Financial Management-3

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LIST OF ATTEMPTED QUESTIONS AND ANSWERS



Multiple Choice Single Answer
Question
For the calculation of Operating Profit / Loss , Depreciation on fixed assets should be
Correct Answer
added to the Net Profit as per Profit and loss account
Your Answer
Deducted from the Net Profit as per Profit and loss account

Multiple Choice Single Answer
Question
The return which the company pays on borrowed funds is termed as
Correct Answer
Interest
Your Answer
Interest

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. 8,156

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
Earnings per share is calculated as ( Profit after tax - Preference Dividend ) / Number of Equity shares
Correct Answer
True
Your Answer
True

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
There is no liability for repayment

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

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

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 Single Answer
Question
The market price per share is equal to the present value of the expected dividends discounted at the rate of return required by equity shareholders is determined under
Correct Answer
Dividend /Price Approach
Your Answer
Dividend /Price Approach

Multiple Choice Multiple Answer
Question
Assuming the current ratio is 2, in which cases would the current ratio decline
Correct Answer
Purchase of fixed Assets , Borrow Money on an Interest bearing promissory note
Your Answer
Issue of new shares , Purchase of fixed Assets , Cash collected from customers , Borrow Money on an Interest bearing promissory note

Multiple Choice Multiple Answer
Question
Advantages of Net Present value is
Correct Answer
It considers time value of money , It considers cash inflows from the project throughout its life
Your Answer
It considers time value of money , It considers cash inflows from the project throughout its life , It is easy to calculate , It is easy to understand

Match The Following
Question
Correct Answer
Your Answer
Credit rating symbol for Commercial Paper of Default by Investment Information and Credit rating agency
A5
B
Credit rating symbol for Debentures of Inadequate safety by CRISIL
BB
FC
Credit rating symbol for Fixed Deposits of High risk by CRISIL
FC
FA
Credit rating symbol for Fixed Deposits of Adequate safety by Investment Information and Credit rating agency
MA
A5

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

Select The Blank
Question
The ________ collections may be useful for reducing the postal float as well as bank float
Correct Answer
Decentralised
Your Answer
Debtors

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
0.05

Select The Blank
Question
Operating Lease is also referred to as ________ lease
Correct Answer
Service
Your Answer
Financial

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

Multiple Choice Multiple Answer
Question
The assumptions for the theories of capital structure are
Correct Answer
Firm use only long term debt capital or equity share capital to raise funds , Firm follow policy of paying 100% of its earnings by way of dividend , Operating earnings are not expected to grow
Your Answer
Firm use only long term debt capital or equity share capital to raise funds , Corporate Income Tax does exists , Firm follow policy of paying 100% of its earnings by way of dividend , Operating earnings are not expected to grow

Multiple Choice Single Answer
Question
Capital turnover ratio is calculated as
Correct Answer
Sales / Capital employed
Your Answer
Total assets / Owners fund

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
above which the actual stock should not exceed
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
Vital few Trivial Many

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

Multiple Choice Single Answer
Question
The Pay Bank period is calculated as
Correct Answer
Cash outlay / Annual cash inflow
Your Answer
External liabilities / Shareholders funds

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

Select The Blank
Question
In ABC analysis C class consist of ________.
Correct Answer
a very large number of items which are less important
Your Answer
that quantity which is fixed in such a way that the total variable cost of managing the inventory can be minimised

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

Select The Blank
Question
Factoring indicates the relationship between ________ and a business organisation
Correct Answer
Financial institutions
Your Answer
Financial institutions

Multiple Choice Multiple Answer
Question
Importance of capital budgeting decisions
Correct Answer
They represent the true earning assets of the firm , they are irreversible , they require assessment of future events which are uncertain
Your Answer
They represent the true earning assets of the firm , it helps in preparation of financial statements , they require assessment of future events which are uncertain

Multiple Choice Single Answer
Question
Fixed Income bearing securities for the computation of Capital gearing ratio consists of
Correct Answer
Debentures
Your Answer
Debentures

