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Financial Management 27
Financial Management 28
Financial Management 29
Tuesday, July 27, 2010
Financial Management 29--SCDL
Financial Management 29:
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
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 Total instalment
True/False
Question There are essentially two parties in case of a letter of
credit
Correct Answer False
Your Answer False
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 The sources of cash are
Correct Answer Cash from operations , sale of machinery , Issue of
new shares
Your Answer Cash from operations , sale of machinery , Issue of new
shares
True/False
Question In an organisation, Dividend distribution is the function of
a Finance Controller
Correct Answer False
Your Answer True
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
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 Revaluation reserve
Select The Blank
Question The current ratio of ________ is considered to be standard
Correct Answer 2 : 1
Your Answer 2 : 1
Multiple Choice Single Answer
Question The lenders of the borrowed funds are
Correct Answer Debentures
Your Answer Equity shares
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 Future earnings may be underestimated
Multiple Choice Single Answer
Question Which important accounting ratios would be used by a
shareholder who is examining his portfolio and who is to decide whether he
should hold or sell his shares in the company
Correct Answer Earning per share
Your Answer Earning per share
Multiple Choice Single Answer
Question In financial terms, Profit after tax can be referred as
Correct Answer Earning after tax
Your Answer Earning after tax
True/False
Question Projects for venture capital financing are more risky in
nature and involve larger gestation period
Correct Answer True
Your Answer True
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
Match The Following
Question Correct Answer Your Answer
Risk adjusting discounting rate method of capital budgeting decision
discounting rate is increased in case of projects involving greater risk
indicates that period within which the discounted cash inflows equal to the
discounted cash outflows
Capital rationing situation where the company has more acceptable
proposals requiring a greater amount of funds situation where the company
has more acceptable proposals requiring a greater amount of funds
Problems relating to situation of capital rationing Project
Indivisibility Project Indivisibility
Informal method of capital budgeting decision subjective method
subjective method
True/False
Question The funds flow statements can be prepared on monthly basis,
six monthly basis or annual basis
Correct Answer True
Your Answer True
Select The Blank
Question ________ implies arithmetical relationship between two
related figures
Correct Answer Ratio
Your Answer Ratio
Select The Blank
Question ________ is clubbed with Current Assets in the Balance Sheet
Correct Answer Loans and advances
Your Answer Miscellaneous expenditure
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 Fixation of Inventory levels are based on the following
propositions
Correct Answer There has to be a constant watch on the actual stock
level of various kinds of materials so that proper action can be taken , The
various levels fixed are not fixed on a permanent basis and are subject to
revision regularly
Your Answer Ordering cost and carrying cost are directly related to each
other , There has to be a constant watch on the actual stock level of
various kinds of materials so that proper action can be taken , Minimum
level indicate the level above which the actual stock should not exceed
True/False
Question Fixed Assets turnover ratio is the relationship between
fixed assets and owner's funds
Correct Answer False
Your Answer False
Select The Blank
Question Preparation of Financial plan at the time of company
promotion is ________ duty of the finance executive
Correct Answer Non-recurring
Your Answer Long term
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
Multiple Choice Single Answer
Question An increase in the share premium account is
Correct Answer Source of funds
Your Answer Application of funds
Multiple Choice Multiple Answer
Question Undue increase in Gross Profit ratio may indicate
Correct Answer Over-valuation of closing stock , Consideration of
non-sales transactions as sales transaction
Your Answer Under-valuation of closing stock , Consideration of
non-sales transactions as sales transaction , Improper utilisation of
infrastructural facilities
Select The Blank
Question In the case of Overcapitalisation ________ is the worst
affected class
Correct Answer Shareholders
Your Answer Society
Multiple Choice Single Answer
Question The most important decisions regarding the amount to be
invested in fixed assets is technically referred to as
Correct Answer Capital budgeting
Your Answer Capital forecasting
Select The Blank
Question The mathematical expression of ________ is ( Minimum level +
Maximum level ) / 2
Correct Answer Average level
Your Answer Average level
Multiple Choice Single Answer
Question A project requires an outlay of Rs. 4,00,000 and earns, an
annual cash inflow of Rs. 1,00,000 for 8 years. Calculate pay back period
Correct Answer 4 years
Your Answer 5 years
True/False
Question Cash from operation is the main internal source of cash
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question The technique of Ratio Analysis is
Correct Answer The interpretation of financial statements by
grouping or regrouping the various figures with the intention to draw
conclusions.
Your Answer The interpretation of financial statements by grouping or
regrouping the various figures with the intention to draw conclusions.
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 maximum
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 Items under Cash from operations include
Correct Answer Profit made during the year , Increase in creditors
, Increase in Bills receivables
Your Answer Profit made during the year , Increase in Bills receivables
, Issue of new shares
Select The Blank
Question The mathematical expression of ________ is Normal Usage *
Lead time for emergency purchases
Correct Answer Danger level
Your Answer Danger level
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 , No collateral is pledged in favour of
preference shareholders
Multiple Choice Single Answer
Question The Dividend in the form of cash is payable out of the
current year's profit after providing for sufficient amount of
Correct Answer Depreciation
Your Answer Tax
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
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 The addition of Equity capital, preference capital and
reserves and surplus is termed as
Correct Answer Shareholders funds
Your Answer Capital employed
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 Multiple Answer
Question The sources of cash are
Correct Answer Long term loans , cash from other sources
Your Answer Long term loans , cash from other sources , Purchase of
fixed assets
Select The Blank
Question The dealing with the financial matters of the government is
termed as ________ field of finance
Correct Answer Public
Your Answer Corporate
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
Match The Following
Question Correct Answer Your Answer
Classification of ratios Profitability ratio It is a creative
technique
Advantages of Ratio Analysis It helps in planning and forecasting
Inter firm comparison
Limitation of Ratio Analysis Facts only those which can be expressed in
financial terms are considered Facts only those which can be expressed in
financial terms are considered
Precautions before using ratio analysis technique Impact of the
inflationary conditions of changing price levels to be taken in account
Impact of the inflationary conditions of changing price levels to be taken
in account
Select The Blank
Question Cost management is the function of a ________.
