Financial Management-15

Financial Management


Multiple Choice Single Answer
Question The amount of cheques deposited by a Bank awaiting clearance is called
Correct Answer Collection float
Your Answer Deposit float


True/False
Question Re-order level is the highest level of inventory to be maintained above which the inventory should not rise
Correct Answer False
Your Answer True


Select The Blank
Question ________ will be shown as source of funds net of proposed dividend
Correct Answer Operating Profit
Your Answer Gross profit


True/False
Question If the company buys back its own shares, it shall not make further issue of Bonus shares within a period of 24 months
Correct Answer False
Your Answer True


Match The Following
Question Correct Answer Your Answer

Classification of ratios Profitability ratio It helps in planning and forecasting

Advantages of Ratio Analysis It helps in planning and forecasting It is a creative technique

Limitation of Ratio Analysis Facts only those which can be expressed in financial terms are considered Inter firm comparison

Precautions before using ratio analysis technique Impact of the inflationary conditions of changing price levels to be taken in account Profitability ratio



Multiple Choice Multiple Answer
Question Projects for which profitability is not the criterion are
Correct Answer Service Department projects , Welfare projects , Educational projects
Your Answer Service Department projects , Welfare projects , Educational projects


Select The Blank
Question If the amount of interest is considered as a part of expenses, the ________ liability of the company reduces proportionately
Correct Answer tax
Your Answer current


Multiple Choice Multiple Answer
Question The advantages of stable Dividend policy are
Correct Answer Credit standing of the company in the market increases , Share price of the company increases , Enjoys Confidence of the shareholders
Your Answer Credit standing of the company in the market increases , Share price of the company increases


Select The Blank
Question The objective of the management in the investment decisions is in the form of ________
Correct Answer maximisation of the wealth of the shareholders
Your Answer Goodwill of the organisation


True/False
Question Ratios can be expressed only in percentage
Correct Answer False
Your Answer True


True/False
Question Operating leverage is calculated as Earnings Before Interest and Tax / ( Earnings before Interest and Tax - Interest )
Correct Answer False
Your Answer True


Multiple Choice Multiple Answer
Question Measurement of cost of capital can be done through
Correct Answer Cost of Debt , Cost of Preference shares , Cost of Equity shares
Your Answer Cost of Preference shares , Cost of Equity shares , Cost of other liabilities


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


True/False
Question The objective of funds flow statement may be to find out uses of loans raised by the business
Correct Answer True
Your Answer True


Select The Blank
Question The mathematical expression of ________ is ( Minimum level + Maximum level ) / 2
Correct Answer Average level
Your Answer Average level


True/False
Question Liquid assets includes all current assets except Inventories and Prepaid expenses
Correct Answer True
Your Answer True


True/False
Question Proprietary ratios is the relationship between owners funds and total assets
Correct Answer True
Your Answer False


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 , It does not consider time value of money


Select The Blank
Question In case of Mortgage, the party in whose favour the interest is so transferred is called ________
Correct Answer Mortgagee
Your Answer Transferee


Multiple Choice Multiple Answer
Question The functions of a Finance Controller are :
Correct Answer Budgeting , Record Keeping , Annual Reporting
Your Answer Banking Relations , Budgeting , Record Keeping


Multiple Choice Single Answer
Question The working Partner is a Partner who
Correct Answer participates in day-to-day affairs of the firm
Your Answer takes only crucial decisions


Multiple Choice Single Answer
Question The cost of equity shares may be decided on the basis of yields actually realised over the period of past few years which may be expected to be continued in future also as per the
Correct Answer Realised Yield Approach
Your Answer Dividend /Price Approach


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 True


Multiple Choice Single Answer
Question Working Capital is computed as
Correct Answer Current assets - Current liabilities
Your Answer Current assets + Current liabilities


Select The Blank
Question Redemtion of shares/debentures is categorised under ________
Correct Answer Non-operating cash outflow
Your Answer Operating cash inflow


Multiple Choice Single Answer
Question How many days in a year are to be considered for the calculation of daily sales
Correct Answer 360
Your Answer 365


