Financial Management 24:
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
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
daily
True/False
Question
Cash flow statement is important financial tool for the management
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
Question
Advantages of Debentures from Investor's point of view
Correct Answer
They earn a stable rate of return , They are protected by the various provisions of the debenture Trust Deed , They generally have a fixed maturity period
Your Answer
They earn a stable rate of return , They are protected by the various provisions of the debenture Trust Deed , They generally have a fixed maturity period
Multiple Choice Multiple Answer
Question
Fund based lending of banks include
Correct Answer
Overdraft , Bills Purchased
Your Answer
Overdraft , Bills Purchased
Select The Blank
Question
In ABC analysis C class consist of ________.
Correct Answer
a very large number of items which are less important
Your Answer
a very large number of items which are less important
Select The Blank
Question
If the size of the issue is more than Rs. 100 crores, the issue is required to be rated by at least ________ credit rating agencies
Correct Answer
two
Your Answer
two
Multiple Choice Single Answer
Question
The effect of Bonus paid in the form of fully paid shares on funds ( cash concept ) is
Correct Answer
No change in cash
Your Answer
No change in cash
True/False
Question
Mortgage mode of security pertains to immovable properties like land and buildings
Correct Answer
True
Your Answer
True
True/False
Question
Ratio should be computed on the basis of inter-related figures which have a cause and effect relationship
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
Question
Net cash inflow is arrived at
Correct Answer
Revenue after tax add depreciation
Your Answer
Revenue after tax add depreciation
Multiple Choice Single Answer
Question
The motive of the company to hold the inventories in order to facilitate the smooth and uninterrupted production and sales operations is known as
Correct Answer
Transaction motive
Your Answer
Precautionary motive
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
Match The Following
Question
Correct Answer
Your Answer
Role of Client
Sends the invoice copy
Places the order
Without Recourses factoring
risk of non-payment assumed by factor
Follows up
With Recourses factoring
risk of non-payment assumed by selling company
Sends the invoice copy
Role of factor
Follows up
Bills Discounting
Select The Blank
Question
Depreciation is sometimes treated as ________ funds
Correct Answer
source
Your Answer
source
Multiple Choice Multiple Answer
Question
Advantages of Debentures from company's point of view are
Correct Answer
The specific cost of debt capital represented by debentures is lower than the cost of preference or equity capital , Debenture financing does not result in dilution of control
Your Answer
The specific cost of debt capital represented by debentures is lower than the cost of preference or equity capital , Debenture financing does not result in dilution of control
True/False
Question
Fixed Assets turnover ratio is the relationship between fixed assets and owner's funds
Correct Answer
False
Your Answer
True
Multiple Choice Single Answer
Question
Economic Order quantity indicates that
Correct Answer
Quantity which is fixed in such a way that the total variable cost of managing the inventory can be minimised
Your Answer
Quantity which is fixed in such a way that the total variable cost of managing the inventory can be minimised
Select The Blank
Question
The current ratio of ________ is considered to be standard
Correct Answer
2 : 1
Your Answer
1 : 1
Multiple Choice Multiple Answer
Question
Limitations of cash flow analysis are
Correct Answer
It cannot be equated with the income statement , Cannot replace the fund flow statement , Dose not represent real liquid position
Your Answer
It cannot be equated with the income statement , Cannot replace the fund flow statement , Discloses the success or failure of cash planning
Match The Following
Question
Correct Answer
Your Answer
Term loan
represents a source of debt finance which is generally repayable in more than one year but less than ten years
instruments to raise long term debt capital
Lessee
Not able to claim depreciation on asset
Claims the depreciation on the asset
Hirer
Claims the depreciation on the asset
Not able to claim depreciation on asset
Retained earnings
Residue left behind from earnings available to equity shareholders after the payment of annual dividend
represents a source of debt finance which is generally repayable in more than one year but less than ten years
Multiple Choice 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
Cash inflows cannot be eatimated accurately , Inaccurate estimation of the fixed assets , Difficulties in deciding the cost of 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 Multiple Answer
Question
The assumptions made while preparing the funds flow statement are
Correct Answer
The bank credit has been taken as short term advance from the bank , In the absence of information about the actual amount of dividend and tax paid, it has been presumed that the proposed dividend and tax provision for the current year were paid in the next year
Your Answer
In the absence of information about the actual amount of dividend and tax paid, it has been presumed that the proposed dividend and tax provision for the current year were paid in the next year , It represents real liquid position , It can be equated with the income statement
True/False
Question
A high debt equity ratio may indicate that the financial stake of the creditors is more than that of the owners
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
Question
Mr. A invested Rs. 10,000 in fixed deposit carrying interest @10% p.a. compounded annually. Calculate the value of investment after two years
Correct Answer
Rs. 12,100
Your Answer
Rs. 12,100
Multiple Choice 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
Multiple Choice Single Answer
Question
Overcapitalisation is
Correct Answer
Existence of excess capital as compared to the level of activity and requirements
Your Answer
Existence of excess capital as compared to the level of activity and requirements
Select The Blank
Question
________ in assets involves inflow of funds
Correct Answer
Decrease
Your Answer
Increase
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
True
Select The Blank
Question
Financial Institution plays the role of ________ in factoring service offered
Correct Answer
Factor
Your Answer
lender
Multiple Choice Multiple Answer
Question
The functions of a Finance Controller are :
Correct Answer
Budgeting , Record Keeping , Annual Reporting
Your Answer
Banking Relations , Budgeting , Annual Reporting
True/False
Question
In case of cash credit, the company need not have a formal current account
Correct Answer
True
Your Answer
False
Multiple Choice Multiple Answer
Question
Packing credit facility can take the following form
Correct Answer
Pre-shipment Packing credit , Post-shipment Packing credit
Your Answer
Pre-shipment Packing credit , Post-shipment Packing credit , Confirmed Packing credit
Multiple Choice Single Answer
Question
Interest and Dividend are categorised under
Correct Answer
Non-operating expenses
Your Answer
Non-operating expenses
True/False
Question
Turnover ratios measure efficiency of a business in using its resources
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
Question
Among all the intermediaries in Capital market, probably the most important and significant intermediary is the
Correct Answer
Merchant Banker
Your Answer
Merchant Banker
Select The Blank
Question
The most accepted interpretation of the term 'funds' is in the form of ________
Correct Answer
Working capital
Your Answer
Working capital
True/False
Question
Under hypothecation mode of security neither the property not the possession of the goods hypothecated is transferred to the Bank
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
Question
If Profit maximization is accepted as the only goal of finance function, it is criticised on the following grounds
Correct Answer
Ignores risk factor , Does not consider social obligation , Ignores quality aspect of benefits associated with a financial course of action
Your Answer
Ignores risk factor , Does not consider social obligation , Ignores quality aspect of benefits associated with a financial course of action
Multiple Choice Single Answer
Question
The technique where the interest is compounded and becomes a part of initial principal at the end of compounding period is termed as
Correct Answer
Compounding
Your Answer
Compounding
Select The Blank
Question
The basic objective of ________ management is to reduce the operating cash requirement to the minimum possible extent without affecting the routine transactions.