Correct Answer Treasurer
Your Answer Finance manager
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
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
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 Total instalment
True/False
Question There are essentially two parties in case of a letter of
credit
Correct Answer False
Your Answer False
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 The sources of cash are
Correct Answer Cash from operations , sale of machinery , Issue of
new shares
Your Answer Cash from operations , sale of machinery , Issue of new
shares
True/False
Question In an organisation, Dividend distribution is the function of
a Finance Controller
Correct Answer False
Your Answer True
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
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 Revaluation reserve
Select The Blank
Question The current ratio of ________ is considered to be standard
Correct Answer 2 : 1
Your Answer 2 : 1
Multiple Choice Single Answer
Question The lenders of the borrowed funds are
Correct Answer Debentures
Your Answer Equity shares
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 Future earnings may be underestimated
Multiple Choice Single Answer
Question Which important accounting ratios would be used by a
shareholder who is examining his portfolio and who is to decide whether he
should hold or sell his shares in the company
Correct Answer Earning per share
Your Answer Earning per share
Multiple Choice Single Answer
Question In financial terms, Profit after tax can be referred as
Correct Answer Earning after tax
Your Answer Earning after tax
True/False
Question Projects for venture capital financing are more risky in
nature and involve larger gestation period
Correct Answer True
Your Answer True
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
Match The Following
Question Correct Answer Your Answer
Risk adjusting discounting rate method of capital budgeting decision
discounting rate is increased in case of projects involving greater risk
indicates that period within which the discounted cash inflows equal to the
discounted cash outflows
Capital rationing situation where the company has more acceptable
proposals requiring a greater amount of funds situation where the company
has more acceptable proposals requiring a greater amount of funds
Problems relating to situation of capital rationing Project
Indivisibility Project Indivisibility
Informal method of capital budgeting decision subjective method
subjective method
True/False
Question The funds flow statements can be prepared on monthly basis,
six monthly basis or annual basis
Correct Answer True
Your Answer True
Select The Blank
Question ________ implies arithmetical relationship between two
related figures
Correct Answer Ratio
Your Answer Ratio
Select The Blank
Question ________ is clubbed with Current Assets in the Balance Sheet
Correct Answer Loans and advances
Your Answer Miscellaneous expenditure
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 Fixation of Inventory levels are based on the following
propositions
Correct Answer There has to be a constant watch on the actual stock
level of various kinds of materials so that proper action can be taken , The
various levels fixed are not fixed on a permanent basis and are subject to
revision regularly
Your Answer Ordering cost and carrying cost are directly related to each
other , There has to be a constant watch on the actual stock level of
various kinds of materials so that proper action can be taken , Minimum
level indicate the level above which the actual stock should not exceed
True/False
Question Fixed Assets turnover ratio is the relationship between
fixed assets and owner's funds
Correct Answer False
Your Answer False
Select The Blank
Question Preparation of Financial plan at the time of company
promotion is ________ duty of the finance executive
Correct Answer Non-recurring
Your Answer Long term
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
Multiple Choice Single Answer
Question An increase in the share premium account is
Correct Answer Source of funds
Your Answer Application of funds
Multiple Choice Multiple Answer
Question Undue increase in Gross Profit ratio may indicate
Correct Answer Over-valuation of closing stock , Consideration of
non-sales transactions as sales transaction
Your Answer Under-valuation of closing stock , Consideration of
non-sales transactions as sales transaction , Improper utilisation of
infrastructural facilities
Select The Blank
Question In the case of Overcapitalisation ________ is the worst
affected class
Correct Answer Shareholders
Your Answer Society
Multiple Choice Single Answer
Question The most important decisions regarding the amount to be
invested in fixed assets is technically referred to as
Correct Answer Capital budgeting
Your Answer Capital forecasting
Select The Blank
Question The mathematical expression of ________ is ( Minimum level +
Maximum level ) / 2
Correct Answer Average level
Your Answer Average level
Multiple Choice Single Answer
Question A project requires an outlay of Rs. 4,00,000 and earns, an
annual cash inflow of Rs. 1,00,000 for 8 years. Calculate pay back period
Correct Answer 4 years
Your Answer 5 years
True/False
Question Cash from operation is the main internal source of cash
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question The technique of Ratio Analysis is
Correct Answer The interpretation of financial statements by
grouping or regrouping the various figures with the intention to draw
conclusions.
Your Answer The interpretation of financial statements by grouping or
regrouping the various figures with the intention to draw conclusions.
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 maximum
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 Items under Cash from operations include
Correct Answer Profit made during the year , Increase in creditors
, Increase in Bills receivables
Your Answer Profit made during the year , Increase in Bills receivables
, Issue of new shares
Select The Blank
Question The mathematical expression of ________ is Normal Usage *
Lead time for emergency purchases
Correct Answer Danger level
Your Answer Danger level
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 , No collateral is pledged in favour of
preference shareholders
Multiple Choice Single Answer
Question The Dividend in the form of cash is payable out of the
current year's profit after providing for sufficient amount of
Correct Answer Depreciation
Your Answer Tax
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
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 The addition of Equity capital, preference capital and
reserves and surplus is termed as
Correct Answer Shareholders funds
Your Answer Capital employed
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 Multiple Answer
Question The sources of cash are
Correct Answer Long term loans , cash from other sources
Your Answer Long term loans , cash from other sources , Purchase of
fixed assets
Select The Blank
Question The dealing with the financial matters of the government is
termed as ________ field of finance
Correct Answer Public
Your Answer Corporate
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
Match The Following
Question Correct Answer Your Answer
Classification of ratios Profitability ratio It is a creative
technique
Advantages of Ratio Analysis It helps in planning and forecasting
Inter firm comparison
Limitation of Ratio Analysis Facts only those which can be expressed in
financial terms are considered Facts only those which can be expressed in
financial terms are considered
Precautions before using ratio analysis technique Impact of the
inflationary conditions of changing price levels to be taken in account
Impact of the inflationary conditions of changing price levels to be taken
in account
Select The Blank
Question Cost management is the function of a ________.
Correct Answer Treasurer
Your Answer Finance manager
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
Financial Management 28--SCDL
Financial Management 28:
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
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 Purchase of fixed Assets , Borrow Money on an Interest
bearing promissory note
Multiple Choice Multiple Answer
Question Earnings / Price Approach to compute cost of equity shares
is objected on the following grounds
Correct Answer 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
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
Select The Blank
Question Interest on overdraft is payable on the actual amount drawn
and is calculated on ________ product basis
Correct Answer daily
Your Answer quarterly
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
Multiple Choice Single Answer
Question Interest Coverage ratio is calculated as
Correct Answer Profit before Interest and taxes / Interest charges
Your Answer (Profit after tax + Depreciation) / Interest on term loan
Multiple Choice Single Answer
Question Ratio analysis is a widely used tool of
Correct Answer Financial analysis
Your Answer Financial analysis
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
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
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
True/False
Question Budgeting is the main function of a Treasurer
Correct Answer False
Your Answer False
Multiple Choice Multiple Answer
Question The recurring duties of Finance Executive includes
Correct Answer Fixed Assets management , Working Capital Management
, Control of funds
Your Answer Working Capital Management , Financing re-adjustments in
times of liquidity crisis , Control of funds
True/False
Question Accounts Receivable is an example of current assets
Correct Answer True
Your Answer True
True/False
Question A good Budget manual promotes standardization and
simplification of budgetary procedures
Correct Answer True
Your Answer True
Select The Blank
Question Modigliani - Miller approach closely resembles ________
approach
Correct Answer Net operating income
Your Answer Net operating income
True/False
Question Internal rate of return presupposes that the cash inflows
can be reinvested immediately to yield the return equivalent to the Internal
rate of return
Correct Answer True
Your Answer False
True/False
Question Funds flow statements and cash flow statement are one and
the same
