Single Answer*Question A project requires an outlay of Rs. 4,00,000 and earns, an annual cash inflow of Rs. 1,00,000 for 8 years. Calculate pay back period
Correct Answer 4 years
Your Answer 4 years
Multiple Choice Single Answer*Question The rate of return which computes the average annual yield on the net investment in the project is known as
Correct Answer Accounting rate of return
Your Answer Accounting rate of return
Multiple Choice Single Answer*Question The Pay Bank period is calculated as
Correct Answer Cash outlay / Annual cash inflow
Your Answer Cash outlay / Annual cash inflow
Multiple Choice Multiple Answer*Question Disadvantages of Internal rate of return is
Correct Answer It is difficult to use and understand , It presupposes that the cash inflows can be reinvested immediately to yield the return equivalent to Internal rate of return which is not very realistic
Your Answer It is difficult to use and understand , It presupposes that the cash inflows can be reinvested immediately to yield the return equivalent to Internal rate of return which is not very realistic
True/False*Question The lessor is the nominal owner of the asset as the possession and economic use of the asset rests with the lessee
Correct Answer True
Your Answer True
Select The Blank*Question The projects having maximum positive Net present value will be ranked ________
Correct Answer highest
Your Answer highest
Select The Blank*Question The current ratio of ________ is considered to be standard
Correct Answer 2 : 1
Your Answer 2 : 1
Multiple Choice Single Answer*Question The cost which varies in direct proportion to the sales revenue is termed as
Correct Answer Variable cost
Your Answer Variable cost
Multiple Choice Single Answer*Question Current assets are also referred to as
Correct Answer Working Capital
Your Answer Working Capital
Multiple Choice Multiple Answer*Question Situation of capital rationing may involve problems in the form of
Correct Answer Mutually dependent project , Multi period projects , Project Indivisibility
Your Answer Project Indivisibility , Mutually dependent project , Multi period projects
True/False*Question Financial leverage is calculated as ( Sales - Variable cost ) / ( Earnings before Interest and tax - Interest )
Correct Answer False
Your Answer False
Multiple Choice Single Answer*Question The Irrelevance approach is based on the assumption of
Correct Answer Capital markets are perfect, Investors are rational, transactions are instaneous and costless. Securities are divisible and no investor can influence the market price
Your Answer Retained earnings are the only source of finance available to the company
Multiple Choice Multiple Answer*Question The normal process which may be followed under the capital rationing situations may be
Correct Answer Rank the projects according to some measure of profitability , Select projects in the descending order of profitability till the available funds are exhausted
Your Answer Rank the projects according to some measure of profitability , Select projects in the descending order of profitability till the available funds are exhausted
Match The Following*Question Correct Answer Your Answer
Advantage of Net present value considers cash inflows from the project throughout its life considers cash inflows from the project throughout its life
Disadvantage of Accounting rate of return uses profits after depreciation and taxes and not the cash inflows for evaluating the projects uses profits after depreciation and taxes and not the cash inflows for evaluating the projects
Disadvantage of Pay back period ignores time value of money ignores time value of money
Advantage of Discounted Pay back period considers time value of money considers time value of money
Match The Following*Question Correct Answer Your Answer
Mortgage Mode of security pertains to immovable properties like land and building Mode of security pertains to immovable properties like land and building
Hypothecation Neither the property not the possession of the goods is transferred to the bank Neither the property not the possession of the goods is transferred to the bank
Pledge Possession of the goods is with the bank Possession of the goods is with the bank
Lien Bank has a right to retain the goods belonging to the company until the debt due to the bank is paid Bank has a right to retain the goods belonging to the company until the debt due to the bank is paid
Multiple Choice Multiple Answer*Question Utility of cash flow analysis
Correct Answer Helps in efficient cash management , helps in internal financial management , Discloses the movements of cash
Your Answer Helps in efficient cash management , helps in internal financial management , Discloses the movements of cash
True/False*Question Inadequate provision for depreciation may be the cause of overcapitalisation
Correct Answer True
Your Answer True
Multiple Choice Single Answer*Question Price Earnings ratio is calculated as
Correct Answer Market Price per share / Earnings per share
Your Answer Market Price per share / Earnings per share
Select The Blank*Question If the size of the issue is more than Rs. 100 crores, the issue is required to be rated by at least ________ credit rating agencies
