Financial Management - 9

LIST OF ATTEMPTED QUESTIONS AND ANSWERS




True/False
Question
Interest in provision for doubtful debts should be added back in order to find out cash from operations
Correct Answer
True
Your Answer
True

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

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
If the company buys the raw material from the suppliers on credit basis, it is termed as
Correct Answer
Trade Credit
Your Answer
Trade Credit

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
Funds flow statements and cash flow statement are one and the same
Correct Answer
False
Your Answer
True

Select The Blank
Question
From the following data, the Earning per share is ________ : Net Profit before tax Rs. 2,00,000/-, Taxation at 50% of Net Profit, 10% Preference Share Capital (Rs. 10 each) Rs. 1,00,000/-, Equity Share Capital (Rs. 10 each) Rs. 1,00,000/-
Correct Answer
9
Your Answer
10

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
Fund based lending of banks include
Correct Answer
Overdraft , Bills Purchased
Your Answer
Bank Guarantee , Overdraft , Letter of credit

True/False
Question
A good Budget manual promotes standardization and simplification of budgetary procedures
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

True/False
Question
Cross-sectional Analysis is the comparison of financial data of same time period of different organisations engaged in similar business
Correct Answer
True
Your Answer
True

Multiple Choice Single Answer
Question
Expected future earnings of ABC Ltd. are Rs. 2,00,000. Find out the amount of capitalisation if the rate of return earned by similar types of companies is 10%.
Correct Answer
Rs. 20,00,000
Your Answer
Rs. 20,000

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

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

True/False
Question
The Stock Dividends are more expensive to administer as compared to cash dividends
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 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
In post tax terms, the cost of term loans is lower than the cost of equity capital or preference capital

Select The Blank
Question
Retained earnings indicates that whatever profits are earned by the company are not distributed by it by way of ________ but are kept aside for use in future for expansion or other purpose
Correct Answer
Dividend
Your Answer
Dividend

Multiple Choice Single Answer
Question
Rights issue is
Correct Answer
Selling the securities in the primary market to the existing shareholders
Your Answer
Bonus Issue

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
Discounted Pay back period

Select The Blank
Question
The current ratio of ________ is considered to be standard
Correct Answer
2 : 1
Your Answer
2 : 1

Multiple Choice Single Answer
Question
The traditional approach to financial management refers only to the procurement of funds by
Correct Answer
Corporate entity
Your Answer
Individuals

Multiple Choice Multiple Answer
Question
Operating cost incurred by the company can be classified into
Correct Answer
Variable cost , Fixed cost , Semi-variable cost
Your Answer
Variable cost , Fixed cost , Semi-variable cost

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

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

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

Multiple Choice Single Answer
Question
The real value of the assets is less than the book value of the assets due to purchase of the assets during inflationary situations results into
Correct Answer
Overcapitalisation
Your Answer
Overcapitalisation

Select The Blank
Question
Without Recourses factoring is also referred to as ________
Correct Answer
Full factoring
Your Answer
Zero factoring

Multiple Choice Multiple Answer
Question
Indicate which of these are Profitability ratios
Correct Answer
Operating ratio , Gross Profit ratio
Your Answer
Operating ratio , Gross Profit ratio

Multiple Choice Multiple Answer
Question
The book-keeping and accounting activities in relation to the receivables management undertaken by the factor includes
Correct Answer
Maintenance of debtors ledger , Various periodical reports about outstanding from the customers , Age-wise analysis of the outstanding
Your Answer
Maintenance of debtors ledger , Various periodical reports about outstanding from the customers , Preparing financial statements

Select The Blank
Question
________ is more useful to the management as a tool of financial analysis in short periods
Correct Answer
Cash flow analysis
Your Answer
Ratio analysis

Multiple Choice Single Answer
Question
Accounting rate of return is calculated as
Correct Answer
[Total Profits / (Net Investment * No. of years of Profits)] * 100
Your Answer
[Total Profits / (Net Investment * No. of years of Profits)] * 100