Correct Answer False
Your Answer False
Multiple Choice Single Answer
Question The ratio which indicates the protection available to the
lenders of long term capital in the form of funds available to pay the
interest charges is
Correct Answer Interest coverage ratio
Your Answer Interest coverage ratio
Select The Blank
Question The project having ________ profitability index will be
ranked highest
Correct Answer highest
Your Answer Optimal
True/False
Question Debt equity ratio is alternately called Leverage ratio
Correct Answer True
Your Answer True
Match The Following
Question Correct Answer Your Answer
Recurring duties of finance executive Raising of funds Cost
management
Objective of finance function Profit maximization Profit maximization
Treasurer Cost management Internal Auditing
Finance Controller Internal Auditing Raising of funds
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 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 , Gross
Profit ratio
Select The Blank
Question The ________ is used as the capitalisation rate to decide
the amount of capitalisation in case of a new concern
Correct Answer cost of capital
Your Answer cost of capital
Multiple Choice Single Answer
Question Current liabilities consist of
Correct Answer Creditors
Your Answer Creditors
True/False
Question The combination of irrevocable and confirmed letter of
credit can be considered to be a guaranteed payment on the part of the
exporter
Correct Answer True
Your Answer False
Multiple Choice Single Answer
Question From company's point of view return on borrowed capital is
Correct Answer is a tax deductible expenditure
Your Answer is a tax deductible expenditure
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
Multiple Choice Multiple Answer
Question The cost of managing inventory includes
Correct Answer Ordering cost , Carrying cost
Your Answer Maintenance cost , Ordering cost , Labour cost
Multiple Choice Multiple Answer
Question Advantages of cash flow statement are
Correct Answer Discloses the movements of cash , Discloses the
success or failure of cash planning , Helps in efficient cash management
Your Answer Helps in efficient cash management , Discloses the movements
of cash , Represents real liquid position
Match The Following
Question Correct Answer Your Answer
Internal rate of return less than cost of capital Project rejected
Project rejected
Internal rate of return breakeven rate of borrowing for the company
indicates that period within which the discounted cash inflows equal to the
discounted cash outflows
Profitability Index ratio between total discounted cash inflows and
total discounted cash outflows ratio between total discounted cash inflows
and total discounted cash outflows
Profitability Index more than one Project accepted Project
accepted
True/False
Question Retained earnings or ploughed back profits is one of the
best source of raising long term funds for the company
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question Rights issue is
Correct Answer Selling the securities in the primary market to the
existing shareholders
Your Answer Selling the securities in the primary market to the existing
shareholders
Multiple Choice Multiple Answer
Question The trading Account consists of the following items
Correct Answer Purchases , Closing Stock
Your Answer Purchases , Advertisement , Closing Stock
Select The Blank
Question The debt equity ratio of the company after such buy back of
shares should not be more than ________ except where the Central Government
allows a higher ratio in case of certain companies
Correct Answer 2:1
Your Answer 2:1
Multiple Choice Multiple Answer
Question The functions of a Finance Controller are :
Correct Answer Budgeting , Record Keeping , Annual Reporting
Your Answer Banking Relations , Record Keeping , Annual Reporting
Select The Blank
Question Turnover ratios measures how efficiently the ________ are
employed by the firm
Correct Answer Assets
Your Answer Capital
Select The Blank
Question The ratios under overall profitability group indicate the
relationship between the profits of a firm and ________ in the firm
Correct Answer Investment
Your Answer Sales
True/False
Question The cycle in which cash available to the organisation is
converted back in the form of cash is referred to as Working Capital cycle
Correct Answer True
Your Answer True
Select The Blank
Question ________ indicates the symptom of liquidity crisis
Correct Answer Current ratio
Your Answer Current ratio
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
True/False
Question Debt equity ratio indicates the stake of share holders and
creditors in the organisation
Correct Answer True
Your Answer False
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 2.25
Multiple Choice Multiple Answer
Question Internal sources of funds are
Correct Answer Funds from operations , Loss on sale of fixed assets
, Goodwill written off
Your Answer Funds from operations , Loss on sale of fixed assets
True/False
Question It is only after crossing the break even point that the
profit generating capacity of the company starts
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question Indicate which of these are Profitability ratios
Correct Answer Operating ratio , Gross Profit ratio
Your Answer Interest Coverage ratio , Operating ratio , Gross Profit
ratio
Multiple Choice Multiple Answer
Question Types of capital budgeting decisions
Correct Answer Replacements , Expansion , Diversification
Your Answer Replacements , Expansion , Diversification
Multiple Choice Single Answer
Question Requirement of working capital is low is case of
Correct Answer Infrastructure oriented projects
Your Answer Trading organisation
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
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 Purchase of fixed Assets , Borrow Money on an Interest
bearing promissory note
Multiple Choice Multiple Answer
Question Earnings / Price Approach to compute cost of equity shares
is objected on the following grounds
Correct Answer 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
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
Select The Blank
Question Interest on overdraft is payable on the actual amount drawn
and is calculated on ________ product basis
Correct Answer daily
Your Answer quarterly
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
Multiple Choice Single Answer
Question Interest Coverage ratio is calculated as
Correct Answer Profit before Interest and taxes / Interest charges
Your Answer (Profit after tax + Depreciation) / Interest on term loan
Multiple Choice Single Answer
Question Ratio analysis is a widely used tool of
Correct Answer Financial analysis
Your Answer Financial analysis
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
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
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
True/False
Question Budgeting is the main function of a Treasurer
Correct Answer False
Your Answer False
Multiple Choice Multiple Answer
Question The recurring duties of Finance Executive includes
Correct Answer Fixed Assets management , Working Capital Management
, Control of funds
Your Answer Working Capital Management , Financing re-adjustments in
times of liquidity crisis , Control of funds
True/False
Question Accounts Receivable is an example of current assets
Correct Answer True
Your Answer True
True/False
Question A good Budget manual promotes standardization and
simplification of budgetary procedures
Correct Answer True
Your Answer True
Select The Blank
Question Modigliani - Miller approach closely resembles ________
approach
Correct Answer Net operating income
Your Answer Net operating income
True/False
Question Internal rate of return presupposes that the cash inflows
can be reinvested immediately to yield the return equivalent to the Internal
rate of return
Correct Answer True
Your Answer False
True/False
Question Funds flow statements and cash flow statement are one and
the same
Correct Answer False
Your Answer False
Multiple Choice Single Answer
Question The ratio which indicates the protection available to the
lenders of long term capital in the form of funds available to pay the
interest charges is
Correct Answer Interest coverage ratio
Your Answer Interest coverage ratio
Select The Blank
Question The project having ________ profitability index will be
ranked highest
Correct Answer highest
Your Answer Optimal
True/False
Question Debt equity ratio is alternately called Leverage ratio
Correct Answer True
Your Answer True
Match The Following
Question Correct Answer Your Answer
Recurring duties of finance executive Raising of funds Cost
management
Objective of finance function Profit maximization Profit maximization
Treasurer Cost management Internal Auditing
Finance Controller Internal Auditing Raising of funds
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 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 , Gross
Profit ratio
Select The Blank
Question The ________ is used as the capitalisation rate to decide
the amount of capitalisation in case of a new concern
Correct Answer cost of capital
Your Answer cost of capital
Multiple Choice Single Answer
Question Current liabilities consist of
Correct Answer Creditors
Your Answer Creditors
True/False
Question The combination of irrevocable and confirmed letter of
credit can be considered to be a guaranteed payment on the part of the
exporter
Correct Answer True
Your Answer False
Multiple Choice Single Answer
Question From company's point of view return on borrowed capital is
Correct Answer is a tax deductible expenditure
Your Answer is a tax deductible expenditure
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
Multiple Choice Multiple Answer
Question The cost of managing inventory includes
Correct Answer Ordering cost , Carrying cost
Your Answer Maintenance cost , Ordering cost , Labour cost
Multiple Choice Multiple Answer
Question Advantages of cash flow statement are
Correct Answer Discloses the movements of cash , Discloses the
success or failure of cash planning , Helps in efficient cash management
Your Answer Helps in efficient cash management , Discloses the movements
of cash , Represents real liquid position
Match The Following
Question Correct Answer Your Answer
Internal rate of return less than cost of capital Project rejected
Project rejected
Internal rate of return breakeven rate of borrowing for the company
