Financial Management

Multiple Choice Single Answer Question For the calculation of Operating Profit / Loss , Depreciation on fixed assets should be Correct Answer added to the Net Profit as per Profit and loss account Your Answer Deducted from the Net Profit as per Profit and loss account Multiple Choice Single Answer Question The return which the company pays on borrowed funds is termed as Correct Answer Interest Your Answer Interest Multiple Choice Single Answer Question Mr. A is given the opportunity to receive Rs. 10,000 after two years, when he can earn interest of 10% p.a. on his investment, what should be the amount which he should invest today so that he may be able to receive Rs. 10,000 after two years Correct Answer Rs. 8,264 Your Answer Rs. 8,156 Select The Blank Question A wrong decision in respect of capital expenditure proposals may disturb the entire ________ structure of the organisation Correct Answer financial Your Answer financial True/False Question Earnings per share is calculated as ( Profit after tax - Preference Dividend ) / Number of Equity shares Correct Answer True

Your Answer True Multiple Choice Single Answer Question Advantage of term loan from the company's point of view is Correct Answer In post tax terms, the cost of term loans is lower than the cost of equity capital or preference capital Your Answer There is no liability for repayment True/False Question Proprietary ratios is the relationship between owners funds and total assets Correct Answer True Your Answer True Multiple Choice Single Answer Question Increase in the amount in debtors results in Correct Answer Decrease in cash Your Answer Decrease in cash Multiple Choice Single Answer Question The products which are ready for sale in the market are termed as Correct Answer Finished goods Your Answer Finished goods Multiple Choice Single Answer Question The market price per share is equal to the present value of the expected dividends discounted at the rate of return required by equity shareholders is determined under Correct Answer Dividend /Price Approach Your Answer Dividend /Price Approach

Multiple Choice Multiple Answer Question Assuming the current ratio is 2, in which cases would the current ratio decline Correct Answer Purchase of fixed Assets , Borrow Money on an Interest bearing promissory note Your Answer Issue of new shares , Purchase of fixed Assets , Cash collected from customers , Borrow Money on an Interest bearing promissory note Multiple Choice Multiple Answer Question Advantages of Net Present value is Correct Answer It considers time value of money , It considers cash inflows from the project throughout its life Your Answer It considers time value of money , It considers cash inflows from the project throughout its life , It is easy to calculate , It is easy to understand Match The Following Question Correct Answer Your Answer Credit rating symbol for Commercial Paper of Default by Investment Information and Credit rating agency A5 B Credit rating symbol for Debentures of Inadequate safety by CRISIL BB FC Credit rating symbol for Fixed Deposits of High risk by CRISIL FC FA Credit rating symbol for Fixed Deposits of Adequate safety by Investment Information and Credit rating agency MA A5 Multiple Choice Multiple Answer Question Types of capital budgeting decisions Correct Answer Replacements , Expansion , Diversification Your Answer

Replacements , Expansion , Diversification , Liquidation Select The Blank Question The ________ collections may be useful for reducing the postal float as well as bank float Correct Answer Decentralised Your Answer Debtors Select The Blank Question As per the Tandon committee, variations between the projected figures and actuals may be permitted to the extent of ________ Correct Answer 0.1 Your Answer 0.05 Select The Blank Question Operating Lease is also referred to as ________ lease Correct Answer Service Your Answer Financial Multiple Choice Single Answer Question The formula for Current ratio is Correct Answer Current assets / Current liabilities Your Answer Liquid assets / Current liabilities Multiple Choice Multiple Answer Question The assumptions for the theories of capital structure are Correct Answer Firm use only long term debt capital or equity share capital to raise funds , Firm follow policy of paying 100% of its earnings by way of dividend , Operating earnings are not expected to grow Your Answer Firm use only long term debt capital or equity share capital to raise funds ,

Corporate Income Tax does exists , Firm follow policy of paying 100% of its earnings by way of dividend , Operating earnings are not expected to grow Multiple Choice Single Answer Question Capital turnover ratio is calculated as Correct Answer Sales / Capital employed Your Answer Total assets / Owners fund Match The Following Question Correct Answer Your Answer Safety Stock below which the actual stock should not be allowed to fall below which the actual stock should not be allowed to fall ABC Analysis Vital few Trivial Many above which the actual stock should not exceed Bill of Materials Details of the necessary materials as well as quantity of each item Details of the necessary materials as well as quantity of each item Perpetual Inventory System Maintenance of Bin Cards and Stores ledger in order to know about the stock in quantity and value at any given point of time Vital few Trivial Many True/False Question Return on Assets is a ratio of relationship between Assets and Sales Correct Answer False Your Answer True Multiple Choice Single Answer Question The Pay Bank period is calculated as Correct Answer Cash outlay / Annual cash inflow Your Answer External liabilities / Shareholders funds

