Financial Management-8

Financial Management


True/False
Question The knowledge of Working capital is necessary while studying the concept of Cash flow statement
Correct Answer True
Your Answer False


Select The Blank
Question ________ of the company should authorise the company to buy back its own shares
Correct Answer Articles of Association
Your Answer Prospectus


Multiple Choice Multiple Answer
Question Types of capital budgeting decisions
Correct Answer Replacements , Expansion , Diversification
Your Answer Replacements , Expansion , Diversification


Multiple Choice Multiple Answer
Question Gross Profit can be increased by either
Correct Answer Reduced Production cost, sales price remaining the same , Increased Sales price, Reduced Production cost , Increased Sales price, Production cost remaining the same
Your Answer Reduced Production cost, sales price remaining the same , Increased Sales price, Reduced Production cost , Increased Sales price, Production cost remaining the same


Multiple Choice Single Answer
Question Net Profit is the difference between Sales and
Correct Answer All types of cost
Your Answer Operating cost


Multiple Choice Single Answer
Question Undercapitalisation is
Correct Answer Excess of real worth of the assets over the aggregate of shares and debentures outstanding
Your Answer Excess of real worth of the assets over the aggregate of shares and debentures outstanding


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


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


Select The Blank
Question The operating profit earned by the company is in the form of contribution duly reduced by the ________
Correct Answer Fixed operating cost
Your Answer Fixed operating cost


Multiple Choice Single Answer
Question Increase in the amount in debtors results in
Correct Answer Decrease in cash
Your Answer Increase in cash


True/False
Question When a company issues bonus shares, reserves of the company get reduced and share capital of the company increases
Correct Answer True
Your Answer False


True/False
Question The factor need not factor all the debts of the client
Correct Answer True
Your Answer True


Select The Blank
Question Where share capital is not represented by the assets of equal value, the situation may mean introduction of ________
Correct Answer Watered capital
Your Answer Watered 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 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


Select The Blank
Question ________ indicates the symptom of liquidity crisis
Correct Answer Current ratio
Your Answer Current ratio


Multiple Choice Single Answer
Question The real value of the assets is less than the book value of the assets due to purchase of the assets during inflationary situations results into
Correct Answer Overcapitalisation
Your Answer Overcapitalisation


Multiple Choice Single Answer
Question Mr. A invested Rs. 10,000 in fixed deposit carrying interest @10% p.a. compounded annually. Calculate the value of investment after two years
Correct Answer Rs. 12,100
Your Answer Rs. 12,100


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


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


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 quality aspect of benefits associated with a financial course of action , Ignores risk factor , Does not consider social obligation
Your Answer Ignores risk factor , Does not consider social obligation , Does take into consideration time value of money


Multiple Choice Single Answer
Question From the following compute the 'Current Ratio' : Sundry Debtors Rs. 40,000/-, Prepaid exps Rs. 20,000/-, Short term investment Rs. 10,000/-, Bills Payable Rs. 10,000/-, Sundry Creditors Rs. 20,000/-, Debentures Rs. 1,00,000/-, Inventories Rs. 20,000/-, Outstanding expenses Rs. 20,000/-.
Correct Answer 1.8
Your Answer 1.8


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


True/False
Question Internal rate of return does not considers cash inflows from the project throughout its life
Correct Answer False
Your Answer False


Multiple Choice Single Answer
Question The Investment decisions are mainly concerned with
Correct Answer Application of funds
Your Answer Application of funds


Match The Following
Question Correct Answer Your Answer

Financial ratios Ratios disclosing the financial position or solvency of the firm Ratios disclosing the financial position or solvency of the firm

Profitability ratio Ratios which reflect the final results of business operations The ratios indicate the long term financial prospects of the company

Turnover ratios Ratios measuring the efficiency with which the assets are employed by a firm Ratios measuring the efficiency with which the assets are employed by a firm

Overall profitability ratio Ratios which indicates the percentage of return on the total capital employed in the business Ratios which indicates the percentage of return on the total capital employed in the business



Select The Blank
Question The ________ has been empowered to order the company that fails to repay any deposit to make the repayment of such deposits
Correct Answer Company Law board
Your Answer Company Law board


Multiple Choice Single Answer
Question The formula for Current ratio is
Correct Answer Current assets / Current liabilities
Your Answer Current assets / Current liabilities


Multiple Choice Single Answer
Question Shortcoming of term loans from company's point of view
Correct Answer The interest and capital repayment are obligatory payments
Your Answer The interest and capital repayment are obligatory payments


Multiple Choice Multiple Answer
Question Goods Stolen ( Sale price Rs. 1000/- Cost Rs. 800/- ) ; Which of the accounts will be affected by this transaction
Correct Answer Purchases Account , Loss by theft Account
Your Answer Sales Account , Stock Account , Loss by theft Account


True/False
Question Introduction of a heavy amount of debt capital in the capital structure will not only reduce the valuation of the firm but will also increase the cost of capital
Correct Answer True
Your Answer True


True/False
Question Some projects which cannot be divided while execution , they can be either accepted or rejected in its entirety
Correct Answer True
Your Answer False


Select The Blank
Question Financial Institution plays the role of ________ in factoring service offered
Correct Answer Factor
Your Answer Factor


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 , the norms for inventory and accounts receivables for as many as 15 industries excluding heavy engineering industry


True/False
Question Return on Assets is a ratio of relationship between Assets and Sales
Correct Answer False
Your Answer False


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 Multiple Answer
Question Indicate which of these are Profitability ratios
Correct Answer Operating ratio , Gross Profit ratio
Your Answer Operating ratio , Gross Profit ratio


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 Single Answer
Question The reduction in the market value of the shares may cause due to
Correct Answer Overcapitalisation
Your Answer Overcapitalisation


Multiple Choice Multiple Answer
Question Operating cost incurred by the company can be classified into
Correct Answer Variable cost , Fixed cost , Semi-variable cost
Your Answer Variable cost , Fixed cost , Semi-variable cost


Multiple Choice Single Answer
Question Increase in average credit period to maintain sales in view of falling demand can be indicated by
Correct Answer Debtors turnover ratio
Your Answer Finished goods turnover ratio


True/False
Question Hire Purchase is referred to as 'Off the balance sheet mode of financing' for the hirer
Correct Answer False
Your Answer False


Select The Blank
Question For the selection of the period for which capital expenditure budget should be prepared , ________ a period may not be useful
Correct Answer Too long
Your Answer very small


Select The Blank
Question In ABC analysis B class consist of ________.
Correct Answer relatively less important items
Your Answer relatively less important items


Multiple Choice Multiple Answer
Question Advantages of letter of credit to the Importer
Correct Answer the importer can bargain for better trading terms , he is assured to get proper supply of the goods
Your Answer the importer can bargain for better trading terms , he is assured to get proper supply of the goods


Match The Following
Question Correct Answer Your Answer

Ratio which measures the profitability of the investments in a firm Return on Asset Return on Asset

The relation of Net Sales and Working Capital Working Capital turnover ratio Working Capital turnover ratio

The ratio which indicates the speed at which the Sundry debtors are converted in the form of cash Debtors turnover ratio Debtors turnover ratio

The ratio which indicates the efficiency of the organisation with which the capital employed is being utilised Capital turnover ratio Capital turnover ratio



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