indicates that period within which the discounted cash inflows equal to the
discounted cash outflows
Profitability Index ratio between total discounted cash inflows and
total discounted cash outflows ratio between total discounted cash inflows
and total discounted cash outflows
Profitability Index more than one Project accepted Project
accepted
True/False
Question Retained earnings or ploughed back profits is one of the
best source of raising long term funds for the company
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question Rights issue is
Correct Answer Selling the securities in the primary market to the
existing shareholders
Your Answer Selling the securities in the primary market to the existing
shareholders
Multiple Choice Multiple Answer
Question The trading Account consists of the following items
Correct Answer Purchases , Closing Stock
Your Answer Purchases , Advertisement , Closing Stock
Select The Blank
Question The debt equity ratio of the company after such buy back of
shares should not be more than ________ except where the Central Government
allows a higher ratio in case of certain companies
Correct Answer 2:1
Your Answer 2:1
Multiple Choice Multiple Answer
Question The functions of a Finance Controller are :
Correct Answer Budgeting , Record Keeping , Annual Reporting
Your Answer Banking Relations , Record Keeping , Annual Reporting
Select The Blank
Question Turnover ratios measures how efficiently the ________ are
employed by the firm
Correct Answer Assets
Your Answer Capital
Select The Blank
Question The ratios under overall profitability group indicate the
relationship between the profits of a firm and ________ in the firm
Correct Answer Investment
Your Answer Sales
True/False
Question The cycle in which cash available to the organisation is
converted back in the form of cash is referred to as Working Capital cycle
Correct Answer True
Your Answer True
Select The Blank
Question ________ indicates the symptom of liquidity crisis
Correct Answer Current ratio
Your Answer Current ratio
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
True/False
Question Debt equity ratio indicates the stake of share holders and
creditors in the organisation
Correct Answer True
Your Answer False
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 2.25
Multiple Choice Multiple Answer
Question Internal sources of funds are
Correct Answer Funds from operations , Loss on sale of fixed assets
, Goodwill written off
Your Answer Funds from operations , Loss on sale of fixed assets
True/False
Question It is only after crossing the break even point that the
profit generating capacity of the company starts
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question Indicate which of these are Profitability ratios
Correct Answer Operating ratio , Gross Profit ratio
Your Answer Interest Coverage ratio , Operating ratio , Gross Profit
ratio
Multiple Choice Multiple Answer
Question Types of capital budgeting decisions
Correct Answer Replacements , Expansion , Diversification
Your Answer Replacements , Expansion , Diversification
Multiple Choice Single Answer
Question Requirement of working capital is low is case of
Correct Answer Infrastructure oriented projects
Your Answer Trading organisation
Financial Management 27--SCDL
Financial Management 27:
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Multiple Choice Single Answer
Question Gross Working Capital means
Correct Answer Current assets
Your Answer Current assets
Select The Blank
Question ________ approach is the mean between two extreme approaches of
net income approach and net operating income approach
Correct Answer Traditional
Your Answer Traditional
True/False
Question Secured Premium notes did not carry any interest during the
first three years
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question Objective of perpetual inventory system are
Correct Answer Maintenance of Bin Cards and Stores ledger in order to
know about the stock in quantity and value at any given point of time ,
Continuous verification of physical stock to ensure that the physical
balance and the book balance tallies
Your Answer Maintenance of Bin Cards and Stores ledger in order to know
about the stock in quantity and value at any given point of time ,
Continuous verification of physical stock to ensure that the physical
balance and the book balance tallies
True/False
Question Reorder level is calculated as Maximum Lead Time * Minimum
Usage
Correct Answer False
Your Answer False
Multiple Choice Single Answer
Question A project requires an outlay of Rs. 4,00,000 and earns, an
annual cash inflow of Rs. 1,00,000 for 8 years. Calculate pay back period
Correct Answer 4 years
Your Answer 4 years
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
Multiple Choice Single Answer
Question A decrease in current liabilities
Correct Answer increases working capital
Your Answer increases working 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
Multiple Choice Single Answer
Question The Pay Bank period is calculated as
Correct Answer Cash outlay / Annual cash inflow
Your Answer Cash outlay / Annual cash inflow
Select The Blank
Question Retained earnings is a source of ________ finance
Correct Answer Internal
Your Answer Internal
Multiple Choice Single Answer
Question An increase in current liabilities
Correct Answer decreases working capital
Your Answer decreases working capital
Multiple Choice Single Answer
Question Own capital of the company includes
Correct Answer Shares
Your Answer Shares
Multiple Choice Single Answer
Question The period that within which the cost of the project will be
completely recovered is known as
Correct Answer Pay Back period
Your Answer Pay Back period
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 Only interest
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 added to the Net Profit as per Profit and loss account
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 Too long
Multiple Choice Multiple Answer
Question The advantages of leasing for the lessee are
Correct Answer The payment of lease rents is the tax deductible
expenditure , It is the quickest method of financing the requirements of
long term capital , Avoids risk of ownership
Your Answer The payment of lease rents is the tax deductible expenditure
, It is the quickest method of financing the requirements of long term
capital , Avoids risk of ownership
Select The Blank
Question ________ can be issued for the maturity period of 15 days to
one year
Correct Answer Commercial Paper
Your Answer Commercial Paper
Multiple Choice Single Answer
Question Current assets are also referred to as
Correct Answer Working Capital
Your Answer Working Capital
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
True/False
Question Debt Service Coverage Ratio is one of the most important ratios
calculated by the bankers of financial institutions giving long term finance
to the organisation
Correct Answer True
Your Answer True
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 Investment decisions are mainly concerned with
Correct Answer Application of funds
Your Answer Application of funds
Multiple Choice Single Answer
Question The Capital Structure decision mainly refers to the decision of
Correct Answer Financing
Your Answer Financing
Multiple Choice Single Answer
Question Fixed Working Capital is
Correct Answer the minimum working capital required to be maintained in
the business on permanent or uninterrupted basis
Your Answer the minimum working capital required to be maintained in the
business on permanent or uninterrupted basis
Select The Blank
Question Suggestions made by the Tandon committee regarding the
information system were accepted by Reserve Bank of India and were made
applicable to all the borrowers having the overall banking limits of more
than Rs.________
Correct Answer 1 crore
Your Answer 1 crore
Multiple Choice Single Answer
Question Cash Budget is
Correct Answer the statement showing the various estimated sources of
cash receipts on one hand and the various applications of cash on another
hand
Your Answer the statement showing the various estimated sources of cash
receipts on one hand and the various applications of cash on another hand
Match The Following
Question Correct Answer Your Answer
Nayak committee to recognize the contribution made by the SSI sector to the
economy to recognize the contribution made by the SSI sector to the economy
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
examine the extent to which credit needs of industry and trade are likely to
be inflated and how such trends could be checked
Chhore committee to review mainly the system of cash credit management
policy by banks to review mainly the system of cash credit management policy
by banks
Marathe committee to review the credit authorization scheme to review the
credit authorization scheme
Select The Blank
Question The projects having Profitability index of more than ________
will be accepted
Correct Answer one
Your Answer one
True/False
Question According to Net Operating Income Approach there exists a
direct relationship between the capital structure and valuation of the firm
and the cost of capital
Correct Answer False
Your Answer False
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
True/False
Question Semi-variable cost is the cost which varies in direct
proportion to the sales revenue
Correct Answer False
Your Answer True
Multiple Choice Single Answer
Question The Current assets and current liabilities of a company were
Rs. 10 lakhs and Rs. 5 Lakhs respectively. What will be the current ratio if
the company purchases fixed assets for Rs. 4 lakhs on a Medium term loan
from bank with 15% margin
Correct Answer 1.88 : 1.00
Your Answer 1.88 : 1.00
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
Select The Blank
Question ________ financing is more preferred route for venture capital
funding
Correct Answer Equity
Your Answer Equity
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 Single Answer
Question The company granting credit may insist on giving the names of
those who are currently dealing with the company. This is termed as
Correct Answer Trade Reference
Your Answer Trade Reference
Multiple Choice Multiple Answer
Question Limitations of financial leverage is
Correct Answer It ignores implicit cost of debt , It assumes that cost
of debt remains constant regardless of degree of leverage which is not true