Correct Answer
Cash
Your Answer
Cash
True/False
Question
Earnings per share is calculated as ( Profit after tax - Preference Dividend ) / Number of Equity shares
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
Question
The "Pre-emptive right" of the equity shareholder is
Correct Answer
the right to purchase new shares in the same proportion as their current ownership
Your Answer
the right to purchase new shares in the same proportion as their current ownership
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
Attempts should be made by the company to get the maximum credit for the goods or service supplied , Avoid early payments
Multiple Choice Single Answer
Question
The cost of equity shares may be decided on the basis of yields actually realised over the period of past few years which may be expected to be continued in future also as per the
Correct Answer
Realised Yield Approach
Your Answer
Realised Yield Approach
Multiple Choice Single Answer
Question
Irregular Dividend Policy refers to
Correct Answer
Dividend per share varying according to the level of earnings
Your Answer
The company does not pay any dividend despite the huge earnings
Multiple Choice Multiple Answer
Question
Shortcomings of Debentures from Investor's point of view
Correct Answer
The interest on debentures is fully taxable , They do not carry the right to vote , Debenture prices are vulnerable to increase in interest rates
Your Answer
They do not carry the right to vote , Debenture prices are vulnerable to increase in interest rates
Tuesday, July 27, 2010
Financial Management 23--SCDL
Financial Management 23:
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Multiple Choice Multiple Answer
Question
The collection programme of the firm consists of
Correct Answer
Maintaining the state of receivables , Dispatch of letters to customers whose due date is approaching , Telegraphic and Telephonic advice to customers around the due date
Your Answer
Telegraphic and Telephonic advice to customers around the due date , Maintaining the state of receivables , Dispatch of letters to customers whose due date is approaching
Select The Blank
Question
Shareholders of a joint stock company appoint their representative in the form of ________ to carry on the day-to-day affairs of the company
Correct Answer
Directors
Your Answer
Directors
Select The Blank
Question
________ in liabilities involves inflow of funds
Correct Answer
Increase
Your Answer
Increase
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
International Finance
Finance Controller
Internal Auditing
Raising of funds
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
The analytical method of inventory control which aims at concentrating efforts in those areas where attention is required most is termed as ________
Correct Answer
ABC Analysis
Your Answer
ABC Analysis
Select The Blank
Question
Lease agreement is the most important document as it starts the ________ relationship between the lessor and lessee
Correct Answer
Legal
Your Answer
Legal
True/False
Question
Ratio should be computed on the basis of inter-related figures which have a cause and effect relationship
Correct Answer
True
Your Answer
True
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 Single Answer
Question
The Proprietary concern is owned by
Correct Answer
Only one person
Your Answer
Only one person
Multiple Choice Multiple Answer
Question
The limitations of ratio analysis are
Correct Answer
Ratios are based on historical financial statements rather than future happenings , Ratios are only indicators, they cannot be taken as final regarding good or bad financial position of the business , Ratio analysis takes in to consideration only monetary transactions
Your Answer
Ratios are based on historical financial statements rather than future happenings , Ratios are only indicators, they cannot be taken as final regarding good or bad financial position of the business , Ratio analysis provides data for inter-firm comparison
Multiple Choice Multiple Answer
Question
The disadvantages of a Partnership firm are
Correct Answer
Unlimited liability , Capacity to raise funds to meet complex business operations is limited
Your Answer
Unlimited liability , Capacity to raise funds to meet complex business operations is limited
Multiple Choice Single Answer
Question
Float indicates
Correct Answer
the difference between the bank balance as per the bank book and as per the bank pass book/bank statement
Your Answer
the difference between the bank balance as per the bank book and as per the bank pass book/bank statement
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
Select The Blank
Question
If the company pays the dividend out of retained profits, then the amount to be drawn from the reserve shall not exceed an amount equal to ________ of its paid up capital and free reserves
Correct Answer
0.1
Your Answer
0.1
True/False
Question
Introduction of a heavy amount of debt capital in the capital structure will not only reduce the valuation of the firm but will also increase the cost of capital
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
Question
An increase in the share premium account is
Correct Answer
Source of funds
Your Answer
Source of funds
Multiple Choice Single Answer
Question
Current liabilities consist of
Correct Answer
Creditors
Your Answer
Creditors
True/False
Question
Issue of Bonus shares is the remedy used in the situation of overcapitalisation
Correct Answer
False
Your Answer
True
Multiple Choice Single Answer
Question
Current assets are also referred to as
Correct Answer
Working Capital
Your Answer
Working Capital
Select The Blank
Question
The basic objective of ________ management is to reduce the operating cash requirement to the minimum possible extent without affecting the routine transactions.
Correct Answer
Cash
Your Answer
Cash
Match The Following
Question
Correct Answer
Your Answer
Advantage of Net present value
considers cash inflows from the project throughout its life
presupposes that the cash inflows can be reinvested immediately to yield the return equivalent to the Internal rate of return
Disadvantage of Accounting rate of return
uses profits after depreciation and taxes and not the cash inflows for evaluating the projects
considers cash inflows from the project throughout its life
Disadvantage of Pay back period
ignores time value of money
ignores time value of money
Advantage of Discounted Pay back period
considers time value of money
considers time value of money
Multiple Choice Multiple Answer
Question
Limitations of Average collection period
Correct Answer
Average Collection period assumes that the credit sales are evenly spread throughout the year. In practical circumstances, credit sales are not evenly spread throughout the year , The amount of credit sales made by company or the normal credit period offered by the company are not available in the published financial statements
Your Answer
Average Collection period assumes that the credit sales are evenly spread throughout the year. In practical circumstances, credit sales are not evenly spread throughout the year , The amount of credit sales made by company or the normal credit period offered by the company are not available in the published financial statements , Not proper cost benefit analysis made by the company
True/False
Question
Traditional approach believes the existence of Optimal Capital structure
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
Question
Assuming the current ratio is 2, in which cases would the current ratio decline
Correct Answer
Purchase of fixed Assets , Borrow Money on an Interest bearing promissory note
Your Answer
Issue of new shares , Purchase of fixed Assets , Cash collected from customers
Select The Blank
Question
The amount of profit earned after recovering the interest on long term sources of capital is referred to as ________
Correct Answer
Profit before taxes
Your Answer
Profit before Interest and Taxes
Select The Blank
Question
The concept of watered capital is confined to the time of ________ of the company
Correct Answer
Promotion
Your Answer
Promotion
True/False
Question
