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