Your Answer It ignores implicit cost of debt , It assumes that cost of
debt remains constant regardless of degree of leverage which is not true
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 Multiple Answer
Question Earnings / Price Approach to compute cost of equity shares is
objected on the following grounds
Correct Answer 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
Your Answer 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
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 The causes of undercapitalisation are
Correct Answer Company following too conservative policy for paying the
dividends , Future earnings may be underestimated
Your Answer Company following too conservative policy for paying the
dividends , Future earnings may be underestimated
Multiple Choice Single Answer
Question The lending Bank does not commit any physical outflow of funds
in a
Correct Answer Non-Fund based lending
Your Answer Non-Fund based lending
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 Till the sales revenue reaches the break even point, the
company ________
Correct Answer incurs the losses
Your Answer incurs the losses
Match The Following
Question Correct Answer Your Answer
The ratio which indicates the efficiency of the organisation with which the
capital employed is being utilised Capital turnover ratio Capital turnover
ratio
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
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Multiple Choice Single Answer
Question Gross Working Capital means
Correct Answer Current assets
Your Answer Current assets
Select The Blank
Question ________ approach is the mean between two extreme approaches of
net income approach and net operating income approach
Correct Answer Traditional
Your Answer Traditional
True/False
Question Secured Premium notes did not carry any interest during the
first three years
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question Objective of perpetual inventory system are
Correct Answer Maintenance of Bin Cards and Stores ledger in order to
know about the stock in quantity and value at any given point of time ,
Continuous verification of physical stock to ensure that the physical
balance and the book balance tallies
Your Answer Maintenance of Bin Cards and Stores ledger in order to know
about the stock in quantity and value at any given point of time ,
Continuous verification of physical stock to ensure that the physical
balance and the book balance tallies
True/False
Question Reorder level is calculated as Maximum Lead Time * Minimum
Usage
Correct Answer False
Your Answer False
Multiple Choice Single Answer
Question A project requires an outlay of Rs. 4,00,000 and earns, an
annual cash inflow of Rs. 1,00,000 for 8 years. Calculate pay back period
Correct Answer 4 years
Your Answer 4 years
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
Multiple Choice Single Answer
Question A decrease in current liabilities
Correct Answer increases working capital
Your Answer increases working 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
Multiple Choice Single Answer
Question The Pay Bank period is calculated as
Correct Answer Cash outlay / Annual cash inflow
Your Answer Cash outlay / Annual cash inflow
Select The Blank
Question Retained earnings is a source of ________ finance
Correct Answer Internal
Your Answer Internal
Multiple Choice Single Answer
Question An increase in current liabilities
Correct Answer decreases working capital
Your Answer decreases working capital
Multiple Choice Single Answer
Question Own capital of the company includes
Correct Answer Shares
Your Answer Shares
Multiple Choice Single Answer
Question The period that within which the cost of the project will be
completely recovered is known as
Correct Answer Pay Back period
Your Answer Pay Back period
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 Only interest
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 added to the Net Profit as per Profit and loss account
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 Too long
Multiple Choice Multiple Answer
Question The advantages of leasing for the lessee are
Correct Answer The payment of lease rents is the tax deductible
expenditure , It is the quickest method of financing the requirements of
long term capital , Avoids risk of ownership
Your Answer The payment of lease rents is the tax deductible expenditure
, It is the quickest method of financing the requirements of long term
capital , Avoids risk of ownership
Select The Blank
Question ________ can be issued for the maturity period of 15 days to
one year
Correct Answer Commercial Paper
Your Answer Commercial Paper
Multiple Choice Single Answer
Question Current assets are also referred to as
Correct Answer Working Capital
Your Answer Working Capital
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
True/False
Question Debt Service Coverage Ratio is one of the most important ratios
calculated by the bankers of financial institutions giving long term finance
to the organisation
Correct Answer True
Your Answer True
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 Investment decisions are mainly concerned with
Correct Answer Application of funds
Your Answer Application of funds
Multiple Choice Single Answer
Question The Capital Structure decision mainly refers to the decision of
Correct Answer Financing
Your Answer Financing
Multiple Choice Single Answer
Question Fixed Working Capital is
Correct Answer the minimum working capital required to be maintained in
the business on permanent or uninterrupted basis
Your Answer the minimum working capital required to be maintained in the
business on permanent or uninterrupted basis
Select The Blank
Question Suggestions made by the Tandon committee regarding the
information system were accepted by Reserve Bank of India and were made
applicable to all the borrowers having the overall banking limits of more
than Rs.________
Correct Answer 1 crore
Your Answer 1 crore
Multiple Choice Single Answer
Question Cash Budget is
Correct Answer the statement showing the various estimated sources of
cash receipts on one hand and the various applications of cash on another
hand
Your Answer the statement showing the various estimated sources of cash
receipts on one hand and the various applications of cash on another hand
Match The Following
Question Correct Answer Your Answer
Nayak committee to recognize the contribution made by the SSI sector to the
economy to recognize the contribution made by the SSI sector to the economy
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
examine the extent to which credit needs of industry and trade are likely to
be inflated and how such trends could be checked
Chhore committee to review mainly the system of cash credit management
policy by banks to review mainly the system of cash credit management policy
by banks
Marathe committee to review the credit authorization scheme to review the
credit authorization scheme
Select The Blank
Question The projects having Profitability index of more than ________
will be accepted
Correct Answer one
Your Answer one
True/False
Question According to Net Operating Income Approach there exists a
direct relationship between the capital structure and valuation of the firm
and the cost of capital
Correct Answer False
Your Answer False
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
True/False
Question Semi-variable cost is the cost which varies in direct
proportion to the sales revenue
Correct Answer False
Your Answer True
Multiple Choice Single Answer
Question The Current assets and current liabilities of a company were
Rs. 10 lakhs and Rs. 5 Lakhs respectively. What will be the current ratio if
the company purchases fixed assets for Rs. 4 lakhs on a Medium term loan
from bank with 15% margin
Correct Answer 1.88 : 1.00
Your Answer 1.88 : 1.00
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
Select The Blank
Question ________ financing is more preferred route for venture capital
funding
Correct Answer Equity
Your Answer Equity
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 Single Answer
Question The company granting credit may insist on giving the names of
those who are currently dealing with the company. This is termed as
Correct Answer Trade Reference
Your Answer Trade Reference
Multiple Choice Multiple Answer
Question Limitations of financial leverage is
Correct Answer It ignores implicit cost of debt , It assumes that cost
of debt remains constant regardless of degree of leverage which is not true
Your Answer It ignores implicit cost of debt , It assumes that cost of
debt remains constant regardless of degree of leverage which is not true
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 Multiple Answer
Question Earnings / Price Approach to compute cost of equity shares is
objected on the following grounds
Correct Answer 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
Your Answer 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
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 The causes of undercapitalisation are
Correct Answer Company following too conservative policy for paying the
dividends , Future earnings may be underestimated
Your Answer Company following too conservative policy for paying the
dividends , Future earnings may be underestimated
Multiple Choice Single Answer
Question The lending Bank does not commit any physical outflow of funds
in a
Correct Answer Non-Fund based lending
Your Answer Non-Fund based lending
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 Till the sales revenue reaches the break even point, the
company ________
Correct Answer incurs the losses
Your Answer incurs the losses
Match The Following
Question Correct Answer Your Answer
The ratio which indicates the efficiency of the organisation with which the
capital employed is being utilised Capital turnover ratio Capital turnover
ratio
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
Financial Management Set 8--SCDL
Plz Click on the link Below to access the Papers of Financial Management
Financial Management 24
Financial Management 25
Financial Management 26
Financial Management 24
Financial Management 25
Financial Management 26
Financial Management 26--SCDL
Financial Management 26:
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Select The Blank
Question When a company issues bonus shares ________ of the company get reduced