Capital budgeting process involves the estimation of various future aspects regarding future cash inflows, life of the project etc.
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
True/False
Question
Return on Assets is a ratio of relationship between Assets and Sales
Correct Answer
False
Your Answer
True
Multiple Choice Single Answer
Question
Increase in the amount in debtors results in
Correct Answer
Decrease in cash
Your Answer
No change in cash
Multiple Choice Single Answer
Question
The symptom of low capacity utilisation will be shown by
Correct Answer
Fixed Assets Turnover ratio
Your Answer
Fixed Assets Turnover ratio
Multiple Choice Single Answer
Question
From the following data, work out the Economic order quantity : Annual Demand : 5000 units, Ordering cost Rs. 60 per order, Price per unit Rs. 100, Inventory carrying cost is 15% on average inventory
Correct Answer
200 units
Your Answer
200 units
Select The Blank
Question
________ ratio will be useful in indicating the symptom of inability to pay dues to financial institutions
Correct Answer
Debt Service Coverage ratio
Your Answer
Debt Equity
Multiple Choice Multiple Answer
Question
The patterns of Dividend policy are
Correct Answer
Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy
Your Answer
Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy
Multiple Choice Single Answer
Question
The Walter and Gordon's approach of Dividend policy is based on the assumption of
Correct Answer
Retained earnings represent the only source of financing for the firm, EPS, dividend per share, internal rate of return and cost of capital are all constant
Your Answer
Retained earnings represent the only source of financing for the firm, EPS, dividend per share, internal rate of return and cost of capital are all constant
Select The Blank
Question
The payment of Dividend in the form of Bonus shares involves ________
Correct Answer
only transfer of retained earnings to share capital
Your Answer
only transfer of retained earnings to share capital
Multiple Choice Single Answer
Question
Gross Profit ratio is calculated as
Correct Answer
[(Gross Profit / Net Sales)] * 100
Your Answer
[(Gross Profit / Net Sales)] * 100
True/False
Question
If the process of capital rationing is strictly followed it may result into the exclusion of various smaller projects by larger projects
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
Question
External sources of cash are as follows :
Correct Answer
Issue of new shares , long term loans , short term borrowings
Your Answer
Issue of new shares , long term loans , short term borrowings
Select The Blank
Question
Profit after taxes can be distributed among the owners of the company by way of ________
Correct Answer
dividend
Your Answer
dividend
Multiple Choice Single Answer
Question
The Policy which attracts the shareholders who are willing to devote short term dividend income for long term capital gains and share in the increased prosperity of the company is termed as
Correct Answer
No immediate Dividend policy
Your Answer
No immediate Dividend policy
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
The prices of the material remain unstable , 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 Multiple Answer
Question
Measurement of cost of capital can be done through
Correct Answer
Cost of Debt , Cost of Preference shares , Cost of Equity shares
Your Answer
Cost of Debt , Cost of Preference shares , Cost of Equity shares
True/False
Question
Financial leverage is calculated as ( Sales - Variable cost ) / ( Earnings before Interest and tax - Interest )
Correct Answer
False
Your Answer
True
Multiple Choice Single Answer
Question
Capital cost is
Correct Answer
cost on the use of additional capital to support credit sales
Your Answer
additional expenses on the creation and maintenance of a credit department
Multiple Choice Single Answer
Question
The rate at which an organisation must pay to the suppliers of capital for the use of their funds is termed as
Correct Answer
cost of capital
Your Answer
cost of investment
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Multiple Choice Multiple Answer
Question
The collection programme of the firm consists of
Correct Answer
Maintaining the state of receivables , Dispatch of letters to customers whose due date is approaching , Telegraphic and Telephonic advice to customers around the due date
Your Answer
Telegraphic and Telephonic advice to customers around the due date , Maintaining the state of receivables , Dispatch of letters to customers whose due date is approaching
Select The Blank
Question
Shareholders of a joint stock company appoint their representative in the form of ________ to carry on the day-to-day affairs of the company
Correct Answer
Directors
Your Answer
Directors
Select The Blank
Question
________ in liabilities involves inflow of funds
Correct Answer
Increase
Your Answer
Increase
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
International Finance
Finance Controller
Internal Auditing
Raising of funds
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
The analytical method of inventory control which aims at concentrating efforts in those areas where attention is required most is termed as ________
Correct Answer
ABC Analysis
Your Answer
ABC Analysis
Select The Blank
Question
Lease agreement is the most important document as it starts the ________ relationship between the lessor and lessee
Correct Answer
Legal
Your Answer
Legal
True/False
Question
Ratio should be computed on the basis of inter-related figures which have a cause and effect relationship
Correct Answer
True
Your Answer
True
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 Single Answer
Question
The Proprietary concern is owned by
Correct Answer
Only one person
Your Answer
Only one person
Multiple Choice Multiple Answer
Question
The limitations of ratio analysis are
Correct Answer
Ratios are based on historical financial statements rather than future happenings , Ratios are only indicators, they cannot be taken as final regarding good or bad financial position of the business , Ratio analysis takes in to consideration only monetary transactions
Your Answer
Ratios are based on historical financial statements rather than future happenings , Ratios are only indicators, they cannot be taken as final regarding good or bad financial position of the business , Ratio analysis provides data for inter-firm comparison
Multiple Choice Multiple Answer
Question
The disadvantages of a Partnership firm are
Correct Answer
Unlimited liability , Capacity to raise funds to meet complex business operations is limited
Your Answer
Unlimited liability , Capacity to raise funds to meet complex business operations is limited
Multiple Choice Single Answer
Question
Float indicates
Correct Answer
the difference between the bank balance as per the bank book and as per the bank pass book/bank statement
Your Answer
the difference between the bank balance as per the bank book and as per the bank pass book/bank statement
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
Select The Blank
Question
If the company pays the dividend out of retained profits, then the amount to be drawn from the reserve shall not exceed an amount equal to ________ of its paid up capital and free reserves
Correct Answer
0.1
Your Answer
0.1
True/False
Question
Introduction of a heavy amount of debt capital in the capital structure will not only reduce the valuation of the firm but will also increase the cost of capital
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
Question
An increase in the share premium account is
Correct Answer
Source of funds
Your Answer
Source of funds
Multiple Choice Single Answer
Question
Current liabilities consist of
Correct Answer
Creditors
Your Answer
Creditors
True/False
Question
Issue of Bonus shares is the remedy used in the situation of overcapitalisation
Correct Answer
False
Your Answer
True
Multiple Choice Single Answer
Question
Current assets are also referred to as
Correct Answer
Working Capital
Your Answer
Working Capital
Select The Blank
Question
The basic objective of ________ management is to reduce the operating cash requirement to the minimum possible extent without affecting the routine transactions.
