Strategic Finance - 1

LIST OF ATTEMPTED QUESTIONS AND ANSWERS



Multiple Choice Single Answer
Question
One of the selective developments that has taken place in recent times is companies are going in for :-
Correct Answer
Activity based costing and management
Your Answer
Activity based costing and management

True/False
Question
Diversification helps in preserving a firm's reputation & goodwill.
Correct Answer
True
Your Answer
True

True/False
Question
Cash dividends are taxable at ordinary tax rates.
Correct Answer
True
Your Answer
True

Multiple Choice Multiple Answer
Question
The 3 groups of participants in a firm are :-
Correct Answer
Suppliers of equity , Debt suppliers , Firm Managers
Your Answer
Suppliers of equity , Debt suppliers , Firm Managers

Multiple Choice Multiple Answer
Question
As per AS 13 Statement, the following are not considered as investments:-
Correct Answer
Shares , Debentures , Other securities held as stock in trade
Your Answer
Shares , Debentures , Other securities held as stock in trade

Match The Following
Question
Correct Answer
Your Answer
Opportunity cost
An asset value when they are the target of an alternative use.
An asset value when they are the target of an alternative use.
Exit cost
Lost efficiency prior to separation, Job vacancy cost during the new search & termination pay.
Lost efficiency prior to separation, Job vacancy cost during the new search & termination pay.
Historical costs
Sacrifice necessary to hire & train people
Sacrifice necessary to hire & train people
Substitution cost
Exit costs of the leaving employee & recruiting & training of the replacement
Exit costs of the leaving employee & recruiting & training of the replacement

Multiple Choice Multiple Answer
Question
The acquiring firm for any M & A will require data about the target firm which will include :-
Correct Answer
Quality of management , Production capabilities , Profitability
Your Answer
Quality of management , Production capabilities , Profitability

Multiple Choice Single Answer
Question
Equity includes :-
Correct Answer
Development Rebate Reserve
Your Answer
Development Rebate Reserve

Match The Following
Question
Correct Answer
Your Answer
Free cash flow theory
Enormous conflicts of interest between Stakeholders and shareholders
Enormous conflicts of interest between Stakeholders and shareholders
Net income approach
Cost of debt & equity do not change with a change in leverage ratio
Cost of debt & equity do not change with a change in leverage ratio
Net operating income approach
The overall capitalization rate remains constant for all levels of financial leverages
The overall capitalization rate remains constant for all levels of financial leverages
Modigliani - Miller Theory
weighted average cost of capital does not change with a change in the proportion of debt to equity in the capital structure
weighted average cost of capital does not change with a change in the proportion of debt to equity in the capital structure

Select The Blank
Question
If a segment is not designated as a ________ it should be included as an unallocated reconciling item.
Correct Answer
Reportable segment
Your Answer
Reportable segment

True/False
Question
For determining exchange ratio, the model developed by Conn & Nielson is used.
Correct Answer
True
Your Answer
True

Select The Blank
Question
In presenting the reconciliation segment result should be reconciled to ________.
Correct Answer
Enterprise net profit or loss
Your Answer
Enterprise net profit or loss

Select The Blank
Question
Identify disclosure on human resources as a societal concern & prepare international regulations comes under ________
Correct Answer
The compulsory method
Your Answer
The compulsory method

Multiple Choice Single Answer
Question
Which is an example out of the following to which special consideration apply for depreciation :-
Correct Answer
Regenerative natural resources
Your Answer
Regenerative natural resources

True/False
Question
It is essential that ABC must fit into the strategy of the company.
Correct Answer
True
Your Answer
True

Select The Blank
Question
HLL the largest FMCG company has a turnover of Rs. ________.
Correct Answer
118 Bn
Your Answer
118 Bn

Select The Blank
Question
There is a ________ relationship between the number of employees & the use of operating supplies.
Correct Answer
Natural
Your Answer
Natural

Multiple Choice Multiple Answer
Question
The important aspect of dividend policy is :-
Correct Answer
To determine the amount of earnings to be distributed to shareholders , Amount to be retained in the firm
Your Answer
To determine the amount of earnings to be distributed to shareholders , Amount to be retained in the firm

Multiple Choice Multiple Answer
Question
The main characteristics of CAPM are :-
Correct Answer
It is an equilibrium Model , It describes the pricing of assets as well as derivatives , Expected security return = Riskless return + beta x (expected market risk premium)
Your Answer
It is an equilibrium Model , It describes the pricing of assets as well as derivatives , Expected security return = Riskless return + beta x (expected market risk premium)

True/False
Question
Current accounting system is able to provide actual value of employee capabilities & knowledge.
Correct Answer
False
Your Answer
False

Multiple Choice Single Answer
Question
In respect of depreciable assets, which do not have material value, depreciation is often allocated :-
Correct Answer
Fully in the accounting period for which they are acquired
Your Answer
Fully in the accounting period for which they are acquired