Multiple Choice Multiple Answer
Question
The collection programme of the firm consists of
Correct Answer
Maintaining the state of receivables , Dispatch of letters to customers whose due date is approaching , Telegraphic and Telephonic advice to customers around the due date
Your Answer
Maintaining the state of receivables , Dispatch of letters to customers whose due date is approaching , Telegraphic and Telephonic advice to customers around the due date , Maintaining record of bills payable

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 assumes that the company will not earn on its retained earnings which is a wrong assumption , 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
The operating profit earned by the company is in the form of contribution duly reduced by the ________
Correct Answer
Fixed operating cost
Your Answer
Variable operating cost

Multiple Choice Multiple Answer
Question
The following techniques can be used to delay cash payments
Correct Answer
Payments can be made from a bank which is distant from the bank of the company to which payment is to be made , Attempts should be made by the company to get the maximum credit for the goods or service supplied , Avoid early payments
Your Answer
Payments can be made from a bank which is distant from the bank of the company to which payment is to be made , Insist upon payment in the form of demand draft, letters of credit , Attempts should be made by the company to get the maximum credit for the goods or service supplied , Avoid early payments

Multiple Choice Single Answer
Question
Net Working Capital means
Correct Answer
Current assets less Current liabilities
Your Answer
Current assets less Current liabilities

True/False
Question
Wages/salaries is considered under Operating cashinflow
Correct Answer
False
Your Answer
True

Select The Blank
Question
Sometimes the term ________ is interpreted as cash equivalent i.e. cash and marketable securities
Correct Answer
Fund
Your Answer
Investment

Select The Blank
Question
If a deposit is repaid after 6 months from the date of deposit but before its expiry, the rate of interest on such deposit shall be reduced by ________ from the rate which the company would have paid had the deposit been accepted for the period for which such deposit had run
Correct Answer
0.01
Your Answer
0.01

True/False
Question
The requirement of Fixed Working Capital is unaffected due to the changes in the level of activity
Correct Answer
True
Your Answer
True

True/False
Question
Internal rate of return can be computed even in the absence of the knowledge about the firm's cost of capital
Correct Answer
True
Your Answer
False

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
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 , information is useful to construct financial statements

Multiple Choice Single Answer
Question
The real owners of the company are
Correct Answer
Equity shareholders
Your Answer
Preference shareholders

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 mathematical expression of ________ is Normal Usage * Lead time for emergency purchases
Correct Answer
Danger level
Your Answer
Re-order level

Select The Blank
Question
Turnover ratios measures how efficiently the ________ are employed by the firm
Correct Answer
Assets
Your Answer
Assets

Multiple Choice Multiple Answer
Question
The patterns of Dividend policy are
Correct Answer
Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy
Your Answer
Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy , Increasing Dividend policy

True/False
Question
Economic order quantity is based on the assumption that the demand for the material concerned is uniform throughout a year
Correct Answer
True
Your Answer
True

True/False
Question
Inventory is the intermediate stage between purchase of raw materials and consumption of raw materials
Correct Answer
True
Your Answer
True

at 5:25 AM 0 comments Links to this post

Labels: Financial Management


Financial Management - 4
LIST OF ATTEMPTED QUESTIONS AND ANSWERS



Multiple Choice Multiple Answer
Question
The limitations of ratio analysis are
Correct Answer
Ratios are based on historical financial statements rather than future happenings , Ratios are only indicators, they cannot be taken as final regarding good or bad financial position of the business , Ratio analysis takes in to consideration only monetary transactions
Your Answer
Ratios are based on historical financial statements rather than future happenings , Ratio analysis provides data for inter-firm comparison , Ratio analysis takes in to consideration only monetary transactions

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

True/False
Question
The excessive issue of equity shares may result in over-capitalisation to be realized in future
Correct Answer
True
Your Answer
True

Multiple Choice Single Answer
Question
Net revenue is arrived at
Correct Answer
Sales revenue less cost
Your Answer
Sales revenue less tax liability

Match The Following
Question
Correct Answer
Your Answer
Term loan
represents a source of debt finance which is generally repayable in more than one year but less than ten years
unsecured borrowings for the company
Lessee
Not able to claim depreciation on asset
Residue left behind from earnings available to equity shareholders after the payment of annual dividend
Hirer
Claims the depreciation on the asset
instruments to raise long term debt capital
Retained earnings
Residue left behind from earnings available to equity shareholders after the payment of annual dividend
represents a source of debt finance which is generally repayable in more than one year but less than ten years

