Financial Management-12

Financial Management


Multiple Choice Multiple Answer
Question Disadvantages of Preference shares from shareholders point of view
Correct Answer Preference shareholders are vulnerable to arbitrary managerial actions , Preference Dividend rate is rather modest , Price fluctuation preference shares is greater than price fluctuation of debentures
Your Answer Preference Dividend rate is rather modest , Price fluctuation preference shares is greater than price fluctuation of debentures


Multiple Choice Single Answer
Question The motive of the company to hold inventory to get the advantage in terms of quantity discounts connected with bulk purchasing is known as
Correct Answer Speculative motive
Your Answer Speculative motive


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 Multiple Answer
Question Factoring can be classified as
Correct Answer Without Recourses factoring , With Recourse factoring
Your Answer Without Recourses factoring , With Recourse factoring


True/False
Question Usually, the implementation of capital expenditure proposals are spread over more than one year
Correct Answer True
Your Answer True


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 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


Multiple Choice Multiple Answer
Question The classification of return on Investment are
Correct Answer Return on Asset , Return on Capital Employed
Your Answer Return on Capital Employed , Debt Equity ratio


Select The Blank
Question Retained earnings is a source of ________ finance
Correct Answer Internal
Your Answer Internal


Multiple Choice Single Answer
Question The symptom of large inventory accumulation in anticipation of price rise in future will be indicated by
Correct Answer Inventory turnover ratio
Your Answer Inventory turnover ratio


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 is easy to calculate , It presupposes that the discounting rate is known , It may give dissatisfactory results if the alternative projects involve varying investment outlay


True/False
Question Under pledge mode of security, possession of the goods is with the Bank and the goods pledged are in the custody of the Bank
Correct Answer True
Your Answer True


Select The Blank
Question The projects having Profitability index of less than ________ will be rejected
Correct Answer one
Your Answer one


True/False
Question In certain cases, the capital expenditure may not involve any specific inflow of funds, but only outflow of funds
Correct Answer True
Your Answer True


Multiple Choice Multiple Answer
Question Dividend / Price Approach to compute cost of equity shares is objected on the following grounds
Correct Answer This presupposes that an investor looks forward only to receive dividend on equity shares which may not be correct , It assumes that the company will not earn on its retained earnings which is a wrong assumption
Your Answer This presupposes that an investor looks forward only to receive dividend on equity shares which may not be correct , It wrongly assumes that earnings per share will remain constant in future , All the earnings may not be distributed among the shareholders by way of dividend


Select The Blank
Question A wrong decision in respect of capital expenditure proposals may disturb the entire ________ structure of the organisation
Correct Answer financial
Your Answer financial


Select The Blank
Question The indication given by Internal rate of return is that it is the ________ rate at which the company will be able to pay towards the interest on amounts borrowed for investing in the projects
Correct Answer maximum
Your Answer minimum


Multiple Choice Single Answer
Question The Pay Bank period is calculated as
Correct Answer Cash outlay / Annual cash inflow
Your Answer Total Profits / (Net Investment * No. of years of Profits) * 100


True/False
Question In narrow sense funds means only cash resources of the business
Correct Answer True
Your Answer False


Select The Blank
Question One of the tools available to the company to ensure the maintenance of ________ cash balance is to prepare cash budget
Correct Answer Optimum
Your Answer Zero


Select The Blank
Question Lease agreement is the most important document as it starts the ________ relationship between the lessor and lessee
Correct Answer Legal
Your Answer Permanent


Select The Blank
Question The amount of profit earned after recovering the interest on long term sources of capital is referred to as ________
Correct Answer Profit before taxes
Your Answer Profit before Interest and Taxes


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 , Management attitude if conservative, then credit will not be extended


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 , Preparing financial statements


Multiple Choice Single Answer
Question The accounting report which summarises the revenues and expenses for a specified accounting period is referred to as
Correct Answer Profit and loss Account
Your Answer Balance Sheet


Select The Blank
Question ________ in assets involves outflow of funds
Correct Answer Increase
Your Answer Decrease


Select The Blank
Question Inflow of funds may not necessarily result in ________
Correct Answer Inflow of cash
Your Answer Inflow of cash


Select The Blank
Question ________ committee has extended the recommendations of Nayak committee to all the business organisations
Correct Answer Vaz
Your Answer Vaz


True/False
Question Fixed Assets turnover ratio is the relationship between fixed assets and owner's funds
Correct Answer False
Your Answer True


Multiple Choice Single Answer
Question The motive of the company to hold inventory to guard against the risk of unpredictable changes in demand and supply forces is known as
Correct Answer Precautionary motive
Your Answer Precautionary motive