Correct Answer
Cash
Your Answer
Cash
Match The Following
Question
Correct Answer
Your Answer
Advantage of Net present value
considers cash inflows from the project throughout its life
presupposes that the cash inflows can be reinvested immediately to yield the return equivalent to the Internal rate of return
Disadvantage of Accounting rate of return
uses profits after depreciation and taxes and not the cash inflows for evaluating the projects
considers cash inflows from the project throughout its life
Disadvantage of Pay back period
ignores time value of money
ignores time value of money
Advantage of Discounted Pay back period
considers time value of money
considers time value of money
Multiple Choice Multiple Answer
Question
Limitations of Average collection period
Correct Answer
Average Collection period assumes that the credit sales are evenly spread throughout the year. In practical circumstances, credit sales are not evenly spread throughout the year , The amount of credit sales made by company or the normal credit period offered by the company are not available in the published financial statements
Your Answer
Average Collection period assumes that the credit sales are evenly spread throughout the year. In practical circumstances, credit sales are not evenly spread throughout the year , The amount of credit sales made by company or the normal credit period offered by the company are not available in the published financial statements , Not proper cost benefit analysis made by the company
True/False
Question
Traditional approach believes the existence of Optimal Capital structure
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
Question
Assuming the current ratio is 2, in which cases would the current ratio decline
Correct Answer
Purchase of fixed Assets , Borrow Money on an Interest bearing promissory note
Your Answer
Issue of new shares , Purchase of fixed Assets , Cash collected from customers
Select The Blank
Question
The amount of profit earned after recovering the interest on long term sources of capital is referred to as ________
Correct Answer
Profit before taxes
Your Answer
Profit before Interest and Taxes
Select The Blank
Question
The concept of watered capital is confined to the time of ________ of the company
Correct Answer
Promotion
Your Answer
Promotion
True/False
Question
Capital budgeting process involves the estimation of various future aspects regarding future cash inflows, life of the project etc.
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
True/False
Question
Return on Assets is a ratio of relationship between Assets and Sales
Correct Answer
False
Your Answer
True
Multiple Choice Single Answer
Question
Increase in the amount in debtors results in
Correct Answer
Decrease in cash
Your Answer
No change in cash
Multiple Choice Single Answer
Question
The symptom of low capacity utilisation will be shown by
Correct Answer
Fixed Assets Turnover ratio
Your Answer
Fixed Assets Turnover ratio
Multiple Choice Single Answer
Question
From the following data, work out the Economic order quantity : Annual Demand : 5000 units, Ordering cost Rs. 60 per order, Price per unit Rs. 100, Inventory carrying cost is 15% on average inventory
Correct Answer
200 units
Your Answer
200 units
Select The Blank
Question
________ ratio will be useful in indicating the symptom of inability to pay dues to financial institutions
Correct Answer
Debt Service Coverage ratio
Your Answer
Debt Equity
Multiple Choice Multiple Answer
Question
The patterns of Dividend policy are
Correct Answer
Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy
Your Answer
Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy
Multiple Choice Single Answer
Question
The Walter and Gordon's approach of Dividend policy is based on the assumption of
Correct Answer
Retained earnings represent the only source of financing for the firm, EPS, dividend per share, internal rate of return and cost of capital are all constant
Your Answer
Retained earnings represent the only source of financing for the firm, EPS, dividend per share, internal rate of return and cost of capital are all constant
Select The Blank
Question
The payment of Dividend in the form of Bonus shares involves ________
Correct Answer
only transfer of retained earnings to share capital
Your Answer
only transfer of retained earnings to share capital
Multiple Choice Single Answer
Question
Gross Profit ratio is calculated as
Correct Answer
[(Gross Profit / Net Sales)] * 100
Your Answer
[(Gross Profit / Net Sales)] * 100
True/False
Question
If the process of capital rationing is strictly followed it may result into the exclusion of various smaller projects by larger projects
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
Question
External sources of cash are as follows :
Correct Answer
Issue of new shares , long term loans , short term borrowings
Your Answer
Issue of new shares , long term loans , short term borrowings
Select The Blank
Question
Profit after taxes can be distributed among the owners of the company by way of ________
Correct Answer
dividend
Your Answer
dividend
Multiple Choice Single Answer
Question
The Policy which attracts the shareholders who are willing to devote short term dividend income for long term capital gains and share in the increased prosperity of the company is termed as
Correct Answer
No immediate Dividend policy
Your Answer
No immediate Dividend policy
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
The prices of the material remain unstable , 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 Multiple Answer
Question
Measurement of cost of capital can be done through
Correct Answer
Cost of Debt , Cost of Preference shares , Cost of Equity shares
Your Answer
Cost of Debt , Cost of Preference shares , Cost of Equity shares
True/False
Question
Financial leverage is calculated as ( Sales - Variable cost ) / ( Earnings before Interest and tax - Interest )
Correct Answer
False
Your Answer
True
Multiple Choice Single Answer
Question
Capital cost is
Correct Answer
cost on the use of additional capital to support credit sales
Your Answer
additional expenses on the creation and maintenance of a credit department
Multiple Choice Single Answer
Question
The rate at which an organisation must pay to the suppliers of capital for the use of their funds is termed as
Correct Answer
cost of capital
Your Answer
cost of investment
Financial Management Set 7--SCDL
Plz Click on the link Below to access the Papers of Financial Management
Financial Management 21
Financial Management 22
Financial Management 23
Financial Management 21
Financial Management 22
Financial Management 23
Financial Management 22--SCDL
Financial Management 22:
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
True/False
Question
The redemption of preference shares if they carry too high rate of dividend is the remedy to overcome the situation of overcapitalisation
Correct Answer
True
Your Answer
True
Select The Blank
Question
When a company issues bonus shares ________ of the company get reduced
Correct Answer
Reserves
Your Answer
Reserves
Multiple Choice Single Answer
Question
Current assets is in the form of
Correct Answer
Receivables
Your Answer
Investments
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
Accounting rate of return
Select The Blank
Question
Turnover ratios measures how efficiently the ________ are employed by the firm
Correct Answer
Assets
Your Answer
Profits
Multiple Choice Multiple Answer
Question
Debt Service coverage ratio may be considered to be one of the most important ratios calculated by the
Correct Answer
Bankers , Financial Institutions
Your Answer
Bankers , Financial Institutions
Multiple Choice Multiple Answer
Question
Advantages of cash flow statement are
Correct Answer
Helps in efficient cash management , Discloses the movements of cash , Discloses the success or failure of cash planning
Your Answer
Helps in efficient cash management , Discloses the movements of cash , Discloses the success or failure of cash planning , Represents real liquid position
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
The period that indicates the period within which the discounted cash inflows equal to the discounted cash outflows involved in the project is termed as
Correct Answer
Discounted Pay back period
Your Answer
Pay Back period
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
Liquid ratio
Multiple Choice Single Answer
Question
The main function of finance under the traditional approach comprises of
Correct Answer
Procurement of funds
Your Answer
Procurement of funds
Multiple Choice Single Answer
Question
The cost which remains constant upto a certain sales revenue and increases if the sales revenue increases beyond a certain point is termed as
Correct Answer
Semi-variable cost
Your Answer
Semi-variable cost
Multiple Choice Single Answer
Question
Financing consists of the raising, providing, managing of all the money, capital or funds of any kind to be used in connection with the business' is defined by
Correct Answer
Bonneville and Dewey
Your Answer
Bonneville and Dewey
Multiple Choice Multiple Answer
Question
The sources of cash are
Correct Answer
Cash from operations , sale of machinery , Issue of new shares
Your Answer
Cash from operations , Issue of new shares
True/False
Question
Credit rating does not create any legal relationship between the rating agency and the investor
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
Question
For the calculation of Operating Profit / Loss , Goodwill written off should be
Correct Answer
added to the Net Profit as per Profit and loss account
Your Answer
ignored
Multiple Choice Single Answer
Question
The traditional approach to financial management refers only to the procurement of funds by
Correct Answer
Corporate entity
Your Answer
Corporate entity
True/False
Question
Loans from financial corporations etc. are sources of cash
Correct Answer
True
Your Answer
True
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
True
Select The Blank
Question
If the project is accepted, Internal Rate of return resulting from the same should be ________ than cost of capital
Correct Answer
more
Your Answer
more
Select The Blank
Question
Redemtion of shares/debentures is categorised under ________
Correct Answer
Non-operating cash outflow
Your Answer
Non-operating cash inflow
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
Term loans represent unsecured lending
Multiple Choice Single Answer
Question
Discounted Payback period is an improvement over the pay back period method as it considers
Correct Answer
time value of money
Your Answer
time value of money
True/False
Question
A systematic maintenance of perpetual inventory system enables to locate slow and non-moving items and to take remedial action for the same
Correct Answer
True
Your Answer
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 , It only considers equity shares
True/False
Question
The lessor is the nominal owner of the asset as the possession and economic use of the asset rests with the lessee
Correct Answer
True
Your Answer
True
True/False
Question
The operating profit is computed as Sales Revenue Less Variable Operating Cost Less Fixed Operating cost
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
Question
The patterns of Dividend policy are
Correct Answer
Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy
Your Answer
Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy
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
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 Multiple Answer
Question
Shortcomings of Debentures from company's point of view
Correct Answer
The debenture interest and capital repayment are obligatory payments , Debenture financing enhances the financial risk associated with the firm
Your Answer
The debenture interest and capital repayment are obligatory payments , Debenture financing enhances the financial risk associated with the firm , They have lowest priority in the event of liquidation
Select The Blank
Question
Break even point is that level of sales revenue at which there is ________
Correct Answer
no profit no loss
Your Answer
no profit no loss
Multiple Choice Multiple Answer
Question
The characteristics of assets are
Correct Answer
They are acquired for use for long periods , They are ordinarily not meant for resale
Your Answer
They are acquired for use for long periods
Multiple Choice Single Answer
Question
A secured instrument usually secured by a charge on the immovable properties of the company where there is a promise to pay interest and repay principal at a stipulated period of time is known as
Correct Answer