Multiple Choice Single Answer
Question
The ratio which indicates the credit policy followed by a business firm is known as
Correct Answer
Debtors turnover ratio
Your Answer
Creditors turnover ratio

True/False
Question
Debtors turnover ratio is normally supported by the calculations of average collection period
Correct Answer
True
Your Answer
False

True/False
Question
The mostly used methods of short term forcasting is the Receipt and Payment method
Correct Answer
True
Your Answer
True

Match The Following
Question
Correct Answer
Your Answer
Financial ratios
Ratios disclosing the financial position or solvency of the firm
Ratios which indicates the percentage of return on the total capital employed in the business
Profitability ratio
Ratios which reflect the final results of business operations
Ratios measuring the efficiency with which the assets are employed by a firm
Turnover ratios
Ratios measuring the efficiency with which the assets are employed by a firm
Ratios which reflect the final results of business operations
Overall profitability ratio
Ratios which indicates the percentage of return on the total capital employed in the business
The ratios indicate the long term financial prospects of the company

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
Return on investment

Multiple Choice Single Answer
Question
The hidden cost of capital which is not incurred directly is referred to as
Correct Answer
Implicit cost
Your Answer
Explicit cost

Multiple Choice Single Answer
Question
For the calculation of Operating Profit / Loss , Preliminary expenses written off should be
Correct Answer
added to the Net Profit as per Profit and loss account
Your Answer
Deducted from the Net Profit as per Profit and loss account

Select The Blank
Question
Cost management is the function of a ________.
Correct Answer
Treasurer
Your Answer
Finance manager

Multiple Choice Multiple Answer
Question
Advantages of Debentures from company's point of view are
Correct Answer
The specific cost of debt capital represented by debentures is lower than the cost of preference or equity capital , Debenture financing does not result in dilution of control
Your Answer
The specific cost of debt capital represented by debentures is lower than the cost of preference or equity capital , Debenture financing does not result in dilution of control , Debenture prices are vulnerable to increase in interest rates

Select The Blank
Question
If the project is accepted, Internal Rate of return resulting from the same should be ________ than cost of capital
Correct Answer
more
Your Answer
more

Select The Blank
Question
For accounting and tax purposes of hire purchase agreement, ________ is treated as revenue expenditure and is considered to be a tax deductible expenditure
Correct Answer
Only interest
Your Answer
Lease rental

True/False
Question
Following lenient dividend policy without bothering much about building up the reserves may be the cause for undercapitalisation
Correct Answer
False
Your Answer
True

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 Inventory Turnover ratio is ________
Correct Answer
5.24
Your Answer
8.85

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
Ignores risk factor , Does not consider social obligation , Ignores quality aspect of benefits associated with a financial course of action

Multiple Choice Multiple Answer
Question
The depreciation is being charged for the following assets
Correct Answer
Plant and Machinery , Building
Your Answer
Plant and Machinery , Building , Stock

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 overcapitalisation , Remedy for undercapitalisation , Increase marketability of shares

True/False
Question
A partnership is an incorporated association of individuals.
Correct Answer
False
Your Answer
True

True/False
Question
Wealth maximization goal is only an extension of Profit maximization goal of the organisation
Correct Answer
True
Your Answer
True

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
250 units

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 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 , Enjoys controlling power over the firm

True/False
Question
With limited funds, the company must obtain the optimum combination of acceptable investment proposals
Correct Answer
True
Your Answer
True

Select The Blank
Question
________ leverage also acts as a guideline in setting maximum limit upto which the company should use the debt capital
Correct Answer
Financial
Your Answer
Operating

Multiple Choice Single Answer
Question
Interest coverage ratio is useful in indicating the symptom of
Correct Answer
Inability to pay interest
Your Answer
Inability to pay dues to financial institutions

True/False
Question
Financial lease is also referred to as Capital lease
Correct Answer
True
Your Answer
True

Multiple Choice Single Answer
Question
Technical terminology used to invest in the current assets being
Correct Answer
Working Capital Management
Your Answer
Working Capital Management