Multiple Choice Multiple Answer Question Disadvantages of factoring are Correct Answer The financial burden on the company increases , It may be considered to be a symptom of financial weakness on the part of the selling company , In Indian circumstances, factoring is mainly with-recourse factoring. The risk of nonpayment on the part of customer is borne by the selling firm. This restricts its popularity Your Answer The financial burden on the company increases , It may be considered to be a symptom of financial weakness on the part of the selling company , In Indian circumstances, factoring is mainly with-recourse factoring. The risk of nonpayment on the part of customer is borne by the selling firm. This restricts its popularity Select The Blank Question In ABC analysis C class consist of ________. Correct Answer a very large number of items which are less important Your Answer that quantity which is fixed in such a way that the total variable cost of managing the inventory can be minimised True/False Question In Regular Stock Dividend policy, the company may pay dividend in the form of bonus shares instead of cash Correct Answer True Your Answer True Select The Blank Question Factoring indicates the relationship between ________ and a business organisation Correct Answer Financial institutions Your Answer Financial institutions Multiple Choice Multiple Answer Question

Importance of capital budgeting decisions Correct Answer They represent the true earning assets of the firm , they are irreversible , they require assessment of future events which are uncertain Your Answer They represent the true earning assets of the firm , it helps in preparation of financial statements , they require assessment of future events which are uncertain Multiple Choice Single Answer Question Fixed Income bearing securities for the computation of Capital gearing ratio consists of Correct Answer Debentures Your Answer Debentures Multiple Choice Multiple Answer Question The collection programme of the firm consists of Correct Answer Maintaining the state of receivables , Dispatch of letters to customers whose due date is approaching , Telegraphic and Telephonic advice to customers around the due date Your Answer Maintaining the state of receivables , Dispatch of letters to customers whose due date is approaching , Telegraphic and Telephonic advice to customers around the due date , Maintaining record of bills payable Multiple Choice Multiple Answer Question Dividend / Price Approach to compute cost of equity shares is objected on the following grounds Correct Answer This presupposes that an investor looks forward only to receive dividend on equity shares which may not be correct , It assumes that the company will not earn on its retained earnings which is a wrong assumption Your Answer This presupposes that an investor looks forward only to receive dividend on equity shares which may not be correct , It assumes that the company will not earn on its retained earnings which is a wrong assumption , It wrongly assumes that earnings per share will remain constant in future , All the earnings may not be distributed among the shareholders by way of dividend

Select The Blank Question The operating profit earned by the company is in the form of contribution duly reduced by the ________ Correct Answer Fixed operating cost Your Answer Variable operating cost Multiple Choice Multiple Answer Question The following techniques can be used to delay cash payments Correct Answer Payments can be made from a bank which is distant from the bank of the company to which payment is to be made , Attempts should be made by the company to get the maximum credit for the goods or service supplied , Avoid early payments Your Answer Payments can be made from a bank which is distant from the bank of the company to which payment is to be made , Insist upon payment in the form of demand draft, letters of credit , Attempts should be made by the company to get the maximum credit for the goods or service supplied , Avoid early payments Multiple Choice Single Answer Question Net Working Capital means Correct Answer Current assets less Current liabilities Your Answer Current assets less Current liabilities True/False Question Wages/salaries is considered under Operating cashinflow Correct Answer False Your Answer True Select The Blank Question Sometimes the term ________ is interpreted as cash equivalent i.e. cash and marketable securities Correct Answer Fund

Your Answer Investment Select The Blank Question If a deposit is repaid after 6 months from the date of deposit but before its expiry, the rate of interest on such deposit shall be reduced by ________ from the rate which the company would have paid had the deposit been accepted for the period for which such deposit had run Correct Answer 0.01 Your Answer 0.01 True/False Question The requirement of Fixed Working Capital is unaffected due to the changes in the level of activity Correct Answer True Your Answer True True/False Question Internal rate of return can be computed even in the absence of the knowledge about the firm's cost of capital Correct Answer True Your Answer False Multiple Choice Multiple Answer Question Benefits of cash flow information Correct Answer It enhances the comparability of the reporting of operating performance by different enterprise , Historical cash flow information is often used as an indicator of the amount , timing and certainty of future cash flows , It enables the users to evaluate the changes in net assets of an enterprise Your Answer It enhances the comparability of the reporting of operating performance by different enterprise , Historical cash flow information is often used as an indicator of the amount , timing and certainty of future cash flows , It enables the users to evaluate the changes in net assets of an enterprise , information is

useful to construct financial statements Multiple Choice Single Answer Question The real owners of the company are Correct Answer Equity shareholders Your Answer Preference shareholders True/False Question The lessor is the nominal owner of the asset as the possession and economic use of the asset rests with the lessee Correct Answer True Your Answer True Select The Blank Question The mathematical expression of ________ is Normal Usage * Lead time for emergency purchases Correct Answer Danger level Your Answer Re-order level Select The Blank Question Turnover ratios measures how efficiently the ________ are employed by the firm Correct Answer Assets Your Answer Assets Multiple Choice Multiple Answer Question The patterns of Dividend policy are Correct Answer Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy Your Answer Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy , Increasing Dividend policy

True/False Question Economic order quantity is based on the assumption that the demand for the material concerned is uniform throughout a year Correct Answer True Your Answer True True/False Question Inventory is the intermediate stage between purchase of raw materials and consumption of raw materials Correct Answer True Your Answer True