Debentures
Your Answer
Debentures
Match The Following
Question
Correct Answer
Your Answer
Retained earnings
Residue left behind from earnings available to equity shareholders after the payment of annual dividend
Residue left behind from earnings available to equity shareholders after the payment of annual dividend
Term loan
represents a source of debt finance which is generally repayable in more than one year but less than ten years
instruments to raise long term debt capital
Lessee
Not able to claim depreciation on asset
Not able to claim depreciation on asset
Hirer
Claims the depreciation on the asset
Claims the depreciation on the asset
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
Non-recurring
Multiple Choice Multiple Answer
Question
If Profit maximization is accepted as the only goal of finance function, it is criticised on the following grounds
Correct Answer
Ignores risk factor , Does not consider social obligation , Ignores quality aspect of benefits associated with a financial course of action
Your Answer
Does take into consideration time value of money , Ignores risk factor , Does not consider social obligation
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 , Credit standing of the company in the market falls down and difficulty in raising futher capital , Shares become non-transferable
Select The Blank
Question
Retained earnings is a source of ________ finance
Correct Answer
Internal
Your Answer
Internal
Select The Blank
Question
Private limited company and Public limited company are the companies based on the classification of ________
Correct Answer
Number of members
Your Answer
Number of members
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 , The various levels fixed are not fixed on a permanent basis and are subject to revision regularly , Minimum level indicate the level above which the actual stock should not exceed
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
A close and strict control is facilitated on the most important items , 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 , It may serve as a base for the Production department for placing the material requisition slips
Multiple Choice Single Answer
Question
The motive of the company to hold the inventories in order to facilitate the smooth and uninterrupted production and sales operations is known as
Correct Answer
Transaction motive
Your Answer
Transaction motive
Select The Blank
Question
Factoring indicates the relationship between ________ and a business organisation
Correct Answer
Financial institutions
Your Answer
Financial institutions
Multiple Choice Single Answer
Question
According to the Irrelevance approach of dividend policy, the value of the company
Correct Answer
remains unaffected by the dividend policy of the company
Your Answer
remains unaffected by the dividend policy of the company
True/False
Question
Turnover ratios indicate the efficiency of the organisation to use the various kinds of assets by converting them in the form of Sales
Correct Answer
True
Your Answer
True
True/False
Question
The redemption of preference shares if they carry too high rate of dividend is the remedy to overcome the situation of overcapitalisation
Correct Answer
True
Your Answer
True
Select The Blank
Question
When a company issues bonus shares ________ of the company get reduced
Correct Answer
Reserves
Your Answer
Reserves
Multiple Choice Single Answer
Question
Current assets is in the form of
Correct Answer
Receivables
Your Answer
Investments
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
Accounting rate of return
Select The Blank
Question
Turnover ratios measures how efficiently the ________ are employed by the firm
Correct Answer
Assets
Your Answer
Profits
Multiple Choice Multiple Answer
Question
Debt Service coverage ratio may be considered to be one of the most important ratios calculated by the
Correct Answer
Bankers , Financial Institutions
Your Answer
Bankers , Financial Institutions
Multiple Choice Multiple Answer
Question
Advantages of cash flow statement are
Correct Answer
Helps in efficient cash management , Discloses the movements of cash , Discloses the success or failure of cash planning
Your Answer
Helps in efficient cash management , Discloses the movements of cash , Discloses the success or failure of cash planning , Represents real liquid position
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
The period that indicates the period within which the discounted cash inflows equal to the discounted cash outflows involved in the project is termed as
Correct Answer
Discounted Pay back period
Your Answer
Pay Back period
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
Liquid ratio
Multiple Choice Single Answer
Question
The main function of finance under the traditional approach comprises of
Correct Answer
Procurement of funds
Your Answer
Procurement of funds
Multiple Choice Single Answer
Question
The cost which remains constant upto a certain sales revenue and increases if the sales revenue increases beyond a certain point is termed as
Correct Answer
Semi-variable cost
Your Answer
Semi-variable cost
Multiple Choice Single Answer
Question
Financing consists of the raising, providing, managing of all the money, capital or funds of any kind to be used in connection with the business' is defined by
Correct Answer
Bonneville and Dewey
Your Answer
Bonneville and Dewey
Multiple Choice Multiple Answer
Question
The sources of cash are
Correct Answer
Cash from operations , sale of machinery , Issue of new shares
Your Answer
Cash from operations , Issue of new shares
True/False
Question
Credit rating does not create any legal relationship between the rating agency and the investor
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
Question
For the calculation of Operating Profit / Loss , Goodwill written off should be
Correct Answer
added to the Net Profit as per Profit and loss account
Your Answer
ignored
Multiple Choice Single Answer
Question
The traditional approach to financial management refers only to the procurement of funds by
Correct Answer
Corporate entity
Your Answer
Corporate entity
True/False
Question
Loans from financial corporations etc. are sources of cash
Correct Answer
True
Your Answer
True
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
True
Select The Blank
Question
If the project is accepted, Internal Rate of return resulting from the same should be ________ than cost of capital
Correct Answer
more
Your Answer
more
Select The Blank
Question
Redemtion of shares/debentures is categorised under ________
Correct Answer
Non-operating cash outflow
Your Answer
Non-operating cash inflow
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
Term loans represent unsecured lending
Multiple Choice Single Answer
Question
Discounted Payback period is an improvement over the pay back period method as it considers
Correct Answer
time value of money
Your Answer
time value of money
True/False
Question
A systematic maintenance of perpetual inventory system enables to locate slow and non-moving items and to take remedial action for the same
Correct Answer
True
Your Answer
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 , It only considers equity shares
True/False
Question
The lessor is the nominal owner of the asset as the possession and economic use of the asset rests with the lessee
Correct Answer
True
Your Answer
True
True/False
Question
The operating profit is computed as Sales Revenue Less Variable Operating Cost Less Fixed Operating cost
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
Question
The patterns of Dividend policy are
Correct Answer
Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy
Your Answer
Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy
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
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 Multiple Answer
Question
Shortcomings of Debentures from company's point of view
Correct Answer
The debenture interest and capital repayment are obligatory payments , Debenture financing enhances the financial risk associated with the firm
Your Answer
The debenture interest and capital repayment are obligatory payments , Debenture financing enhances the financial risk associated with the firm , They have lowest priority in the event of liquidation
Select The Blank
Question
Break even point is that level of sales revenue at which there is ________
Correct Answer
no profit no loss
Your Answer
no profit no loss
Multiple Choice Multiple Answer
Question
The characteristics of assets are
Correct Answer
They are acquired for use for long periods , They are ordinarily not meant for resale
Your Answer
They are acquired for use for long periods
Multiple Choice Single Answer
Question
A secured instrument usually secured by a charge on the immovable properties of the company where there is a promise to pay interest and repay principal at a stipulated period of time is known as
Correct Answer
Debentures
Your Answer
Debentures
Match The Following
Question
Correct Answer
Your Answer
Retained earnings
Residue left behind from earnings available to equity shareholders after the payment of annual dividend
Residue left behind from earnings available to equity shareholders after the payment of annual dividend
Term loan
represents a source of debt finance which is generally repayable in more than one year but less than ten years
instruments to raise long term debt capital
Lessee
Not able to claim depreciation on asset
Not able to claim depreciation on asset
Hirer
Claims the depreciation on the asset
Claims the depreciation on the asset
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
Non-recurring
Multiple Choice Multiple Answer
Question
If Profit maximization is accepted as the only goal of finance function, it is criticised on the following grounds
Correct Answer
Ignores risk factor , Does not consider social obligation , Ignores quality aspect of benefits associated with a financial course of action
Your Answer
Does take into consideration time value of money , Ignores risk factor , Does not consider social obligation
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 , Credit standing of the company in the market falls down and difficulty in raising futher capital , Shares become non-transferable
Select The Blank
Question
Retained earnings is a source of ________ finance
Correct Answer
Internal
Your Answer
Internal
Select The Blank
Question
Private limited company and Public limited company are the companies based on the classification of ________
Correct Answer
Number of members
Your Answer
Number of members
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 , The various levels fixed are not fixed on a permanent basis and are subject to revision regularly , Minimum level indicate the level above which the actual stock should not exceed
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
A close and strict control is facilitated on the most important items , 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 , It may serve as a base for the Production department for placing the material requisition slips
Multiple Choice Single Answer
Question
The motive of the company to hold the inventories in order to facilitate the smooth and uninterrupted production and sales operations is known as
Correct Answer
Transaction motive
Your Answer
Transaction motive
Select The Blank
Question
Factoring indicates the relationship between ________ and a business organisation
Correct Answer
Financial institutions
Your Answer
Financial institutions
Multiple Choice Single Answer
Question
According to the Irrelevance approach of dividend policy, the value of the company
Correct Answer
remains unaffected by the dividend policy of the company
Your Answer
remains unaffected by the dividend policy of the company
True/False
Question
Turnover ratios indicate the efficiency of the organisation to use the various kinds of assets by converting them in the form of Sales
Correct Answer
True
Your Answer
True
Financial Management 21--SCDL
Financial Management 21:
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
True/False
Question
One of the basic objectives of cash management is to maintain the optimum cash balance
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
Question
In financial terms, Profit after tax can be referred as
Correct Answer
Earning after tax
Your Answer
Gain after tax
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
Select The Blank
Question
________ in liabilities involves inflow of funds
Correct Answer
Increase
Your Answer
Deficit
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