Correct Answer Reserves
Your Answer Reserves
Match The Following
Question Correct Answer Your Answer
Net Profit ratio Indicates that portion of sales available to the owners after consideration of all types of expenses and cost Indicates that portion of sales available to the owners after consideration of all types of expenses and cost
Undue increase in Gross Profit ratio Over-valuation of closing stock Over-valuation of closing stock
Undue decrease in Gross Profit ratio Under-valuation of closing stock Under-valuation of closing stock
Gross Profit ratio Indicates the relation between production cost and Sales Indicates the relation between production cost and Sales
Select The Blank
Question The fixed assets are expressed at ________
Correct Answer Cost - Depreciation
Your Answer Cost - Depreciation
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 Single Answer
Question Earnings per share is calculated as
Correct Answer ( Profit after tax - Preference Dividend ) / No. of equity shares
Your Answer ( Profit after tax - Preference Dividend ) / No. of equity shares
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 In case of Mortgage, the party in whose favour the interest is so transferred is called ________
Correct Answer Mortgagee
Your Answer Mortgagee
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 , Attempts should be made by the company to get the maximum credit for the goods or service supplied , Avoid early payments
True/False
Question If Average credit period works out to be more than the Normal credit period, it indicates efficiency on the part of collection department of the company in collecting the dues from the customers
Correct Answer False
Your Answer False
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 How many days in a year are to be considered for the calculation of daily sales
Correct Answer 360
Your Answer 360
True/False
Question Wealth maximization goal is only an extension of Profit maximization goal of the organisation
Correct Answer True
Your Answer True
Match The Following
Question Correct Answer Your Answer
Risk adjusting discounting rate method of capital budgeting decision discounting rate is increased in case of projects involving greater risk discounting rate is increased in case of projects involving greater risk
Capital rationing situation where the company has more acceptable proposals requiring a greater amount of funds situation where the company has more acceptable proposals requiring a greater amount of funds
Problems relating to situation of capital rationing Project Indivisibility Project Indivisibility
Informal method of capital budgeting decision subjective method subjective method
True/False
Question Internal rate of return considers time value of money
Correct Answer True
Your Answer True
True/False
Question Reorder level is calculated as Maximum Lead Time * Minimum Usage
Correct Answer False
Your Answer False
Multiple Choice Single Answer
Question Floor rate is
Correct Answer the minimum rate of interest payable by the company on the bonds even is the base rate falls below a certain limit
Your Answer the minimum rate of interest payable by the company on the bonds even is the base rate falls below a certain limit
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
True/False
Question Current ratio and Acid test ratio are categorised under liquidity group
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question The Purpose of cash budget is
Correct Answer to co-ordinate the timings of cash needs , It pinpoints the period when there is likely to be excess cash , it helps to arrange needed funds on the most favourable terms and prevents the accumulation of excess funds
Your Answer to co-ordinate the timings of cash needs , It pinpoints the period when there is likely to be excess cash , it helps to arrange needed funds on the most favourable terms and prevents the accumulation of excess funds
Multiple Choice Single Answer
Question Current assets are also referred to as
Correct Answer Working Capital
Your Answer Working Capital
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 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 Purchase of fixed Assets , Borrow Money on an Interest bearing promissory note
Multiple Choice Single Answer
Question The combined or weighted average cost of capital of the various individual components is termed as
Correct Answer Composite cost
Your Answer Composite cost
Multiple Choice Single Answer
Question The mix of sources from which the long term funds required by a business are raised is termed as
Correct Answer Capital Structure
Your Answer Capital Structure
Multiple Choice Single Answer
Question Revenue reserves represents
Correct Answer Accumulated retained earnings from the profits of normal business operations
Your Answer Accumulated retained earnings from the profits of normal business operations
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
Multiple Choice Multiple Answer
Question The cost of managing inventory includes
Correct Answer Ordering cost , Carrying cost
Your Answer Ordering cost , Carrying cost
True/False
Question Projects for venture capital financing are more risky in nature and involve larger gestation period
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question The effects of undercapitalisation are
Correct Answer Increase tax liability of the company , Demand of the employees to increase wages
Your Answer Increase tax liability of the company , Demand of the employees to increase wages
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 , Discloses the movements of cash
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 ________ is calculated on the basis of current profits and not on the basis of retained profits
Correct Answer Earnings per share
Your Answer Earnings per share
Multiple Choice Single Answer
Question The effect of Purchase of machinery by issue of debentures on the funds flow is that there will be
Correct Answer No effect on the funds flow
Your Answer No effect on the funds flow
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
Multiple Choice Multiple Answer
Question The Economic Order Quantity model is based on the assumption of
Correct Answer Placing and receiving orders is without any delay , Ordering costs and carrying costs associated with the orders are variable in nature and they behave exactly opposite to each other , The demand for the material concerned is uniform throughout the year
Your Answer Placing and receiving orders is without any delay , Ordering costs and carrying costs associated with the orders are variable in nature and they behave exactly opposite to each other , The demand for the material concerned is uniform throughout the year
Multiple Choice Single Answer
Question An organized collection of data according to logical and consistent accounting procedure is known as
Correct Answer Financial Statement
Your Answer Financial Statement
Multiple Choice Multiple Answer
Question Limitations of capital budgeting is
Correct Answer Life of the project cannot be estimated accurately , Cash inflows cannot be eatimated accurately , Difficulties in deciding the cost of capital
Your Answer Life of the project cannot be estimated accurately , Cash inflows cannot be eatimated accurately , Difficulties in deciding the cost of capital
Multiple Choice Multiple Answer
Question Fixation of Inventory levels are based on the following propositions
Correct Answer There has to be a constant watch on the actual stock level of various kinds of materials so that proper action can be taken , The various levels fixed are not fixed on a permanent basis and are subject to revision regularly
Your Answer There has to be a constant watch on the actual stock level of various kinds of materials so that proper action can be taken , The various levels fixed are not fixed on a permanent basis and are subject to revision regularly
Select The Blank
Question Operating Lease is also referred to as ________ lease
Correct Answer Service
Your Answer Service
Multiple Choice Single Answer
Question The lending Bank does not commit any physical outflow of funds in a
Correct Answer Non-Fund based lending
Your Answer Non-Fund based lending
True/False
Question The assumptions of capital structure theories is that Operating earnings are not expected to grow
Correct Answer True
Your Answer True
Select The Blank
Question According to the provisions of the companies Act 1956, ________ can declare the interim dividend
Correct Answer Board of Directors
Your Answer Board of Directors
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
True/False
Question Accounts Receivable is an example of current assets
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question The amount of cheques deposited by a Bank awaiting clearance is called
Correct Answer Collection float
Your Answer Collection float
Select The Blank
Question In financial terms, the operating profit earned by the company is also referred to as ________
Correct Answer Profit before Interest and Taxes
Your Answer Profit before Interest and Taxes
Select The Blank
Question Depreciation is sometimes treated as ________ funds
Correct Answer source
Your Answer source
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Select The Blank
Question When a company issues bonus shares ________ of the company get reduced
Correct Answer Reserves
Your Answer Reserves
Match The Following
Question Correct Answer Your Answer
Net Profit ratio Indicates that portion of sales available to the owners after consideration of all types of expenses and cost Indicates that portion of sales available to the owners after consideration of all types of expenses and cost
Undue increase in Gross Profit ratio Over-valuation of closing stock Over-valuation of closing stock
Undue decrease in Gross Profit ratio Under-valuation of closing stock Under-valuation of closing stock
Gross Profit ratio Indicates the relation between production cost and Sales Indicates the relation between production cost and Sales
Select The Blank
Question The fixed assets are expressed at ________
Correct Answer Cost - Depreciation
Your Answer Cost - Depreciation
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 Single Answer
Question Earnings per share is calculated as
Correct Answer ( Profit after tax - Preference Dividend ) / No. of equity shares