Correct Answer two
Your Answer two
Multiple Choice Multiple Answer*Question Advantages of ABC Analysis are
Correct Answer A close and strict control is facilitated on the most important items , Helps in maintaining a high inventory turnover ratio , Optimum utilisation of the available funds can be assured
Your Answer A close and strict control is facilitated on the most important items , Helps in maintaining a high inventory turnover ratio , Optimum utilisation of the available funds can be assured
Select The Blank*Question Modigliani - Miller approach closely resembles ________ approach
Correct Answer Net operating income
Your Answer Net operating income
Select The Blank*Question The amount of shares bought back by the company should not be more than ________ of total paid-up capital of the company and its free reserves
Correct Answer 0.25
Your Answer 0.25
Multiple Choice Single Answer*Question The most easiest form of organisation to form and operate is
Correct Answer Proprietary concern
Your Answer Proprietary concern
Multiple Choice Single Answer*Question The period that within which the cost of the project will be completely recovered is known as
Correct Answer Pay Back period
Your Answer Pay Back period
True/False*Question Credit rating is obligatory only in case of the debt instruments
Correct Answer True
Your Answer True
Select The Blank*Question In the case of Overcapitalisation ________ is the worst affected class
Correct Answer Shareholders
Your Answer Shareholders
Select The Blank*Question From the following data, the Earning per share is ________ : Net Profit before tax Rs. 2,00,000/-, Taxation at 50% of Net Profit, 10% Preference Share Capital (Rs. 10 each) Rs. 1,00,000/-, Equity Share Capital (Rs. 10 each) Rs. 1,00,000/-
Correct Answer 9
Your Answer 9
Multiple Choice Multiple Answer*Question Overall profitability ratio includes
Correct Answer Return on Asset , Return on Shareholders Funds
Your Answer Return on Asset , Return on Shareholders Funds
True/False*Question Earnings per share is of great significance to an operator on the stock exchange buying and selling the shares
Correct Answer False
Your Answer False
Multiple Choice Multiple Answer*Question The recommendations of the Chhore committee included
Correct Answer increasing role of short term loans and bill finance and curbing the role of cash credit limits , the bank should appraise and fix separate limits for normal non-peak levels and also peak levels
Your Answer increasing role of short term loans and bill finance and curbing the role of cash credit limits , the bank should appraise and fix separate limits for normal non-peak levels and also peak levels
Multiple Choice Single Answer*Question Inventory turnover ratio is a measure to discover
Correct Answer The possible trouble in the form of overstocking or overvaluation
Your Answer The possible trouble in the form of overstocking or overvaluation
Select The Blank*Question The comparison of the ratios of one organisation with that of the other organisation is termed as ________ comparison
Correct Answer Inter-firm
Your Answer Inter-firm
Select The Blank*Question Net Present value considers ________ from the project throughout its life
Correct Answer cash inflow
Your Answer cash inflow
Financial Management - 18
LIST OF ATTEMPTED QUESTIONS AND ANSWERSMultiple Choice Single Answer*Question If the policy of the lending banks or financial institutions is too harsh or rigid, it will be advisable to
Correct Answer not to go for borrowed funds
Your Answer not to go for borrowed funds
True/False*Question Retained earnings involves cost in terms of dividend foregone by or withheld from the equity shareholders
Correct Answer True
Your Answer True
True/False*Question In case of cash credit, the company need not have a formal current account
Correct Answer True
Your Answer True
True/False*Question Reserve Bank of India appointed the Marathe Committee with the intention to recognize the contribution made by the SSI Sector to the economy
Correct Answer False
Your Answer False
Multiple Choice Multiple Answer*Question The book-keeping and accounting activities in relation to the receivables management undertaken by the factor includes
Correct Answer Maintenance of debtors ledger , Various periodical reports about outstanding from the customers , Age-wise analysis of the outstanding
Your Answer Maintenance of debtors ledger , Various periodical reports about outstanding from the customers
True/False*Question Economic Order Quantity model is a very useful model of determining the order quantity
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer*Question The internal factors affecting the dividend policy are
Correct Answer Growth rate of the company , Composition of the shareholding
Your Answer Growth rate of the company , Composition of the shareholding
Multiple Choice Multiple Answer*Question The causes of undercapitalisation are
Correct Answer Company following too conservative policy for paying the dividends , Future earnings may be underestimated
Your Answer Company following too conservative policy for paying the dividends , Future earnings may be underestimated