Goods Stolen ( Sale price Rs. 1000/- Cost Rs. 800/- ) ; Which of the accounts will be affected by this transaction
Correct Answer
Purchases Account , Loss by theft Account
Your Answer
Stock Account , Loss by theft Account
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 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
Deposit float
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 , It only considers equity shares
Multiple Choice Single Answer
Question
The motive of the company to hold inventory to guard against the risk of unpredictable changes in demand and supply forces is known as
Correct Answer
Precautionary motive
Your Answer
Precautionary motive
True/False
Question
When the firm's actual bank balance is greater than the balance shown by the firm's books, the difference is called as 'payment float'
Correct Answer
True
Your Answer
True
True/False
Question
Economic Order Quantity model is a very useful model of determining the order quantity
Correct Answer
True
Your Answer
True
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 traditional approach to financial management refers only to the procurement of funds by
Correct Answer
Corporate entity
Your Answer
Corporate entity
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
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 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 , Capital market , inter-corporate bills discounting , Bank deposits
Multiple Choice Multiple Answer
Question
External sources of funds are
Correct Answer
Funds from long term loans , Sale of fixed assets
Your Answer
Funds from operations , Funds from long term loans , Sale of fixed assets
Multiple Choice Single Answer
Question
Which of the following assets get generated during course of operations or get utilized within one year
Correct Answer
Current assets
Your Answer
Current assets
Multiple Choice Single Answer
Question
The Capital Structure decision mainly refers to the decision of
Correct Answer
Financing
Your Answer
Investment
True/False
Question
Private limited company can commence business immediately on incorporation
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
Question
Advantages of Debentures from company's point of view are
Correct Answer
The specific cost of debt capital represented by debentures is lower than the cost of preference or equity capital , Debenture financing does not result in dilution of control
Your Answer
The specific cost of debt capital represented by debentures is lower than the cost of preference or equity capital , Debenture financing does not result in dilution of control , Debenture prices are vulnerable to increase in interest rates
Multiple Choice Multiple Answer
Question
The causes of undercapitalisation are
Correct Answer
Company following too conservative policy for paying the dividends , Future earnings may be underestimated
Your Answer
The company might have spent huge amounts during its formation stage , Company following too conservative policy for paying the dividends , Purchasing of asssets during inflationary situations
Multiple Choice Multiple Answer
Question
The functions of a Finance Controller are :
Correct Answer
Budgeting , Record Keeping , Annual Reporting
Your Answer
Banking Relations , Budgeting , Record Keeping , Annual Reporting
Multiple Choice Single Answer
Question
The deposit receipt should contain
Correct Answer
Amount of deposit
Your Answer
Amount of deposit
Select The Blank
Question
________ is one of the current assets that takes the longest time to get converted into cash
Correct Answer
Stock
Your Answer
Debtors
Select The Blank
Question
The analytical method of inventory control which aims at concentrating efforts in those areas where attention is required most is termed as ________
Correct Answer
ABC Analysis
Your Answer
ABC Analysis
Multiple Choice Single Answer
Question
The most reliable source of getting the information about the creditworthiness of the customer who is dealing with the company presently is
Correct Answer
Past experience of the customer
Your Answer
Bank Reference
Select The Blank
Question
The fixed assets are expressed at ________
Correct Answer
Cost - Depreciation
Your Answer
Cost - Depreciation
Multiple Choice Multiple Answer
Question
Importance of capital budgeting decisions
Correct Answer
They represent the true earning assets of the firm , they are irreversible , they require assessment of future events which are uncertain
Your Answer
they are irreversible , they require assessment of future events which are uncertain
Multiple Choice Single Answer
Question
Equity Warrants are
Correct Answer
where the holders are entitled to purchase the equity shares at a specific price during the specified period
Your Answer
where the holders are entitled to purchase the equity shares at a specific price during the specified period
Multiple Choice Single Answer
Question
Gross Working Capital means
Correct Answer
Current assets
Your Answer
Current assets
True/False
Question
Economic order quantity is based on the assumption that the demand for the material concerned is uniform throughout a year
Correct Answer
True
Your Answer
True
True/False
Question
The basic objective behind fixation of the levels is to avoid overstocking and understocking
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
Question
Packing credit facility can take the following form
Correct Answer
Pre-shipment Packing credit , Post-shipment Packing credit
Your Answer
Pre-shipment Packing credit , Post-shipment Packing credit , Revocable Packing credit
True/False
Question
Loans from financial corporations etc. are sources of cash
Correct Answer
True
Your Answer
True
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
Select The Blank
Question
The amount of profit earned after recovering the interest on long term sources of capital is referred to as ________
Correct Answer
Profit before taxes
Your Answer
Profit before taxes
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
Multiple Choice Single Answer
Question
The weighted average cost of capital is referred to as
Correct Answer
Average cost
Your Answer
Average cost
Multiple Choice Multiple Answer
Question
If Profit maximization is accepted as the only goal of finance function, it is criticised on the following grounds
Correct Answer
Ignores risk factor , Does not consider social obligation , Ignores quality aspect of benefits associated with a financial course of action
Your Answer
Does take into consideration time value of money , Ignores risk factor , Does not consider social obligation
Select The Blank
Question
The payment of Dividend in the form of Bonus shares involves ________
Correct Answer
only transfer of retained earnings to share capital
Your Answer
only transfer of retained earnings to share capital
Select The Blank
Question
The mathematical expression of ________ is Value of material consumed / Average inventory held
Correct Answer
Inventory turnover
Your Answer
Inventory turnover
Multiple Choice Single Answer
Question
Irregular Dividend Policy refers to
Correct Answer
Dividend per share varying according to the level of earnings
Your Answer
Dividend per share varying according to the level of earnings
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
Multiple Choice Multiple Answer
Question
The advantages of ratio analysis are
Correct Answer
It helps in planning and forecasting , It makes possible comparison of the performance of the different divisions of the firm , It simplifies the comprehension of financial statements
Your Answer
It helps in planning and forecasting , It makes possible comparison of the performance of the different divisions of the firm , It simplifies the comprehension of financial statements , It takes into consideration only monetary transactions
Match The Following
Question
Correct Answer
Your Answer
Safety Stock
below which the actual stock should not be allowed to fall
below which the actual stock should not be allowed to fall
ABC Analysis
Vital few Trivial Many
Vital few Trivial Many
Bill of Materials
Details of the necessary materials as well as quantity of each item
Details of the necessary materials as well as quantity of each item
Perpetual Inventory System
Maintenance of Bin Cards and Stores ledger in order to know about the stock in quantity and value at any given point of time
Maintenance of Bin Cards and Stores ledger in order to know about the stock in quantity and value at any given point of time
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
True/False
Question
One of the basic objectives of cash management is to maintain the optimum cash balance
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
Question
In financial terms, Profit after tax can be referred as
Correct Answer
Earning after tax
Your Answer
Gain after tax
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
Select The Blank
Question
________ in liabilities involves inflow of funds
Correct Answer
Increase
Your Answer
Deficit
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
Goods Stolen ( Sale price Rs. 1000/- Cost Rs. 800/- ) ; Which of the accounts will be affected by this transaction
Correct Answer
Purchases Account , Loss by theft Account
Your Answer
Stock Account , Loss by theft Account
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 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
Deposit float
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 , It only considers equity shares
Multiple Choice Single Answer
Question
The motive of the company to hold inventory to guard against the risk of unpredictable changes in demand and supply forces is known as
Correct Answer
Precautionary motive
Your Answer
Precautionary motive
True/False
Question
When the firm's actual bank balance is greater than the balance shown by the firm's books, the difference is called as 'payment float'
Correct Answer
True
Your Answer
True
True/False
Question
Economic Order Quantity model is a very useful model of determining the order quantity
Correct Answer
True
Your Answer
True
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 traditional approach to financial management refers only to the procurement of funds by
Correct Answer
Corporate entity
Your Answer
Corporate entity
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
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 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 , Capital market , inter-corporate bills discounting , Bank deposits
Multiple Choice Multiple Answer
Question
External sources of funds are
Correct Answer
Funds from long term loans , Sale of fixed assets
Your Answer
Funds from operations , Funds from long term loans , Sale of fixed assets
Multiple Choice Single Answer
Question
Which of the following assets get generated during course of operations or get utilized within one year
Correct Answer
Current assets
Your Answer
Current assets
Multiple Choice Single Answer
Question
The Capital Structure decision mainly refers to the decision of
Correct Answer
Financing
Your Answer
Investment
True/False
Question
Private limited company can commence business immediately on incorporation
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
Question
Advantages of Debentures from company's point of view are
Correct Answer
The specific cost of debt capital represented by debentures is lower than the cost of preference or equity capital , Debenture financing does not result in dilution of control
Your Answer
The specific cost of debt capital represented by debentures is lower than the cost of preference or equity capital , Debenture financing does not result in dilution of control , Debenture prices are vulnerable to increase in interest rates
Multiple Choice Multiple Answer
Question
The causes of undercapitalisation are
Correct Answer
Company following too conservative policy for paying the dividends , Future earnings may be underestimated
Your Answer
The company might have spent huge amounts during its formation stage , Company following too conservative policy for paying the dividends , Purchasing of asssets during inflationary situations
Multiple Choice Multiple Answer
Question
The functions of a Finance Controller are :
Correct Answer
Budgeting , Record Keeping , Annual Reporting
Your Answer
Banking Relations , Budgeting , Record Keeping , Annual Reporting
Multiple Choice Single Answer
Question
The deposit receipt should contain
Correct Answer
Amount of deposit
Your Answer
Amount of deposit
Select The Blank
Question
________ is one of the current assets that takes the longest time to get converted into cash
Correct Answer
Stock
Your Answer
Debtors
Select The Blank
Question
