Financial Management - 16

LIST OF ATTEMPTED QUESTIONS AND ANSWERS




Question
The recurring duties of Finance Executive includes
Correct Answer
Fixed Assets management , Control of funds , Working Capital Management
Your Answer
Working Capital Management , Financing re-adjustments in times of liquidity crisis , Control of funds


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


Question
Financial Institution plays the role of ________ in factoring service offered
Correct Answer
Factor
Your Answer
Customer


Question
Types of capital budgeting decisions
Correct Answer
Replacements , Expansion , Diversification
Your Answer
Expansion , Diversification , Liquidation


Question
Packing credit facility can take the following form
Correct Answer
Pre-shipment Packing credit , Post-shipment Packing credit
Your Answer
Post-shipment Packing credit , Revocable Packing credit , Confirmed Packing credit


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
has direct relationship with the dividend policy of the company


Question
________ and return always go hand in hand
Correct Answer
Risk
Your Answer
Risk


Question
The classification of ratios under miscellaneous group includes
Correct Answer
Earnings per share , Dividend Payment ratio
Your Answer
Earnings per share , Dividend Payment ratio

Question
In certain cases, the capital expenditure may not involve any specific inflow of funds, but only outflow of funds
Correct Answer
True
Your Answer
True


Question
Fixed Income bearing securities for the computation of Capital gearing ratio consists of
Correct Answer
Debentures
Your Answer
Debentures


Question
Correct Answer
Your Answer
Recurring duties of finance executive
Raising of funds
Raising of funds
Objective of finance function
Profit maximization
Profit maximization
Treasurer
Cost management
Cost management
Finance Controller
Internal Auditing
Internal Auditing


Question
Proprietory ratio indicates the relationship between the owner's fund and ________
Correct Answer
Total assets
Your Answer
Total assets


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


Question
The requirement of Fixed Working Capital is unaffected due to the changes in the level of activity
Correct Answer
True
Your Answer
False


Question
________ in liabilities involves outflow of funds
Correct Answer
Decrease
Your Answer
Increase


Question
Capital turnover ratio is calculated as
Correct Answer
Sales / Capital employed
Your Answer
Sales / Capital employed


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
Sales Account , Stock Account , Loss by theft Account


Question
Projects for which profitability is not the criterion are
Correct Answer
Service Department projects , Welfare projects , Educational projects
Your Answer
Welfare projects , Educational projects


Question
Current liabilities consist of
Correct Answer
Creditors
Your Answer
Debentures


Question
By issuing the debentures, the controlling position of the existing equity shareholders does not get affected as the debentures do not carry any voting rights
Correct Answer
True
Your Answer
True


Question
Live Stock is an example of
Correct Answer
Fixed Asset
Your Answer
Current Assets


Question
The combination of irrevocable and confirmed letter of credit can be considered to be a guaranteed payment on the part of the exporter
Correct Answer
True
Your Answer
False


Question
The Pay Bank period is calculated as
Correct Answer
Cash outlay / Annual cash inflow
Your Answer
Total Profits / (Net Investment * No. of years of Profits) * 100


Question
Redemtion of shares/debentures is categorised under ________
Correct Answer
Non-operating cash outflow
Your Answer
Non-operating cash inflow


Question
Income tax paid in the case of sole proprietor firms should be treated as a personal expense of the proprietor
Correct Answer
True
Your Answer
False


Question
If the issue of Debentures is having the maturity period of more than 18 months, the company shall create
Correct Answer
Debenture Redemption reserve
Your Answer
Debenture Redemption reserve


Question
From company's point of view return on borrowed capital is
Correct Answer
is a tax deductible expenditure
Your Answer
is a tax deductible expenditure


Question
The value created by the use of resources is more than the total of the input resources is referred to as
Correct Answer
Profit
Your Answer
Income


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 takes into consideration only monetary transactions


Question
Retained earnings or ploughed back profits is one of the best source of raising long term funds for the company
Correct Answer
True
Your Answer
True


Question
The advantages of continuous stock taking are
Correct Answer
The figures of stock can be readily available for the purpose of periodic Profit and Loss Account , It enables to locate slow and non-moving items
Your Answer
The figures of stock can be readily available for the purpose of periodic Profit and Loss Account , It enables to locate slow and non-moving items , A close and strict control is facilitated on the most important items


Question
Correct Answer
Your Answer
Ratio which measures the profitability of the investments in a firm
Return on Asset
Dividend Payment ratio
The relation of Net Sales and Working Capital
Working Capital turnover ratio
Working Capital turnover ratio
The ratio which indicates the speed at which the Sundry debtors are converted in the form of cash
Debtors turnover ratio
Debtors turnover ratio
The ratio which indicates the efficiency of the organisation with which the capital employed is being utilised
Capital turnover ratio
Current Assets turnover ratio


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
three


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 , Represents real liquid position


Question
________ approach is the mean between two extreme approaches of net income approach and net operating income approach
Correct Answer
Traditional
Your Answer
Net Profitability


Question
The trading Account consists of the following items
Correct Answer
Purchases , Closing Stock
Your Answer
Purchases , Closing Stock , Rent


Question
The assumptions of capital structure theories is that Operating earnings are not expected to grow
Correct Answer
True
Your Answer
True


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


Question
The lending Bank does not commit any physical outflow of funds in a
Correct Answer
Non-Fund based lending
Your Answer
Non-Fund based lending


Question
Minimum tradable lot in case of shares having the face value of Rs. 10 per share shall not be more than
Correct Answer
100 shares
Your Answer
100 shares


Question
In an organisation, Dividend distribution is the function of a Finance Controller
Correct Answer
False
Your Answer
True


Question
Fixed Assets turnover ratio is the relationship between fixed assets and owner's funds
Correct Answer
False
Your Answer
False


Question
The discounted cash inflows match with discounted cash outflows is known as
Correct Answer
Internal Rate of return
Your Answer
Discounted rate of return


Question
Net Present value considers ________ from the project throughout its life
Correct Answer
cash inflow
Your Answer
Sales revenue


Question
Earnings / Price Approach to compute cost of equity shares is objected on the following grounds
Correct Answer
It wrongly assumes that earnings per share will remain constant in future , All the earnings may not be distributed among the shareholders by way of dividend
Your Answer
This presupposes that an investor looks forward only to receive dividend on equity shares which may not be correct , It assumes that the company will not earn on its retained earnings which is a wrong assumption , It wrongly assumes that earnings per share will remain constant in future


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


Question
under no circumstances , ________ term requirement of funds should be met out of short term sources of funds
Correct Answer
long
Your Answer
long