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 , Enjoys Confidence of the shareholders

Multiple Choice Single Answer
Question
Denomination of the equity shares in the public issue or rights issue can be decided by
Correct Answer
the company
Your Answer
Company law Board

Multiple Choice Multiple Answer
Question
Limitations of credit rating are
Correct Answer
Credit rating is based upon the evaluation made by the agencies which may vary depending upon the experience, knowledge and individual opinion of the rators which may be biased in some cases , Credit rating is primarily based upon the past performance whereas the future prospects should be given more importance while deciding the credit rating , Multiplicity of the rating agencies can be considered to be the limitation of the credit rating
Your Answer
Credit rating is based upon the evaluation made by the agencies which may vary depending upon the experience, knowledge and individual opinion of the rators which may be biased in some cases , Credit rating is primarily based upon the past performance whereas the future prospects should be given more importance while deciding the credit rating , Multiplicity of the rating agencies can be considered to be the limitation of the credit rating

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

Select The Blank
Question
________ is an example of Intangible asset
Correct Answer
Goodwill
Your Answer
Goodwill

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 Asset , Capital Employed ratio , Debt Equity ratio

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 , Return on Asset

Multiple Choice Multiple Answer
Question
Undue decrease in Gross Profit ratio may indicate
Correct Answer
Non-consideration of sales invoices , Under-valuation of closing stock , Improper utilisation of infrastructural facilities
Your Answer
Non-consideration of sales invoices , Under-valuation of closing stock , Improper utilisation of infrastructural facilities

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

True/False
Question
If the cash is held to take advantage of profit making opportunities arising out of changes in the value of securities, the cash holding is called Precautionary motive
Correct Answer
False
Your Answer
True

Multiple Choice Single Answer
Question
Calculate the Gross Profit Ratio from the following figures : Sales Rs. 1,00,000/-, Purchases Rs. 60,000/-, Sales Return Rs. 10,000/-, Opening stock Rs. 20,000/-, Purchases Return Rs. 15,000/-, Closing Stock Rs. 5,000/-
Correct Answer
0.3333
Your Answer
0.3234

Select The Blank
Question
Shareholders of a joint stock company appoint their representative in the form of ________ to carry on the day-to-day affairs of the company
Correct Answer
Directors
Your Answer
Accountant

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

Select The Blank
Question
Proprietory ratio indicates the relationship between the owner's fund and ________
Correct Answer
Total assets
Your Answer
Profits

Select The Blank
Question
________ is one of the current assets that takes the longest time to get converted into cash
Correct Answer
Stock
Your Answer
Debtors

Multiple Choice Single Answer
Question
Current Assets Turnover ratio is calculated as
Correct Answer
Net Sales / Current Assets
Your Answer
Liquid assets / Liquid liabilities

at 5:23 AM 0 comments Links to this post

Labels: Financial Management


Financial Management - 3
LIST OF ATTEMPTED QUESTIONS AND ANSWERS



Multiple Choice Single Answer
Question
The effect of Purchase of building against a long term loan payable on funds ( cash concept ) is
Correct Answer
No change in cash
Your Answer
No change in cash

True/False
Question
The cost of the factor is slightly higher than the interest which the client would have paid had he borrowed the funds from the Bank
Correct Answer
True
Your Answer
False

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
maximisation of the wealth of the shareholders

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 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
The term Current Assets and Liquid assets have synonymous meanings
Correct Answer
False
Your Answer
False

Multiple Choice Multiple Answer
Question
Factors determining the required cash balance are
Correct Answer
Shortage of cash cost , Surplus cash balance costs , Procurement and Management cost
Your Answer
Shortage of cash cost , Procurement and Management cost , Fixed assets cost

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

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
According to Net Income Approach, the valuation of the firm and its cost of capital is independent of its capital structure
Correct Answer
False
Your Answer
False

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 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 Single Answer
Question
The value created by the use of resources is more than the total of the input resources is referred to as
Correct Answer
Profit
Your Answer
Profit

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

True/False
Question
Internal rate of return considers time value of money
Correct Answer
True
Your Answer
True

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

Select The Blank
Question
The situation of watered capital may arise due to ________
Correct Answer
Company pays higher price to the vendors of the assets transferred
Your Answer
Company pays higher price to the vendors of the assets transferred