Multiple Choice Single Answer*Question Financing consists of the raising, providing, managing of all the money, capital or funds of any kind to be used in connection with the business' is defined by
Correct Answer Bonneville and Dewey
Your Answer Bonneville and Dewey
Multiple Choice Multiple Answer*Question The recurring duties of Finance Executive includes
Correct Answer Working Capital Management , Fixed Assets management , Control of funds
Your Answer Working Capital Management , Fixed Assets management , Control of funds
Multiple Choice Single Answer*Question The inputs purchased and stored to be converted into finished products, this constitutes investment of inventory in the form of
Correct Answer Raw Material
Your Answer Raw Material
True/False*Question A high debt equity ratio may indicate that the financial stake of the creditors is more than that of the owners
Correct Answer True
Your Answer True
Multiple Choice Single Answer*Question The main function of finance under the traditional approach comprises of
Correct Answer Procurement of funds
Your Answer Procurement of funds
Multiple Choice Single Answer*Question Irregular Dividend Policy refers to
Correct Answer Dividend per share varying according to the level of earnings
Your Answer Dividend per share varying according to the level of earnings
Multiple Choice Single Answer*Question Mr. A is given the opportunity to receive Rs. 10,000 after two years, when he can earn interest of 10% p.a. on his investment, what should be the amount which he should invest today so that he may be able to receive Rs. 10,000 after two years
Correct Answer Rs. 8,264
Your Answer Rs. 8,264
Multiple Choice Multiple Answer*Question Gross Profit is ascertained by the difference between sales and normally the following expenses
Correct Answer Cost of Purchases , Expenses related to Purchases , Stock Adjustments
Your Answer Cost of Purchases , Expenses related to Purchases , Stock Adjustments
Multiple Choice Single Answer*Question The Pay Bank period is calculated as
Correct Answer Cash outlay / Annual cash inflow
Your Answer Cash outlay / Annual cash inflow
True/False*Question In Regular Stock Dividend policy, the company may pay dividend in the form of bonus shares instead of cash
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer*Question The techniques of Analysis and Interpretation of financial statements are
Correct Answer Ratio Analysis , Cash flow Analysis
Your Answer Ratio Analysis , Cash flow Analysis
Multiple Choice Single Answer*Question Feature of term loan is
Correct Answer They are required to be repaid during the lifetime of the company at the predecided intervals say monthly, quarterly, yearly etc.
Your Answer They are required to be repaid during the lifetime of the company at the predecided intervals say monthly, quarterly, yearly etc.
Select The Blank*Question The mathematical expression of ________ is Normal Usage * Lead time for emergency purchases
Correct Answer Danger level
Your Answer Danger level
Multiple Choice Single Answer*Question Unclaimed Dividends is shown in the balance sheet under the head
Correct Answer Current liabilities and Provisions
Your Answer Current liabilities and Provisions
Multiple Choice Single Answer*Question The Investment decisions are mainly concerned with
Correct Answer Application of funds
Your Answer Application of funds
Select The Blank*Question The most crucial financial decisions of the organisation are taken by ________
Correct Answer Board of Directors
Your Answer Board of Directors
Multiple Choice Single Answer*Question A project requires an outlay of Rs. 4,00,000 and earns, an annual cash inflow of Rs. 1,00,000 for 8 years. Calculate pay back period
Correct Answer 4 years
Your Answer 4 years
Multiple Choice Single Answer*Question Current assets are also referred to as
Correct Answer Working Capital
Your Answer Working Capital
Multiple Choice Single Answer*Question The Current assets and current liabilities of a company were Rs. 10 lakhs and Rs. 5 Lakhs respecively. What will be the current ratio if the company purchases land for Rs. 4 lakhs on Cash on Delivery basis
Correct Answer 1.2 : 1.00
Your Answer 1.2 : 1.00
Multiple Choice Multiple Answer*Question The recommendations of the Tandon committee included
Correct Answer the norms for inventory and accounts receivables for as many as 15 industries excluding heavy engineering industry , that the amount of bank credit should not be decided by the capacity of the borrower to offer security to the banks but it should be decided in such a way to supplement the borrower's resources in carrying a reasonable level of current assets in relation to his production requirement
Your Answer the norms for inventory and accounts receivables for as many as 15 industries excluding heavy engineering industry , that the amount of bank credit should not be decided by the capacity of the borrower to offer security to the banks but it should be decided in such a way to supplement the borrower's resources in carrying a reasonable level of current assets in relation to his production requirement
Multiple Choice Multiple Answer*Question The classification of ratios under miscellaneous group includes
Correct Answer Earnings per share , Dividend Payment ratio