Match The Following
Question Correct Answer Your Answer

Safety Stock below which the actual stock should not be allowed to fall below which the actual stock should not be allowed to fall

ABC Analysis Vital few Trivial Many Vital few Trivial Many

Bill of Materials Details of the necessary materials as well as quantity of each item Details of the necessary materials as well as quantity of each item

Perpetual Inventory System Maintenance of Bin Cards and Stores ledger in order to know about the stock in quantity and value at any given point of time Maintenance of Bin Cards and Stores ledger in order to know about the stock in quantity and value at any given point of time



True/False
Question Turnover ratios indicate the efficiency of the organisation to use the various kinds of assets by converting them in the form of Sales
Correct Answer True
Your Answer True


Multiple Choice Single Answer
Question Stock at the end results in the
Correct Answer Source of funds
Your Answer Sinking fund


Multiple Choice Single Answer
Question Registered Debentures are those
Correct Answer which can be transferred to another person only through the company
Your Answer which can be transferred to another person only through the company


Match The Following
Question Correct Answer Your Answer

Important ratio from the Equity shareholder point of view in relation between the profits and investment in the firm Return on Shareholders funds Price Earning Ratio

Important ratio for a Bank granting short term loan Current ratio Debt Equity ratio

Important ratio for Financial Institutions and Creditors long term finance Debt Service Coverage Service Capital Gearing ratio

Important ratio for an ideal investor for comparison between the current market price and future EPS Price Earning Ratio Debt Service Coverage Service



True/False
Question The term Accrued Income and Outstanding Income have synonymous meaning
Correct Answer False
Your Answer True


Multiple Choice Multiple Answer
Question Advantages of the issue of Bonus shares in the form of Dividend to the company are
Correct Answer Remedy for undercapitalisation , Increase marketability of shares , Increase credit standing of the company in the eyes of the lending financial institutions
Your Answer Remedy for undercapitalisation , Increase marketability of shares , Increase credit standing of the company in the eyes of the lending financial institutions


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 Compounding


Multiple Choice Multiple Answer
Question Benefits of cash flow information
Correct Answer It enhances the comparability of the reporting of operating performance by different enterprise , Historical cash flow information is often used as an indicator of the amount , timing and certainty of future cash flows , It enables the users to evaluate the changes in net assets of an enterprise
Your Answer Historical cash flow information is often used as an indicator of the amount , timing and certainty of future cash flows , It enables the users to evaluate the changes in net assets of an enterprise , information is useful to construct financial statements


True/False
Question In an organisation, Dividend distribution is the function of a Finance Controller
Correct Answer False
Your Answer True


Multiple Choice Single Answer
Question Capitalisation is
Correct Answer Total amount of long term funds available to the company
Your Answer Total amount of long term funds available to the company


Multiple Choice Single Answer
Question From the following data compute Reorder level : Normal usage 40 units per week each, Minimum usage 15 units per week each, Maximum usage 65 units per week each, Re-order quantity 400 units, Re-order period 4 to 6 weeks
Correct Answer 390 units
Your Answer 390 units


Select The Blank
Question The factor makes the prepayment of the invoice to the selling company after keeping the ________ as stipulated
Correct Answer Margin
Your Answer Charges


Multiple Choice Multiple Answer
Question Disadvantages of factoring are
Correct Answer The financial burden on the company increases , It may be considered to be a symptom of financial weakness on the part of the selling company , In Indian circumstances, factoring is mainly with-recourse factoring. The risk of non-payment on the part of customer is borne by the selling firm. This restricts its popularity
Your Answer The financial burden on the company increases , It may be considered to be a symptom of financial weakness on the part of the selling company , In Indian circumstances, factoring is mainly with-recourse factoring. The risk of non-payment on the part of customer is borne by the selling firm. This restricts its popularity


Multiple Choice Single Answer
Question The products which are ready for sale in the market are termed as
Correct Answer Finished goods
Your Answer Finished goods


Multiple Choice Multiple Answer
Question The Proprietary concern is better than the Partnership concern on the following points
Correct Answer Minimum Government regulations , Where the business is small
Your Answer Minimum Government regulations , Where the business is small


Multiple Choice Single Answer
Question Requirement of working capital is low is case of
Correct Answer Infrastructure oriented projects
Your Answer Infrastructure oriented projects


True/False
Question Introduction of debt capital increases the risk of insolvency due to non-availability of cash and variability of earnings available to equity shareholders
Correct Answer True
Your Answer True