The analytical method of inventory control which aims at concentrating efforts in those areas where attention is required most is termed as ________
Correct Answer
ABC Analysis
Your Answer
ABC Analysis
Multiple Choice Single Answer
Question
The most reliable source of getting the information about the creditworthiness of the customer who is dealing with the company presently is
Correct Answer
Past experience of the customer
Your Answer
Bank Reference
Select The Blank
Question
The fixed assets are expressed at ________
Correct Answer
Cost - Depreciation
Your Answer
Cost - Depreciation
Multiple Choice Multiple Answer
Question
Importance of capital budgeting decisions
Correct Answer
They represent the true earning assets of the firm , they are irreversible , they require assessment of future events which are uncertain
Your Answer
they are irreversible , they require assessment of future events which are uncertain
Multiple Choice Single Answer
Question
Equity Warrants are
Correct Answer
where the holders are entitled to purchase the equity shares at a specific price during the specified period
Your Answer
where the holders are entitled to purchase the equity shares at a specific price during the specified period
Multiple Choice Single Answer
Question
Gross Working Capital means
Correct Answer
Current assets
Your Answer
Current assets
True/False
Question
Economic order quantity is based on the assumption that the demand for the material concerned is uniform throughout a year
Correct Answer
True
Your Answer
True
True/False
Question
The basic objective behind fixation of the levels is to avoid overstocking and understocking
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
Question
Packing credit facility can take the following form
Correct Answer
Pre-shipment Packing credit , Post-shipment Packing credit
Your Answer
Pre-shipment Packing credit , Post-shipment Packing credit , Revocable Packing credit
True/False
Question
Loans from financial corporations etc. are sources of cash
Correct Answer
True
Your Answer
True
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
Select The Blank
Question
The amount of profit earned after recovering the interest on long term sources of capital is referred to as ________
Correct Answer
Profit before taxes
Your Answer
Profit before taxes
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
Multiple Choice Single Answer
Question
The weighted average cost of capital is referred to as
Correct Answer
Average cost
Your Answer
Average cost
Multiple Choice Multiple Answer
Question
If Profit maximization is accepted as the only goal of finance function, it is criticised on the following grounds
Correct Answer
Ignores risk factor , Does not consider social obligation , Ignores quality aspect of benefits associated with a financial course of action
Your Answer
Does take into consideration time value of money , Ignores risk factor , Does not consider social obligation
Select The Blank
Question
The payment of Dividend in the form of Bonus shares involves ________
Correct Answer
only transfer of retained earnings to share capital
Your Answer
only transfer of retained earnings to share capital
Select The Blank
Question
The mathematical expression of ________ is Value of material consumed / Average inventory held
Correct Answer
Inventory turnover
Your Answer
Inventory turnover
Multiple Choice Single Answer
Question
Irregular Dividend Policy refers to
Correct Answer
Dividend per share varying according to the level of earnings
Your Answer
Dividend per share varying according to the level of earnings
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
Multiple Choice Multiple Answer
Question
The advantages of ratio analysis are
Correct Answer
It helps in planning and forecasting , It makes possible comparison of the performance of the different divisions of the firm , It simplifies the comprehension of financial statements
Your Answer
It helps in planning and forecasting , It makes possible comparison of the performance of the different divisions of the firm , It simplifies the comprehension of financial statements , It takes into consideration only monetary transactions
Match The Following
Question
Correct Answer
Your Answer
Safety Stock
below which the actual stock should not be allowed to fall
below which the actual stock should not be allowed to fall
ABC Analysis
Vital few Trivial Many
Vital few Trivial Many
Bill of Materials
Details of the necessary materials as well as quantity of each item
Details of the necessary materials as well as quantity of each item
Perpetual Inventory System
Maintenance of Bin Cards and Stores ledger in order to know about the stock in quantity and value at any given point of time
Maintenance of Bin Cards and Stores ledger in order to know about the stock in quantity and value at any given point of time
Financial Management 20 --SCDL
Financial Management 20:
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Multiple Choice Single Answer
Question The effect of Bonus paid in the form of fully paid shares on funds ( cash concept ) is
Correct Answer No change in cash
Your Answer No change in cash
Multiple Choice Multiple Answer
Question The function of Bill of Materials are
Correct Answer It may serve as a base for the Production department for placing the material requisition slips , It gives an indication about the orders to be executed to all the persons concerned , A bill of material prepared and valued in advance may serve as base for quoting the price for the job or production order
Your Answer It gives an indication about the orders to be executed to all the persons concerned , A bill of material prepared and valued in advance may serve as base for quoting the price for the job or production order , It may serve as a base for the Production department for placing the material requisition slips
Multiple Choice Multiple Answer
Question Disadvantages of Net Present value
Correct Answer It presupposes that the discounting rate is known , It may give dissatisfactory results if the alternative projects involve varying investment outlay , It presupposes that cash inflows can be reinvested immediately to yield the return equivalent to the discounting rate which may not be possible
Your Answer It presupposes that the discounting rate is known , It may give dissatisfactory results if the alternative projects involve varying investment outlay , It presupposes that cash inflows can be reinvested immediately to yield the return equivalent to the discounting rate which may not be possible
Multiple Choice Single Answer
Question From the following data, work out the Economic order quantity : Annual Demand : 5000 units, Ordering cost Rs. 60 per order, Price per unit Rs. 100, Inventory carrying cost is 15% on average inventory
Correct Answer 200 units
Your Answer 200 units
True/False
Question An ideal investor makes an comparison between the current market price and future Earning per share as the market value of shares depends upon the future Earnings per share
Correct Answer True
Your Answer True
True/False
Question One of the most common methods to monitor the receivables on macro basis is to calculate age-wise analysis of receivables
Correct Answer False
Your Answer False
Match The Following
Question Correct Answer Your Answer
Financial leverage indicates firm's ability to use fixed financial charges to magnify the effects of changes in earning before interest and tax on the firm's earning per share indicates firm's ability to use fixed financial charges to magnify the effects of changes in earning before interest and tax on the firm's earning per share
Earnings per share ratio to measure the profits available to the equity shareholders on a per share basis ratio to measure the profits available to the equity shareholders on a per share basis
Price earning ratio indicates the price currently being paid in the stock market for every one rupee of Earning per share indicates the price currently being paid in the stock market for every one rupee of Earning per share
Operating leverage measures the effect of change in sales quantity on earnings before interest and taxes measures the effect of change in sales quantity on earnings before interest and taxes
Select The Blank
Question Inflow of funds may not necessarily result in ________
Correct Answer Inflow of cash
Your Answer Inflow of cash
True/False
Question If the customer fails to pay the amount due from him the legal action should be initiated against the customer after the limitation period is over
Correct Answer False
Your Answer True
Select The Blank
Question Debt Equity ratio is alternatively called ________ ratios
Correct Answer Leverage
Your Answer Leverage
True/False
Question In case of lease transactions, neither the assets side nor the liabilities side of the balance sheet of lessee gets affected
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question The company which pays a fixed amount of dividend irrespective of the fluctuations in income is categorised under
Correct Answer Stable Dividend policy
Your Answer Stable Dividend policy
True/False
Question Wages/salaries is considered under Operating cashinflow
Correct Answer False
Your Answer False
Select The Blank
Question Investment of the venture capitalist does not exceed ________ so that the effective control of the project remains with the entrepreneur
Correct Answer 0.49
Your Answer 0.49
True/False
Question Wealth maximization goal is only an extension of Profit maximization goal of the organisation
Correct Answer True
Your Answer True
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
Select The Blank
Question Liquidity ratios indicate the ________ position of the organisation
Correct Answer Short term
Your Answer Short term
Multiple Choice Single Answer
Question Current assets are also referred to as
Correct Answer Working Capital
Your Answer Working Capital
True/False
Question Debt equity ratio indicates the stake of share holders and creditors in the organisation
Correct Answer True
Your Answer True
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 Which of the following assets get generated during course of operations or get utilized within one year
Correct Answer Current assets
Your Answer Current assets
Multiple Choice Single Answer
Question Net Working Capital means
Correct Answer Current assets less Current liabilities
Your Answer Current assets less Current liabilities
Select The Blank
Question The mathematical expression of ________ is ( Minimum level + Maximum level ) / 2
Correct Answer Average level
Your Answer Average level
Match The Following
Question Correct Answer Your Answer
Credit rating symbol for Commercial Paper of Default by Investment Information and Credit rating agency A5 A5
Credit rating symbol for Debentures of Inadequate safety by CRISIL BB BB
Credit rating symbol for Fixed Deposits of High risk by CRISIL FC FC
Credit rating symbol for Fixed Deposits of Adequate safety by Investment Information and Credit rating agency MA MA
Multiple Choice Single Answer
Question The Capital Structure decision mainly refers to the decision of
Correct Answer Financing
Your Answer Financing
Multiple Choice Multiple Answer
Question If Profit maximization is accepted as the only goal of finance function, it is criticised on the following grounds
Correct Answer Ignores risk factor , Does not consider social obligation , Ignores quality aspect of benefits associated with a financial course of action
Your Answer Does take into consideration time value of money , Ignores risk factor , Does not consider social obligation
Multiple Choice Multiple Answer
Question Advantages of Centralised disbursements
Correct Answer It increases the transit time , Minimum cash balance can be maintained only in case of central bank account instead of four different branches , To maintain the bank accounts at different branches may prove to be administratively difficult
Your Answer Minimum cash balance can be maintained only in case of central bank account instead of four different branches , To maintain the bank accounts at different branches may prove to be administratively difficult , Consideration of the convinience of the customers
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 Sole
Multiple Choice Multiple Answer
Question The techniques of Analysis and Interpretation of financial statements are
Correct Answer Ratio Analysis , Cash flow Analysis
Your Answer Ratio Analysis , Cash flow Analysis
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 Over-valuation of closing stock , Consideration of non-sales transactions as sales transaction
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 Fixed assets turnover ratio is ________ .