Your Answer ( Profit after tax - Preference Dividend ) / No. of equity shares
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 In case of Mortgage, the party in whose favour the interest is so transferred is called ________
Correct Answer Mortgagee
Your Answer Mortgagee
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 , Attempts should be made by the company to get the maximum credit for the goods or service supplied , Avoid early payments
True/False
Question If Average credit period works out to be more than the Normal credit period, it indicates efficiency on the part of collection department of the company in collecting the dues from the customers
Correct Answer False
Your Answer False
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 How many days in a year are to be considered for the calculation of daily sales
Correct Answer 360
Your Answer 360
True/False
Question Wealth maximization goal is only an extension of Profit maximization goal of the organisation
Correct Answer True
Your Answer True
Match The Following
Question Correct Answer Your Answer
Risk adjusting discounting rate method of capital budgeting decision discounting rate is increased in case of projects involving greater risk discounting rate is increased in case of projects involving greater risk
Capital rationing situation where the company has more acceptable proposals requiring a greater amount of funds situation where the company has more acceptable proposals requiring a greater amount of funds
Problems relating to situation of capital rationing Project Indivisibility Project Indivisibility
Informal method of capital budgeting decision subjective method subjective method
True/False
Question Internal rate of return considers time value of money
Correct Answer True
Your Answer True
True/False
Question Reorder level is calculated as Maximum Lead Time * Minimum Usage
Correct Answer False
Your Answer False
Multiple Choice Single Answer
Question Floor rate is
Correct Answer the minimum rate of interest payable by the company on the bonds even is the base rate falls below a certain limit
Your Answer the minimum rate of interest payable by the company on the bonds even is the base rate falls below a certain limit
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
True/False
Question Current ratio and Acid test ratio are categorised under liquidity group
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question The Purpose of cash budget is
Correct Answer to co-ordinate the timings of cash needs , It pinpoints the period when there is likely to be excess cash , it helps to arrange needed funds on the most favourable terms and prevents the accumulation of excess funds
Your Answer to co-ordinate the timings of cash needs , It pinpoints the period when there is likely to be excess cash , it helps to arrange needed funds on the most favourable terms and prevents the accumulation of excess funds
Multiple Choice Single Answer
Question Current assets are also referred to as
Correct Answer Working Capital
Your Answer Working Capital
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 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 Purchase of fixed Assets , Borrow Money on an Interest bearing promissory note
Multiple Choice Single Answer
Question The combined or weighted average cost of capital of the various individual components is termed as
Correct Answer Composite cost
Your Answer Composite cost
Multiple Choice Single Answer
Question The mix of sources from which the long term funds required by a business are raised is termed as
Correct Answer Capital Structure
Your Answer Capital Structure
Multiple Choice Single Answer
Question Revenue reserves represents
Correct Answer Accumulated retained earnings from the profits of normal business operations
Your Answer Accumulated retained earnings from the profits of normal business operations
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
Multiple Choice Multiple Answer
Question The cost of managing inventory includes
Correct Answer Ordering cost , Carrying cost
Your Answer Ordering cost , Carrying cost
True/False
Question Projects for venture capital financing are more risky in nature and involve larger gestation period
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question The effects of undercapitalisation are
Correct Answer Increase tax liability of the company , Demand of the employees to increase wages
Your Answer Increase tax liability of the company , Demand of the employees to increase wages
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 , Discloses the movements of cash
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 ________ is calculated on the basis of current profits and not on the basis of retained profits
Correct Answer Earnings per share
Your Answer Earnings per share
Multiple Choice Single Answer
Question The effect of Purchase of machinery by issue of debentures on the funds flow is that there will be
Correct Answer No effect on the funds flow
Your Answer No effect on the funds flow
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
Multiple Choice Multiple Answer
Question The Economic Order Quantity model is based on the assumption of
Correct Answer Placing and receiving orders is without any delay , Ordering costs and carrying costs associated with the orders are variable in nature and they behave exactly opposite to each other , The demand for the material concerned is uniform throughout the year
Your Answer Placing and receiving orders is without any delay , Ordering costs and carrying costs associated with the orders are variable in nature and they behave exactly opposite to each other , The demand for the material concerned is uniform throughout the year
Multiple Choice Single Answer
Question An organized collection of data according to logical and consistent accounting procedure is known as
Correct Answer Financial Statement
Your Answer Financial Statement
Multiple Choice Multiple Answer
Question Limitations of capital budgeting is
Correct Answer Life of the project cannot be estimated accurately , Cash inflows cannot be eatimated accurately , Difficulties in deciding the cost of capital
Your Answer Life of the project cannot be estimated accurately , Cash inflows cannot be eatimated accurately , Difficulties in deciding the cost of capital
Multiple Choice Multiple Answer
Question Fixation of Inventory levels are based on the following propositions
Correct Answer There has to be a constant watch on the actual stock level of various kinds of materials so that proper action can be taken , The various levels fixed are not fixed on a permanent basis and are subject to revision regularly
Your Answer There has to be a constant watch on the actual stock level of various kinds of materials so that proper action can be taken , The various levels fixed are not fixed on a permanent basis and are subject to revision regularly
Select The Blank
Question Operating Lease is also referred to as ________ lease
Correct Answer Service
Your Answer Service
Multiple Choice Single Answer
Question The lending Bank does not commit any physical outflow of funds in a
Correct Answer Non-Fund based lending
Your Answer Non-Fund based lending
True/False
Question The assumptions of capital structure theories is that Operating earnings are not expected to grow
Correct Answer True
Your Answer True
Select The Blank
Question According to the provisions of the companies Act 1956, ________ can declare the interim dividend
Correct Answer Board of Directors
Your Answer Board of Directors
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
True/False
Question Accounts Receivable is an example of current assets
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question The amount of cheques deposited by a Bank awaiting clearance is called
Correct Answer Collection float
Your Answer Collection float
Select The Blank
Question In financial terms, the operating profit earned by the company is also referred to as ________
Correct Answer Profit before Interest and Taxes
Your Answer Profit before Interest and Taxes
Select The Blank
Question Depreciation is sometimes treated as ________ funds
Correct Answer source
Your Answer source
Financial Management 25--SCDL
Financial Management 25:
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Select The Blank
Question
In case of Bills Purchased, the company gets only the present worth of the amount of the bill, the difference between the face value of the bill and the amount of assistance being in the form of ________
Correct Answer
discount charges
Your Answer
interest charges
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 find measures to improve the present manner and style of lending
Marathe committee
to review the credit authorization scheme
to recognize the contribution made by the SSI sector to the economy
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 reduction in the market value of the shares may cause due to
Correct Answer
Overcapitalisation
Your Answer
Overcapitalisation
Multiple Choice Multiple Answer
Question
The internal factors affecting the dividend policy are
Correct Answer
Growth rate of the company , Composition of the shareholding
Your Answer
Growth rate of the company , Composition of the shareholding
Multiple Choice Single Answer
Question
The time required by the company to process the received cheque and deposit the same in the bank is called
Correct Answer
Deposit float
Your Answer
Bank float
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
20% of the issue price
True/False
Question
Overdraft is given by the bank for a very short period of time, at the end of which the company is supposed to repay the same
Correct Answer
True
Your Answer
True
True/False
Question
One of the basic objectives of cash management is to maintain the optimum cash balance
Correct Answer
True
Your Answer
True
True/False
Question
Internal rate of return is difficult to use , calculate and understand
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
Question
The mix of sources from which the long term funds required by a business are raised is termed as
Correct Answer
Capital Structure
Your Answer
Capital Budgeting
Multiple Choice Single Answer
Question
The Investment decisions are mainly concerned with
Correct Answer
Application of funds
Your Answer
Application of funds
Select The Blank
Question
Cost management is the function of a ________.
