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Thursday, July 2, 2009

Strategic Finance - 15

Question 1 If a company is following multiple accounting system, the activity accountant will
have to match data across
Correct Answer Codes , Time periods , Systems
Question 2 Combination of 2 or more companies into existing company is called ________.
Correct Answer Absorption
Question 4 For M & As, the acquiring firm needs industry data on :-
Correct Answer Market growth , Nature of competition , Degree of regulation
Question 5 A high payout policy on dividends implies :-
Correct Answer More current dividends , Less retained earnings
Question 6 HLL the largest FMCG company has a turnover of Rs. ________.
Correct Answer 118 Bn
Question 7 The scope of the data required relates to the scope of the activity model & processes
under review.
Correct Answer True
Question 8 The total cost of the activitymodel allocated by the applied activity drivers to the
output of the activity model is called________.
Correct Answer The cost of the output
Question 9 The voluntary market based method means :-
Correct Answer Develop a consistent framework which can be operational across sectors and
Question 10 Exit costs are classified into 3 categories namely :-
Correct Answer Lost efficiency prior to separation , Job vacancy cost during the new search ,
Termination pay
Question 11 The offer price by the acquiring company should be an average of the weekly high &
low for :-
Correct Answer The last 26 months
Question 12 One of the advantages of trade credit is its flexibility i.e. the firm does not :-
Correct Answer Have to sign a note , Pledge collateral , Adhere to strict payment schedule
Question 13 A firm with a judicious mixture of debt and equity will have :-
Correct Answer Lowest cost of capital , High value of firm , Good market reputation
Question 14 The acquirer should intimate to the target company & the concerned stock exchanges
as soon as its holding touches :-
Correct Answer 5 % of the voting capital of the target company
Question 15 What is a very important factor in any kind of merger?
Correct Answer Exchange ratio
Question 16 For determining exchange ratio, the model developed by Conn & Nielson is used.
Correct Answer True
Question 17 As per Pecking order theory, which is the costliest means of funding :-
Correct Answer Equity Shares
Question 19 Capital gains are taxed at ________.
Correct Answer Preferentially lower rate
Question 20 Articles of association should authorise buy back of securities as per the Company's
Correct Answer True
Question 21 In today's fast moving world, the quickest way to get information on a firm is through
Correct Answer Internet
Question 22 Suppliers of equity are interested in :-
Correct Answer High share prices
Question 23 The buyback shall be made only on stock exchanges with electronic trading facility.
Correct Answer True
Question 24 Accounting standard 19 for leases statement is applied in accounting for all leases
other than :-
Correct Answer Lease agreements to explore for or use natural resources , Licensing
agreements for items such as motion picture films , Lease agreements to use land
Question 25 Odd lots purchase is not a method of buy back of shares.
Correct Answer False
Question 26 Segment liabilities do not include :-
Correct Answer Borrowings & other liabilities that are incurred for financing rather than
operating purpose
Question 27 Economic analysis usually covers :-
Correct Answer A small number of improvement alternatives
Question 28 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
Question 29 Forfeiting is mostly used for ________.
Correct Answer Big ticket items & durable goods
Question 30 The objective of a dividend policy should be to maximize shareholder's return so that
the value of his investment is maximized.
Correct Answer False
Question 31 firms use credit policy as a marketing tool for expanding sales.
Correct Answer True
Question 32 Mature companies with stable earnings generally pay out ________.
Correct Answer A high proportion of earnings
Question 33 As per AS 13 Statement, the following are not considered as investments:-
Correct Answer Shares , Debentures , Other securities held as stock in trade
Question 34 Accounting numbers are not influenced by :-
Correct Answer Dividend policy , Time span of money , Financial and business risk
Question 35 ________ Assets in the balance sheet are normally excluded from the value of total
Correct Answer Intangible
Question 36 The development aspect of training in firms focus on :-
Correct Answer Promotion to higher job levels
Question 37 work in progress means the inventories are semi manufactured products.
Correct Answer True
Question 38 A company is permitted to buy back its shares through stock exchange in the
following situations :-
Correct Answer The company shall complete the verification of acceptances within 15 days of
the payout , The identity of the company as a purchaser shall appear on the electronic screen when
the order is placed , The buy back shall be made only on stock exchanges with electronic trading
Question 39 Current accounting system is able to provide actual value of employee capabilities &
Correct Answer False
Question 40 The ________ cost tier has the advantage of being the simplest to calculate and
Correct Answer Direct
Question 41 Operating economies occur due to indivisibilities of resources like :-
Correct Answer People , Equipment , Overheads
Question 42 ________ is a variable expense that can be readily eliminated with organisational
Correct Answer Rental equipment
Question 43 The HHI index reflects :-
Correct Answer Inequality & degree of concentration
Question 44 ________ is never a part of the output.
Correct Answer Mechanisms
Question 45 It is essential that ABC must fit into the strategy of the company.
Correct Answer True
Question 46 In a matching approach policy, :-
Correct Answer There is a small risk if shortage of funds
Question 47 Which is an example out of the following to which special consideration apply for
depreciation :-
Correct Answer Regenerative natural resources


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