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

Multiple Choice Single Answer
Question
The main function of finance under the traditional approach comprises of
Correct Answer
Procurement of funds
Your Answer
Working Capital management

Select The Blank
Question
The introduction of debt capital in the capital structure increases the earnings per share of ________
Correct Answer
Equity shareholders
Your Answer
Preference shareholders

Multiple Choice Single Answer
Question
The cost which remains constant irrespective of changes in the sales revenue is termed as
Correct Answer
Fixed cost
Your Answer
Fixed cost

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 , Issue of new shares

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
The financing of the working capital requirement which arises during the course of normal business operations is termed as
Correct Answer
Spontaneous sources
Your Answer
Intercorporate deposits

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

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

Select The Blank
Question
In ABC analysis A class consist of ________.
Correct Answer
only a small percentage of total number of items handled but are most important in nature
Your Answer
only a small percentage of total number of items handled but are most important in nature

Select The Blank
Question
Financial Statement is useful to ________ in order to enable to decide whether to retain the investment in the company
Correct Answer
Shareholders
Your Answer
Shareholders

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 , it cannot replace fund flow statement

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
Interest

Multiple Choice Single Answer
Question
Cash from operation is equal to
Correct Answer
Net Profit plus increase in outstanding expenses
Your Answer
Net Profit plus increase in debtors

True/False
Question
In calculating funds from operations non-business expenses like dividends paid etc. as well as non cash expenses like depreciation etc. are added back in the net profits shown by the Profit & Loss Account
Correct Answer
True
Your Answer
True

Multiple Choice Multiple Answer
Question
Advantages of factoring
Correct Answer
Factoring is the way in which the company can finance its requirement of Working capital in respect of receivables , The company can take advantage of the expertise of the factor in various fields , With the help of factoring the company can be relieved of administrative responsibilities
Your Answer
Factoring is the way in which the company can finance its requirement of Working capital in respect of receivables , The company can take advantage of the expertise of the factor in various fields , With the help of factoring the company can be relieved of administrative responsibilities

Multiple Choice Single Answer
Question
The deposit receipt should contain
Correct Answer
Amount of deposit
Your Answer
Amount of deposit

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 Single Answer
Question
Overcapitalisation is
Correct Answer
Existence of excess capital as compared to the level of activity and requirements
Your Answer
Existence of excess capital as compared to the level of activity and requirements

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
Financial leverage
Earning before interest and tax / ( Earning before interest and tax - Interest )
Earning before interest and tax / ( Earning before interest and tax - Interest )
Earnings per share
(Profit after tax - Preference dividend) / Number of Equity shares
(Profit after tax - Preference dividend) / Number of Equity shares
Price earning ratio
Market Price per share / Earnings per share
Market Price per share / Earnings per share
Operating leverage
Contribution / Earnings before interest and tax
( Sales - Variable cost ) / ( Earning before interest and tax - Interest )

Select The Blank
Question
Debt Service coverage ratio is calculated as ________
Correct Answer
(Net Profit after taxes + Depreciation + Interest on term loan) / (Interest + Instalment)
Your Answer
(Net Profit after taxes + Depreciation + Interest on term loan) / (Interest + Instalment)

Multiple Choice Multiple Answer
Question
The approaches to compute the cost of equity shares are
Correct Answer
Dividend / Price Approach , Realised Yield Approach , Earnings / Price Approach
Your Answer
Dividend / Price Approach , Realised Yield Approach , Earnings / Price Approach

Select The Blank
Question
The dealing with the financial matters of the government is termed as ________ field of finance
Correct Answer
Public
Your Answer
Public

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 operations , Funds from long term loans , Sale of fixed assets

Multiple Choice Single Answer
Question
The ratio which indicate the long term financial prospects of the company are
Correct Answer
Solvency ratios
Your Answer
Solvency ratios

True/False
Question
A high degree of operating leverage means that the component of fixed cost is too high in the overall cost structure
Correct Answer
True
Your Answer
True

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
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
The capital expenditure has to be planned properly taking into consideration the present and future needs of the business
Correct Answer
True
Your Answer
True