Your Answer Earnings per share , Dividend Payment ratio
True/False*Question The lessor is the nominal owner of the asset as the possession and economic use of the asset rests with the lessee
Correct Answer True
Your Answer True
Multiple Choice Single Answer*Question Live Stock is an example of
Correct Answer Fixed Asset
Your Answer Fixed Asset
Multiple Choice Multiple Answer*Question International financial function of the organisation comprises of :
Correct Answer Study of flow of funds beyond national boundaries , Exchange of currencies
Your Answer Study of flow of funds beyond national boundaries , Exchange of currencies
Select The Blank*Question Under ________, it is not only necessary to decide profitable investments but also necessary to rank the acceptable proposals according to their relative profitabilities
Correct Answer Capital rationing
Your Answer capital forecasting
True/False*Question Premium paid on the life policy of the proprietor is debited to the Profit and Loss Account
Correct Answer False
Your Answer False
Match The Following*Question Correct Answer Your Answer
Risk adjusting discounting rate method of capital budgeting decision discounting rate is increased in case of projects involving greater risk discounting rate is increased in case of projects involving greater risk
Capital rationing situation where the company has more acceptable proposals requiring a greater amount of funds situation where the company has more acceptable proposals requiring a greater amount of funds
Problems relating to situation of capital rationing Project Indivisibility Project Indivisibility
Informal method of capital budgeting decision subjective method subjective method
Select The Blank*Question ________ is the most important ratio to measure whether the firm has earned sufficient returns for its shareholders or not
Correct Answer Return on Shareholders funds
Your Answer Return on Shareholders funds
Select The Blank*Question ________ is calculated on the basis of current profits and not on the basis of retained profits
Correct Answer Earnings per share
Your Answer Earnings per share
Select The Blank*Question To meet the working capital needs of the company, banks may grant the working capital term loans for a period of ________
Correct Answer 3 to 7 years
Your Answer 3 to 7 years
Select The Blank*Question under no circumstances , ________ term requirement of funds should be met out of short term sources of funds
Correct Answer long
Your Answer long
Multiple Choice Single Answer*Question The "Pre-emptive right" of the equity shareholder is
Correct Answer the right to purchase new shares in the same proportion as their current ownership
Your Answer the right to purchase new shares in the same proportion as their current ownership
Select The Blank*Question Retained earnings indicates that whatever profits are earned by the company are not distributed by it by way of ________ but are kept aside for use in future for expansion or other purpose
Correct Answer Dividend
Your Answer Dividend
Multiple Choice Multiple Answer*Question The factor may provide the following services to the client
Correct Answer It may undertake the credit analysis of the customers of the client , It will undertake the various book-keeping and accounting activities in relation to the receivables management , It undertakes the responsibility of following up with the customers for the purpose of making the collection from the customer
Your Answer It may undertake the credit analysis of the customers of the client , It will undertake the various book-keeping and accounting activities in relation to the receivables management , It undertakes the responsibility of following up with the customers for the purpose of making the collection from the customer
Multiple Choice Single Answer*Question That part of the inventory which does not become a part of final product but are required for production process is termed as
Correct Answer Stores and supplies
Your Answer Stores and supplies
Multiple Choice Single Answer*Question The traditional approach to financial management refers only to the procurement of funds by
Correct Answer Corporate entity
Your Answer Corporate entity
True/False*Question In case of Without Recourses factoring, the risk on account of non-payment by the customer is assumed by the selling company
Correct Answer False
Your Answer False
Match The Following*Question Correct Answer Your Answer
Advantage of Net present value considers cash inflows from the project throughout its life considers cash inflows from the project throughout its life
Disadvantage of Accounting rate of return uses profits after depreciation and taxes and not the cash inflows for evaluating the projects uses profits after depreciation and taxes and not the cash inflows for evaluating the projects
Disadvantage of Pay back period ignores time value of money ignores time value of money
Advantage of Discounted Pay back period considers time value of money considers time value of money
Multiple Choice Multiple Answer*Question Fund based lending of banks include
Correct Answer Overdraft , Bills Purchased
Your Answer Overdraft , Bills Purchased
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