True/False
Question Informal method of capital budgeting does not follow any mathematical or statistical model to consider the risk factor
Correct Answer True
Your Answer True


Multiple Choice Single Answer
Question The cost which remains constant upto a certain sales revenue and increases if the sales revenue increases beyond a certain point is termed as
Correct Answer Semi-variable cost
Your Answer Variable cost


Multiple Choice Single Answer
Question If the issue of Debentures is having the maturity period of more than 18 months, the company shall create
Correct Answer Debenture Redemption reserve
Your Answer Capital redemption reserve


Select The Blank
Question Factor can purchase the debts of the client making the immediate payment of the same, this reduces the strain on the ________ requirements of the client
Correct Answer Working Capital
Your Answer Fixed assets


Select The Blank
Question As per the Tandon Committee, the norms suggested for consumption of raw materials should be in ________
Correct Answer months
Your Answer quarterly


Multiple Choice Single Answer
Question The form of organisation where the personal assets of the owners are at stake, if the assets of the firm are insufficient to meet the liabilities is
Correct Answer Unlimited liability organisation
Your Answer Limited liability organisation


Multiple Choice Multiple Answer
Question Uses of financial leverage are
Correct Answer It gives an indication regarding the extent to which Earning per share may be affected due to every change in Earning before Interest and tax , It acts as a guideline in setting maximum limit upto which the company should use the debt capital
Your Answer It acts as a guideline in setting maximum limit upto which the company should use the debt capital , It gives an indication regarding the extent to which Earning per share may be affected due to every change in Earning before Interest and tax , It provides useful guidelines for determining the optimal capital structure


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 The company might have spent huge amounts during its formation stage , Company following too conservative policy for paying the dividends , Future earnings may be underestimated


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


Multiple Choice Multiple Answer
Question Under the Business Analysis of the company done by Credit rating and Information Services of India Ltd. the following points are covered
Correct Answer Existing as well as potential competitors in the industry , Market position of the company
Your Answer Existing as well as potential competitors in the industry , Market position of the company


Multiple Choice Multiple Answer
Question Under the Financial Analysis of the company done by Credit rating and Information Services of India Ltd. the following points are covered
Correct Answer Accounting policies followed by the company , Adequacy of cash flows for fixed capital
Your Answer Existing as well as potential competitors in the industry , Market position of the company , Accounting policies followed by the company


Multiple Choice Multiple Answer
Question The importance of various items of inventory may be decided on the following factors
Correct Answer Amount of investment in inventory , Value of material consumption , Critical nature of inventory items
Your Answer Amount of investment in inventory , Value of material consumption


True/False
Question In funds flow statement, net decrease in working capital is shown on sources side
Correct Answer True
Your Answer True


Multiple Choice Multiple Answer
Question The sources of cash are
Correct Answer Cash from operations , sale of machinery , Issue of new shares
Your Answer Purchase of fixed assets , Cash from operations


Select The Blank
Question Till the sales revenue reaches the break even point, the company ________
Correct Answer incurs the losses
Your Answer incurs the losses


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 case of Internal Rate of Return Method, the resultant IRR is compared with the ________
Correct Answer cost of capital
Your Answer cost of current assets


Multiple Choice Single Answer
Question There is a direct relationship between the dividend policy of the company and its value in terms of market price of its shares. This approach is known as
Correct Answer Relevance approach
Your Answer Relevance approach


Match The Following
Question Correct Answer Your Answer

Nayak committee to recognize the contribution made by the SSI sector to the economy to determine the quantum of bank advances

Dahejia committee to examine the extent to which credit needs of industry and trade are likely to be inflated and how such trends could be checked to review mainly the system of cash credit management policy by banks

Chhore committee to review mainly the system of cash credit management policy by banks to recognize the contribution made by the SSI sector to the economy

Marathe committee to review the credit authorization scheme to find measures to improve the present manner and style of lending



Multiple Choice Single Answer
Question Minimum application money payable by the applicant along with the application shall not be less than
Correct Answer 25% of the issue price
Your Answer 30% of the issue price


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 Capital employed Turnover ratio is ________
Correct Answer 1.61
Your Answer 1.61