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Thursday, July 2, 2009

Strategic Finance - 21

Question Accounting standards (AS - 13) is now mandatory.
Correct Answer True
Question 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 A firm's current assets include :-
Correct Answer Marketable securities , Receivables , Inventory
Question In a merger decision, the value of a firm depends upon:-
Correct Answer Earnings , Operating characteristics of acquiring firm , Financial
characteristics of acquiring firm
Question 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 A merger will make sense to the acquiring firm if its shareholders benefit.
Correct Answer True
Question ________ Assets in the balance sheet are normally excluded from the value of total
Correct Answer Intangible
Question What is a very important factor in any kind of merger?
Correct Answer Exchange ratio
Question A shareholder expects a higher rate of return as a firm's compensation for ________.
Correct Answer Increased risk
Question Usually cost data is perfect for ABC Analysis & distribution.
Correct Answer False
Question Forward or backward integration is a characteristic of ________.
Correct Answer Vertical Mergers
Question Segment assets are determined after :-
Correct Answer Deducting related allowances / provisions reported as direct offsets
Question Acceptable audit requirements cannot be overlooked even under the pressure of :-
Correct Answer Timeliness & turnaround
Question Which of the following is NOT a disadvantage of deferred payment plan to the
acquiring firm?
Correct Answer There is built - in cushion to the acquiring firm as total payment is not made at
the time of acquisition
Question A single organisation model serves to keep all individual initiatives to be targeted into
a co-ordinated plan.
Correct Answer True
Question Assets held as stock - in - trade are also investments.
Correct Answer False
Question In an aggressive approach :-
Correct Answer There is a very large risk of shortage of funds
Question Organisational changes are similar to mission changes.
Correct Answer True
Question The internal staffing performance indicators are :-
Correct Answer Sales per employee , Recovery rate , Utilization %
Question The most popular kind of dividend policy is one that pays a ________.
Correct Answer Regular, steady dividend
Amount involved in buy backNot to exceed 25 % of the total paid up capital Not to exceed 25
% of the total paid up capital
Articles of Association Authorize buy back of securities Resolution permitting the buy
back of shares
Board of Directors Resolution permitting the buy back of sharesAuthorize buy back of securities
Shares to be bought back Fully paid up Fully paid up
Question A good accounting system does NOT have the characteristics such as :-
Correct Answer Does not cover decisions over the life cycle
Question Fixed price tender offers are accompanied by an abnormal announcement period
return of :-
Correct Answer 8 - 10 %
Question The external staffing performance indicators include :-
Correct Answer Compensation per Re. Profit , Personnel services head count , Profit per head
Trust receipt Specifically identified by serial number or other means Specifically identified by
serial number or other means
Terminal warehouse receipt Inventory is stored with a public or terminal warehousing company
Inventory is stored with a public or terminal warehousing company
Floating lien Loose arrangement as the lender may find it difficult to police Well suited for
financial good inventories of capital goods
Chattel mortgage Well suited for financial good inventories of capital goods Affords a higher
degree of control over the collateral
Question In today's fast moving world, the quickest way to get information on a firm is through
Correct Answer Internet
Question Companies often need to value its own :-
Correct Answer Shares
Question Long term financing strategy is used by a firm to meet :-
Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion
of fluctuating working capital requirement
Question For determining exchange ratio, the model developed by Conn & Nielson is used.
CorrectAnswer True
Question usually credit lines are established for a period of ________.
Correct Answer 1 year
Question Shortcomings of accounting numbers consist of the following :-
Correct Answer Firms use different kind of accounting methods , Business risk and financial
risk do not have any influence on accounting numbers
Question Investors can reduce the company related risk by diversification of their investments
in ________.
Correct Answer Shares of a large number of companies
Question Making decision on dividend is a very crucial area of financial management for a
Question The following is not a factor for reduction in the life of an asset by obsolescence :-
Correct Answer No study of market demand for a product / service
Question Due to diversification employees seek:-
Correct Answer Job security , Better opportunities within the firm , Higher compensation
Question Research into true human resources accounting began in :-
Correct Answer 1960`s
Question Segment assets are ________.
Correct Answer Directly attributable to the segment
Question AS 13 statement does not deal with operating or finance leases.
Correct Answer True
Question The costs should be gathered & allocated within the organisation at the ________
structural layer.
Correct Answer Lowest possible
Question Value implies that something has :-
Correct Answer Worth
Question Examples of accounting methods used by firm are :-
Correct Answer FIFO , LIFO , Accrual Accounting
Question The main assumptions for stock repurchase models are as follows :-
Correct Answer The market is efficient , There is perfect competition in the securities market
Question As a general rule, an asset is :-
Correct Answer A good or a right that a firm owns in a determined moment , Prepayment
adjustments , Capitalized expenses
Question It is easy to find a risk free security.
Correct Answer False
Question The earning power of the company approach includes :-
Correct Answer Mainly discounting of all future earnings
Question During the costing process, we look at ________.
Correct Answer Resource consumption
Question Mature companies with stable earnings generally pay out ________.
Correct Answer A high proportion of earnings


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