Correct Answer
Treasurer
Your Answer
Finance manager
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
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
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
The projects having Profitability index of less than ________ will be rejected
Correct Answer
one
Your Answer
one
Multiple Choice Single Answer
Question
The Capital Structure decision mainly refers to the decision of
Correct Answer
Financing
Your Answer
Financing
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
Income
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
Kenneth Midgley and Ronald Burns
Multiple Choice Multiple Answer
Question
The advantages of operating lease is
Correct Answer
In an operating lease arrangement the equipment risk is transferred to the lessor , It minimizes investment in equipment , Reduces expenditure on maintenance
Your Answer
In an operating lease arrangement the equipment risk is transferred to the lessor , It minimizes investment in equipment
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
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
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
Multiple Choice Multiple Answer
Question
The cost of managing inventory includes
Correct Answer
Ordering cost , Carrying cost
Your Answer
Maintenance cost , Ordering cost , Carrying cost
True/False
Question
Internal rate of return does not considers cash inflows from the project throughout its life
Correct Answer
False
Your Answer
False
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
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 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 , Discloses the movements of cash
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
Multiple Choice Multiple Answer
Question
The techniques of Analysis and Interpretation of financial statements are
Correct Answer
Ratio Analysis , Cash flow Analysis
Your Answer
Profit and loss account , Balance Sheet
Multiple Choice Multiple Answer
Question
The importance of various items of inventory may be decided on the following factors
Correct Answer
Value of material consumption , Critical nature of inventory items , Amount of investment in inventory
Your Answer
Amount of investment in inventory , Value of material consumption , Critical nature of inventory items
Multiple Choice Single Answer
Question
Receivable management is also called as
Correct Answer
Trade Credit management
Your Answer
Trade Credit management
Multiple Choice Multiple Answer
Question
The avenues available to the company to invest the excess cash balance on short term basis may be in the form of
Correct Answer
Commercial paper , inter-corporate bills discounting , Bank deposits
Your Answer
Commercial paper , inter-corporate bills discounting , Bank deposits
Select The Blank
Question
The mathematical expression of ________ is Normal Usage * Lead time for emergency purchases
Correct Answer
Danger level
Your Answer
Danger level
Multiple Choice Single Answer
Question
Current assets are also referred to as
Correct Answer
Working Capital
Your Answer
Working Capital
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
False
Match The Following
Question
Correct Answer
Your Answer
Contribution
Sales less variable operating cost
Sales less variable operating cost
Operating Profit
Contribution less Fixed Operating cost
Contribution less Fixed Operating cost
Fixed cost
remains constant
remains constant
Variable cost
varies in direct proportion to the sales revenue
varies in direct proportion to the sales revenue
True/False
Question
Semi-variable cost is the cost which varies in direct proportion to the sales revenue
Correct Answer
False
Your Answer
True
Select The Blank
Question
________ and return always go hand in hand
Correct Answer
Risk
Your Answer
Risk
Select The Blank
Question
Inflow of funds may not necessarily result in ________
Correct Answer
Inflow of cash
Your Answer
Inflow of cash
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
Debenture Redemption reserve
Multiple Choice Single Answer
Question
Tax paid is
Correct Answer
Application of funds
Your Answer
Application of funds
Select The Blank
Question
The most crucial financial decisions of the organisation are taken by ________
Correct Answer
Board of Directors
Your Answer
Vice President (finance)
Multiple Choice Single Answer
Question
Unclaimed Dividends is shown in the balance sheet under the head
Correct Answer
Current liabilities and Provisions
Your Answer
Reserves
Select The Blank
Question
________ is clubbed with Current Assets in the Balance Sheet
Correct Answer
Loans and advances
Your Answer
Investments
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 case of Bills Purchased, the company gets only the present worth of the amount of the bill, the difference between the face value of the bill and the amount of assistance being in the form of ________
Correct Answer
discount charges
Your Answer
interest charges
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 find measures to improve the present manner and style of lending
Marathe committee
to review the credit authorization scheme
to recognize the contribution made by the SSI sector to the economy
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 reduction in the market value of the shares may cause due to
Correct Answer
Overcapitalisation
Your Answer
Overcapitalisation
Multiple Choice Multiple Answer
Question
The internal factors affecting the dividend policy are
Correct Answer
Growth rate of the company , Composition of the shareholding
Your Answer
Growth rate of the company , Composition of the shareholding
Multiple Choice Single Answer
Question
The time required by the company to process the received cheque and deposit the same in the bank is called
Correct Answer
Deposit float
Your Answer
Bank float
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
20% of the issue price
True/False
Question
Overdraft is given by the bank for a very short period of time, at the end of which the company is supposed to repay the same
Correct Answer
True
Your Answer
True
True/False
Question
One of the basic objectives of cash management is to maintain the optimum cash balance
Correct Answer
True
Your Answer
True
True/False
Question
Internal rate of return is difficult to use , calculate and understand
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
Question
The mix of sources from which the long term funds required by a business are raised is termed as
Correct Answer
Capital Structure
Your Answer
Capital Budgeting
Multiple Choice Single Answer
Question
The Investment decisions are mainly concerned with
Correct Answer
Application of funds
Your Answer
Application of funds
Select The Blank
Question
Cost management is the function of a ________.
Correct Answer
Treasurer
Your Answer
Finance manager
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
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
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
The projects having Profitability index of less than ________ will be rejected
Correct Answer
one
Your Answer
one
Multiple Choice Single Answer
Question
The Capital Structure decision mainly refers to the decision of
Correct Answer
Financing
Your Answer
Financing
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
Income
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
Kenneth Midgley and Ronald Burns
Multiple Choice Multiple Answer
Question
The advantages of operating lease is
Correct Answer
In an operating lease arrangement the equipment risk is transferred to the lessor , It minimizes investment in equipment , Reduces expenditure on maintenance
Your Answer
In an operating lease arrangement the equipment risk is transferred to the lessor , It minimizes investment in equipment
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
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
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
Multiple Choice Multiple Answer
Question
The cost of managing inventory includes
Correct Answer
Ordering cost , Carrying cost
Your Answer
Maintenance cost , Ordering cost , Carrying cost
True/False
Question
Internal rate of return does not considers cash inflows from the project throughout its life
Correct Answer
False
Your Answer
False
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
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 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 , Discloses the movements of cash
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
Multiple Choice Multiple Answer
Question
The techniques of Analysis and Interpretation of financial statements are
Correct Answer
Ratio Analysis , Cash flow Analysis
Your Answer
Profit and loss account , Balance Sheet
Multiple Choice Multiple Answer
Question
The importance of various items of inventory may be decided on the following factors
Correct Answer
Value of material consumption , Critical nature of inventory items , Amount of investment in inventory
Your Answer
Amount of investment in inventory , Value of material consumption , Critical nature of inventory items
Multiple Choice Single Answer
Question
Receivable management is also called as
Correct Answer
Trade Credit management
Your Answer
Trade Credit management
Multiple Choice Multiple Answer
Question
The avenues available to the company to invest the excess cash balance on short term basis may be in the form of
Correct Answer
Commercial paper , inter-corporate bills discounting , Bank deposits
Your Answer
Commercial paper , inter-corporate bills discounting , Bank deposits
Select The Blank
Question
The mathematical expression of ________ is Normal Usage * Lead time for emergency purchases
Correct Answer
Danger level
Your Answer
Danger level
Multiple Choice Single Answer
Question
Current assets are also referred to as
Correct Answer
Working Capital
Your Answer
Working Capital
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
False
Match The Following
Question
Correct Answer
Your Answer
Contribution
Sales less variable operating cost
Sales less variable operating cost
Operating Profit
Contribution less Fixed Operating cost
Contribution less Fixed Operating cost
Fixed cost
remains constant
remains constant
Variable cost
varies in direct proportion to the sales revenue
varies in direct proportion to the sales revenue
True/False
Question
Semi-variable cost is the cost which varies in direct proportion to the sales revenue
Correct Answer
False
Your Answer
True
Select The Blank
Question
________ and return always go hand in hand
Correct Answer
Risk
Your Answer
Risk
Select The Blank
Question
Inflow of funds may not necessarily result in ________
Correct Answer
Inflow of cash
Your Answer
Inflow of cash
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
Debenture Redemption reserve
Multiple Choice Single Answer
Question
Tax paid is
Correct Answer
Application of funds
Your Answer
Application of funds
Select The Blank
Question
The most crucial financial decisions of the organisation are taken by ________
Correct Answer
Board of Directors
Your Answer
Vice President (finance)
Multiple Choice Single Answer
Question
Unclaimed Dividends is shown in the balance sheet under the head
Correct Answer
Current liabilities and Provisions
Your Answer
Reserves
Select The Blank
Question
________ is clubbed with Current Assets in the Balance Sheet
Correct Answer
Loans and advances
Your Answer
Investments
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
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