Multiple Choice Single Answer
Question
The depreciation rates or the useful lives of the assets are disclosed only :-
Correct Answer
If they are different from the principle rates specified in the statute
Your Answer
If they are different from the principle rates specified in the statute

Multiple Choice Multiple Answer
Question
Due to diversification employees seek:-
Correct Answer
Job security , Better opportunities within the firm , Higher compensation
Your Answer
Job security , Better opportunities within the firm , Higher compensation

Select The Blank
Question
The ________ cost tier has the advantage of being the simplest to calculate and justify.
Correct Answer
Direct
Your Answer
Direct

Multiple Choice Multiple Answer
Question
To gather costs means to do the following actions to support the costing of the activities :-
Correct Answer
To capture , To construct , To synthesize the correct cost figures
Your Answer
To capture , To construct , To synthesize the correct cost figures

True/False
Question
Odd lots purchase is not a method of buy back of shares.
Correct Answer
False
Your Answer
False

Multiple Choice Multiple Answer
Question
The overhead expenses include :-
Correct Answer
Utilities , Maintenance , Security
Your Answer
Utilities , Maintenance , Security

Multiple Choice Single Answer
Question
In a matching approach policy, :-
Correct Answer
There is a small risk if shortage of funds
Your Answer
There is a small risk if shortage of funds

Multiple Choice Single Answer
Question
The most important internal sources of financing the growth of the firm is through :-
Correct Answer
Retained earnings
Your Answer
Retained earnings

True/False
Question
The intellectual assets of a company are often worth 3 or 4 times the tangible book value.
Correct Answer
True
Your Answer
True

Multiple Choice Multiple Answer
Question
Indicators of the value of an investment are obtained by :-
Correct Answer
Reference to its market value , The investee`s assets , The expected cash flows from the investment
Your Answer
Reference to its market value , The investee`s assets , The expected cash flows from the investment

Select The Blank
Question
Buy back through book building the process should be made through ________.
Correct Answer
An electronically linked transparent facility
Your Answer
An electronically linked transparent facility

Multiple Choice Multiple Answer
Question
Significant influence is the power to :-
Correct Answer
Participate in the operating policy decisions , Participate in the financial decisions
Your Answer
Participate in the financial decisions , Participate in the operating policy decisions

True/False
Question
An activity model is a tool to assist in understanding & defining the organisation.
Correct Answer
True
Your Answer
True

True/False
Question
Decisions related to working capital are repetitive & frequent.
Correct Answer
True
Your Answer
True

Select The Blank
Question
________ is not a characteristic of financial conglomerates.
Correct Answer
Provide ineffective competitive process
Your Answer
Provide ineffective competitive process

Multiple Choice Single Answer
Question
In the past, costing mainly focused on :-
Correct Answer
Manufacturing costs
Your Answer
Manufacturing costs

Multiple Choice Multiple Answer
Question
A firm using a conservative policy for determining the requirements of current assets :-
Correct Answer
Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates sales
Your Answer
Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates sales

Multiple Choice Multiple Answer
Question
The major conditions to be fulfilled for buyback of shares as per the legal provisions include :-
Correct Answer
Articles of association should authorize buyback of shares , The shares which are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total capital and free reserves should not be more than 2 : 1
Your Answer
Articles of association should authorize buyback of shares , The shares which are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total capital and free reserves should not be more than 2 : 1

Multiple Choice Single Answer
Question
Segment liabilities do not include :-
Correct Answer
Borrowings & other liabilities that are incurred for financing rather than operating purpose
Your Answer
Borrowings & other liabilities that are incurred for financing rather than operating purpose

Multiple Choice Single Answer
Question
The difference between current assets & current liabilities is known as :-
Correct Answer
Net working capital
Your Answer
Net working capital

Multiple Choice Single Answer
Question
The bottom line of ABC Process is :-
Correct Answer
To achieve a better method of doing the right business pf the organisation
Your Answer
To achieve a better method of doing the right business pf the organisation

Select The Blank
Question
Non value added activities helps ________.
Correct Answer
To analyse the activities more carefully
Your Answer
To analyse the activities more carefully

Multiple Choice Single Answer
Question
In value of assets method the following is also to be included as they are also of value to the company :-
Correct Answer
Non trading assets
Your Answer
Non trading assets

Multiple Choice Single Answer
Question
Best practices, a tool for review process is similar to :-
Correct Answer
Bench marking
Your Answer
Bench marking

Select The Blank
Question
HLL is ________ % of subsidiary of Unilever PLC.
Correct Answer
0.516
Your Answer
0.516

Select The Blank
Question
traditionally avails are provided by ________.
Correct Answer
Banks
Your Answer
Banks