Financial Management-7

Financial Management


Select The Blank
Question A list of all the material required for a job, process or production order is termed as ________.
Correct Answer Bill of materials
Your Answer Bill of materials


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


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 The approved credit rating agencies prevailing in the country are promoted by the government controlled organisations
Correct Answer True
Your Answer True


True/False
Question During the phase of boom and prosperity the company will like to retain more profits which can be used during the depression which is likely to follow
Correct Answer True
Your Answer False


Multiple Choice Single Answer
Question Credit period is
Correct Answer the time allowed by the company to the customers to pay their dues
Your Answer the time allowed by the company to the customers to pay their dues


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 Receipt of loans/borrowings appear in the cash budget under the head
Correct Answer Non-operating cash inflow
Your Answer Non-operating cash inflow


Multiple Choice Single Answer
Question Advantage of term loan from the company's point of view is
Correct Answer In post tax terms, the cost of term loans is lower than the cost of equity capital or preference capital
Your Answer In post tax terms, the cost of term loans is lower than the cost of equity capital or preference capital


Multiple Choice Single Answer
Question Loan Installments appear in the cash budget under the head
Correct Answer Non-operating cash outflow
Your Answer Non-operating cash outflow


Multiple Choice Single Answer
Question Composite cost is calculated as
Correct Answer Total weighted cost / Total weights
Your Answer Total weighted cost / Total weights


Multiple Choice Multiple Answer
Question Advantages of Preference shares from shareholders point of view
Correct Answer For a corporate investor, preference dividend income , It earns a stable dividend rate
Your Answer For a corporate investor, preference dividend income , It earns a stable dividend rate


True/False
Question Carrying cost of inventory includes cost incurred for preparation of purchase requisition
Correct Answer False
Your Answer False


Multiple Choice Multiple Answer
Question Proprietory ratio can be calculated as
Correct Answer Total Assets / Owners Funds , Fixed Assets / Owners Funds , Current Assets / Owners Funds
Your Answer Total Assets / Owners Funds , Fixed Assets / Owners Funds , Current Assets / Owners Funds


Multiple Choice Single Answer
Question The capacity of the existing owners of the company to retain control over operations of the company is termed under
Correct Answer Control factor
Your Answer Control factor


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


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


True/False
Question The assumptions of capital structure theories is that Operating earnings are not expected to grow
Correct Answer True
Your Answer True


True/False
Question Risk adjusted discounting rate method of capital budgeting decision is advantageous in the sense that it is simple to understand and incorporates the risk attached with the future returns in case of capital expenditure proposals
Correct Answer True
Your Answer True


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 Proprietary concern


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 Cash from operation is the main internal source of cash
Correct Answer True
Your Answer True


True/False
Question Earnings per share does not indicate the amount of profits distributed among the owners by way of dividend and also the amount of profits retained in the business
Correct Answer True
Your Answer True


Select The Blank
Question Venture Capitalist is not interested in keeping his investment in the project on a ________ basis
Correct Answer Permanent
Your Answer Permanent


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 Accounting policies followed by the company , Adequacy of cash flows for fixed capital


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 Current assets are also referred to as
Correct Answer Working Capital
Your Answer Working Capital


Select The Blank
Question As per the Tandon committee, variations between the projected figures and actuals may be permitted to the extent of ________
Correct Answer 0.1
Your Answer 0.1


Select The Blank
Question A wider connotation of the term fund is found in the interpretation of the term 'funds' as ________ concept
Correct Answer Resources
Your Answer Resources


Match The Following
Question Correct Answer Your Answer

Operating Profit Contribution less Fixed Operating cost Contribution less Fixed Operating cost

Fixed cost remains constant remain constant upto a certain sales revenue and increase if the sales revenue increases beyond a certain point

Variable cost varies in direct proportion to the sales revenue varies in direct proportion to the sales revenue

Contribution Sales less variable operating cost Sales less variable operating cost



Select The Blank
Question The economical use of the asset is permitted by the lessor on the payment of periodical amount which is in the form of ________.
Correct Answer Lease rent
Your Answer Lease rent


Multiple Choice Single Answer
Question A project involves the investment of Rs. 5,00,000 which yields profit after depreciation and tax Rs. 2,30,000. At the end of 5 years, the machineries in the project can be sold for Rs. 40,000. Find the Average rate of return
Correct Answer 0.1
Your Answer 0.1


Multiple Choice Multiple Answer
Question Internal sources of cash are
Correct Answer Depreciation , Amortization of intangible assets
Your Answer Depreciation , Amortization of intangible assets


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


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


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


True/False
Question As per the SEBI guidelines revaluation reserve can be used for issue of bonus share
Correct Answer False
Your Answer True


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 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


Match The Following
Question Correct Answer Your Answer

Recurring duties of finance executive Raising of funds Raising of funds

Objective of finance function Profit maximization Profit maximization

Treasurer Cost management Cost management

Finance Controller Internal Auditing Internal Auditing



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


Multiple Choice Single Answer
Question Dividends are usually paid on
Correct Answer Paid up capital
Your Answer Issued capital


True/False
Question Financial leverage is calculated as ( Sales - Variable cost ) / ( Earnings before Interest and tax - Interest )
Correct Answer False
Your Answer False


Select The Blank
Question ________ implies arithmetical relationship between two related figures
Correct Answer Ratio
Your Answer Ratio


Select The Blank
Question If the company pays the dividend out of retained profits, then the amount to be drawn from the reserve shall not exceed an amount equal to ________ of its paid up capital and free reserves
Correct Answer 0.1
Your Answer 0.1


Multiple Choice Multiple Answer
Question Before investing in the project, Venture capitalist is interested in ensuring that
Correct Answer The project is technically feasible , It is commercial viable , The entrepreneurs are technically competent
Your Answer The project is technically feasible , It is commercial viable , The entrepreneurs are technically competent


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