Correct Answer 2.17
Your Answer 2.17
Select The Blank
Question Carriage Inward is normally debited to ________
Correct Answer Manufacturing Account
Your Answer Profit and Loss Account
Multiple Choice Single Answer
Question Purchases of raw material appear in the cash budget under the head
Correct Answer Operating cash outflow
Your Answer Operating cash outflow
Multiple Choice Multiple Answer
Question The characteristics of Debentures are
Correct Answer Funds raised by the company by way of debentures are required to be repaid during the lifetime of the company at the time stipulated by the company , The interest on debentures is payable even if the company does not earn the profits , In financial terms, debentures prove to be a cheap source of funds from the company's point of view
Your Answer Funds raised by the company by way of debentures are required to be repaid during the lifetime of the company at the time stipulated by the company , The interest on debentures is payable even if the company does not earn the profits , In financial terms, debentures prove to be a cheap source of funds from the company's point of view
Multiple Choice Single Answer
Question The formula for Fixed assets turnover ratio is
Correct Answer Net Sales / Fixed Assets
Your Answer Net Sales / Fixed Assets
Multiple Choice Multiple Answer
Question External sources of cash are as follows :
Correct Answer Issue of new shares , long term loans , short term borrowings
Your Answer long term loans , short term borrowings
Multiple Choice Single Answer
Question Revenue from sale of products ordinarily is reported as part of the earning in the period
Correct Answer the sale is made
Your Answer the sale is made
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
True/False
Question As per the SEBI guidelines revaluation reserve can be used for issue of bonus share
Correct Answer False
Your Answer False
Multiple Choice Multiple Answer
Question Top management who can accept or reject capital expenditure proposals may be in the form of
Correct Answer Board of Directors , Executive committee , Management committee
Your Answer Board of Directors , Executive committee
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 Net cash inflow is arrived at
Correct Answer Revenue after tax add depreciation
Your Answer Sales revenue less cost
Select The Blank
Question ________ is an example of Intangible asset
Correct Answer Goodwill
Your Answer Goodwill
Multiple Choice Single Answer
Question The capability of the organisation to repay the dues arising as a result of long term borrowing is caculated by
Correct Answer Debt Service coverage ratio
Your Answer Debt Service coverage ratio
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
Select The Blank
Question ________ of the company should authorise the company to buy back its own shares
Correct Answer Articles of Association
Your Answer Articles of Association
Multiple Choice Multiple Answer
Question External sources of funds are
Correct Answer Funds from long term loans , Sale of fixed assets
Your Answer Funds from long term loans , Sale of fixed assets
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Multiple Choice Single Answer
Question The effect of Bonus paid in the form of fully paid shares on funds ( cash concept ) is
Correct Answer No change in cash
Your Answer No change in cash
Multiple Choice Multiple Answer
Question The function of Bill of Materials are
Correct Answer It may serve as a base for the Production department for placing the material requisition slips , It gives an indication about the orders to be executed to all the persons concerned , A bill of material prepared and valued in advance may serve as base for quoting the price for the job or production order
Your Answer It gives an indication about the orders to be executed to all the persons concerned , A bill of material prepared and valued in advance may serve as base for quoting the price for the job or production order , It may serve as a base for the Production department for placing the material requisition slips
Multiple Choice Multiple Answer
Question Disadvantages of Net Present value
Correct Answer It presupposes that the discounting rate is known , It may give dissatisfactory results if the alternative projects involve varying investment outlay , It presupposes that cash inflows can be reinvested immediately to yield the return equivalent to the discounting rate which may not be possible
Your Answer It presupposes that the discounting rate is known , It may give dissatisfactory results if the alternative projects involve varying investment outlay , It presupposes that cash inflows can be reinvested immediately to yield the return equivalent to the discounting rate which may not be possible
Multiple Choice Single Answer
Question From the following data, work out the Economic order quantity : Annual Demand : 5000 units, Ordering cost Rs. 60 per order, Price per unit Rs. 100, Inventory carrying cost is 15% on average inventory
Correct Answer 200 units
Your Answer 200 units
True/False
Question An ideal investor makes an comparison between the current market price and future Earning per share as the market value of shares depends upon the future Earnings per share
Correct Answer True
Your Answer True
True/False
Question One of the most common methods to monitor the receivables on macro basis is to calculate age-wise analysis of receivables
Correct Answer False
Your Answer False
Match The Following
Question Correct Answer Your Answer
Financial leverage indicates firm's ability to use fixed financial charges to magnify the effects of changes in earning before interest and tax on the firm's earning per share indicates firm's ability to use fixed financial charges to magnify the effects of changes in earning before interest and tax on the firm's earning per share
Earnings per share ratio to measure the profits available to the equity shareholders on a per share basis ratio to measure the profits available to the equity shareholders on a per share basis
Price earning ratio indicates the price currently being paid in the stock market for every one rupee of Earning per share indicates the price currently being paid in the stock market for every one rupee of Earning per share
Operating leverage measures the effect of change in sales quantity on earnings before interest and taxes measures the effect of change in sales quantity on earnings before interest and taxes
Select The Blank
Question Inflow of funds may not necessarily result in ________
Correct Answer Inflow of cash
Your Answer Inflow of cash
True/False
Question If the customer fails to pay the amount due from him the legal action should be initiated against the customer after the limitation period is over
Correct Answer False
Your Answer True
Select The Blank
Question Debt Equity ratio is alternatively called ________ ratios
Correct Answer Leverage
Your Answer Leverage
True/False
Question In case of lease transactions, neither the assets side nor the liabilities side of the balance sheet of lessee gets affected
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question The company which pays a fixed amount of dividend irrespective of the fluctuations in income is categorised under
Correct Answer Stable Dividend policy
Your Answer Stable Dividend policy
True/False
Question Wages/salaries is considered under Operating cashinflow
Correct Answer False
Your Answer False
Select The Blank
Question Investment of the venture capitalist does not exceed ________ so that the effective control of the project remains with the entrepreneur
Correct Answer 0.49
Your Answer 0.49
True/False
Question Wealth maximization goal is only an extension of Profit maximization goal of the organisation
Correct Answer True
Your Answer True
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
Select The Blank
Question Liquidity ratios indicate the ________ position of the organisation
Correct Answer Short term
Your Answer Short term
Multiple Choice Single Answer
Question Current assets are also referred to as
Correct Answer Working Capital
Your Answer Working Capital
True/False
Question Debt equity ratio indicates the stake of share holders and creditors in the organisation
Correct Answer True
Your Answer True
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 Which of the following assets get generated during course of operations or get utilized within one year
Correct Answer Current assets
Your Answer Current assets
Multiple Choice Single Answer
Question Net Working Capital means
Correct Answer Current assets less Current liabilities
Your Answer Current assets less Current liabilities
Select The Blank
Question The mathematical expression of ________ is ( Minimum level + Maximum level ) / 2
Correct Answer Average level
Your Answer Average level
Match The Following
Question Correct Answer Your Answer
Credit rating symbol for Commercial Paper of Default by Investment Information and Credit rating agency A5 A5
Credit rating symbol for Debentures of Inadequate safety by CRISIL BB BB
Credit rating symbol for Fixed Deposits of High risk by CRISIL FC FC
Credit rating symbol for Fixed Deposits of Adequate safety by Investment Information and Credit rating agency MA MA
Multiple Choice Single Answer
Question The Capital Structure decision mainly refers to the decision of
Correct Answer Financing
Your Answer Financing
Multiple Choice Multiple Answer
Question If Profit maximization is accepted as the only goal of finance function, it is criticised on the following grounds
Correct Answer Ignores risk factor , Does not consider social obligation , Ignores quality aspect of benefits associated with a financial course of action
Your Answer Does take into consideration time value of money , Ignores risk factor , Does not consider social obligation
Multiple Choice Multiple Answer
Question Advantages of Centralised disbursements
Correct Answer It increases the transit time , Minimum cash balance can be maintained only in case of central bank account instead of four different branches , To maintain the bank accounts at different branches may prove to be administratively difficult
Your Answer Minimum cash balance can be maintained only in case of central bank account instead of four different branches , To maintain the bank accounts at different branches may prove to be administratively difficult , Consideration of the convinience of the customers
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 Sole
Multiple Choice Multiple Answer
Question The techniques of Analysis and Interpretation of financial statements are
Correct Answer Ratio Analysis , Cash flow Analysis
Your Answer Ratio Analysis , Cash flow Analysis
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 Over-valuation of closing stock , Consideration of non-sales transactions as sales transaction
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 Fixed assets turnover ratio is ________ .
Correct Answer 2.17
Your Answer 2.17
Select The Blank
Question Carriage Inward is normally debited to ________
Correct Answer Manufacturing Account
Your Answer Profit and Loss Account
Multiple Choice Single Answer
Question Purchases of raw material appear in the cash budget under the head
Correct Answer Operating cash outflow
Your Answer Operating cash outflow
Multiple Choice Multiple Answer
Question The characteristics of Debentures are
Correct Answer Funds raised by the company by way of debentures are required to be repaid during the lifetime of the company at the time stipulated by the company , The interest on debentures is payable even if the company does not earn the profits , In financial terms, debentures prove to be a cheap source of funds from the company's point of view
Your Answer Funds raised by the company by way of debentures are required to be repaid during the lifetime of the company at the time stipulated by the company , The interest on debentures is payable even if the company does not earn the profits , In financial terms, debentures prove to be a cheap source of funds from the company's point of view
Multiple Choice Single Answer
Question The formula for Fixed assets turnover ratio is
Correct Answer Net Sales / Fixed Assets
Your Answer Net Sales / Fixed Assets
Multiple Choice Multiple Answer
Question External sources of cash are as follows :
Correct Answer Issue of new shares , long term loans , short term borrowings
Your Answer long term loans , short term borrowings
Multiple Choice Single Answer
Question Revenue from sale of products ordinarily is reported as part of the earning in the period
Correct Answer the sale is made
Your Answer the sale is made
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
True/False
Question As per the SEBI guidelines revaluation reserve can be used for issue of bonus share
Correct Answer False
Your Answer False
Multiple Choice Multiple Answer
Question Top management who can accept or reject capital expenditure proposals may be in the form of
Correct Answer Board of Directors , Executive committee , Management committee
Your Answer Board of Directors , Executive committee
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 Net cash inflow is arrived at
Correct Answer Revenue after tax add depreciation
Your Answer Sales revenue less cost
Select The Blank
Question ________ is an example of Intangible asset
Correct Answer Goodwill
Your Answer Goodwill
Multiple Choice Single Answer
Question The capability of the organisation to repay the dues arising as a result of long term borrowing is caculated by
Correct Answer Debt Service coverage ratio
Your Answer Debt Service coverage ratio
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
Select The Blank
Question ________ of the company should authorise the company to buy back its own shares
Correct Answer Articles of Association
Your Answer Articles of Association
Multiple Choice Multiple Answer
Question External sources of funds are
Correct Answer Funds from long term loans , Sale of fixed assets
Your Answer Funds from long term loans , Sale of fixed assets
Financial Management Set 6--SCDL
Plz Click on the link Below to access the Papers of Financial Management
Financial Management 18
Financial Management 19
Financial Management 20
Financial Management 18
Financial Management 19
Financial Management 20
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