Financial Management 2
Select The Blank Question
Preparation of Financial plan at the time of company promotion is ________ duty of the finance executive
Correct Answer Non-recurring
Your Answer Non-recurring
Multiple Choice Single Answer
Question The ratio which indicates the extent to which the Owners funds
are sun! in different !inds of assets is termed as
Correct Answer Proprietory ratio
Your Answer Proprietory ratio
Select The Blank
Question ________ is the summary of cash "oo! or #eceipts and Payments
$tatement
Correct Answer %ash flow statement
Your Answer %ash flow statement
True/False
Question #etained earnings or ploughed "ac!
profits is one of the "est source of raising long term funds for the
company
Correct Answer True
&our 'nswer True
True/False
(uestion )hen a company issues "onus shares* reserves of the company get reduced and share capital of
the company increases
Correct Answer True
&our 'nswer True
Multiple %hoice Multiple 'nswer
Question Top management who can accept or re+ect capital expenditure proposals may "e in the form of
Correct Answer ,oard of -irectors * .xecutive committee * Management committee
Your Answer ,oard of -irectors * .xecutive committee * Management committee
Multiple Choice Multiple Answer
(uestion The approaches to compute the cost of e/uity shares are
Correct Answer -ividend 0 Price 'pproach * #ealised &ield 'pproach * .arnings 0 Price
'pproach
Your Answer -ividend 0 Price 'pproach * #ealised &ield 'pproach * .arnings 0 Price 'pproach
True0False
(uestion 1ntroduction of a heavy amount of de"t capital in the capital structure will not only
reduce the valuation of the firm "ut will also increase the cost of capital
Correct Answer True
&our 'nswer True
True/False Question
,efore the company can pay the dividend on ./uity shares* it is "ound to
pay the dividend on Preference shares
Correct Answer True
&our 'nswer True
Match The Following
Question Correct AnswerYour Answer
Term loan -- represents a source of de"t finance which is generally repaya"le in more
than one year "ut less than ten years -- represents a source of de"t
finance which is generally repaya"le in more than one year "ut less than ten
years
2essee -- Not a"le to claim depreciation on asset -- Not a"le to claim depreciation on asset
3irer -- %laims the depreciation on the asset -- %laims the depreciation on the asset
#etained earnings#esidue left "ehind from
earnings availa"le to e/uity shareholders after the payment of annual
dividend#esidue left "ehind from earnings availa"le to e/uity shareholders
after the payment of annual dividend
Multiple Choice Multiple Answer
Question 4ses of financial leverage are
Correct Answer 1t acts as a guideline in setting maximum limit upto which the company should use the de"t
capital * 1t gives an indication regarding the extent to which
.arning per share may "e affected due to every change in .arning "efore
1nterest and tax
Your Answer 1t acts as a guideline in setting maximum limit upto which the company should use the de"t
capital * 1t gives an indication regarding the extent to which .arning per share may "e affected due to every
change in .arning "efore 1nterest and tax * 1t provides useful guidelines for determining the optimal capital
structure
Multiple Choice Multiple Answer
Question The methods which consider the ris! in capital "udgeting decision are
Correct Answer 1nformal method * #is! ad+usted discounting rate * %ertainty-./uivalent approach
Your Answer 1nformal method * #is! ad+usted discounting rate * %ertainty-./uivalent approach
Select The Blank
Question Profit after taxes can "e distri"uted among the owners of the company "y way of ________
Correct Answer dividend
Your Answer dividend
Multiple Choice Single Answer
(uestion 1nterest %overage ratio is calculated as
Correct Answer Profit "efore 1nterest and taxes 0 1nterest charges
Your Answer Profit "efore 1nterest and taxes 0 1nterest charges
True/False
Question 1nternal rate of return indicates that the discounting rate at
which net present value is 5ero
Correct Answer True
&our 'nswer True
Select The Blank
Question 1n ',% analysis % class consist of ________6
Correct Answer a very large num"er of items which are less important
Your Answer a very large num"er of items which are less important
True/False
(uestion $emi-varia"le cost is the cost which varies in
direct proportion to the sales revenue
Correct Answer False
&our 'nswer False
True0False
Question One of the most common methods to
monitor the receiva"les on macro "asis is to calculate age-wise analysis of
receiva"les
Correct Answer False
&our 'nswer False
Multiple Choice single answer
(uestion Tangi"le net worth means
%orrect 'nswer share capital plus free reserves
Your Answer %urrent assets less %urrent lia"ilities
Multiple Choice Multiple Answer
Question 'ssuming the current ratio is 2* in which cases would the current ratio decline
Correct Answer Purchase of fixed 'ssets * ,orrow Money on an 1nterest
"earing promissory note
Your Answer Purchase of fixed 'ssets * ,orrow Money on an 1nterest "earing promissory note
True/False
(uestion $olvency ratios consists of current ratio and Price earnings ratio
Correct Answer False
&our 'nswer False
Multiple Choice Single Answer
Question #evenue reserves represents
Correct Answer 'ccumulated
retained earnings from the profits of normal "usiness operations
Your Answer 'ccumulated retained earnings from the profits of normal "usiness
operations
Select The Blank Question
For the selection of the period for which capital expenditure "udget should "e prepared * ________ a period
may not "e useful
Correct Answer Too long
&our 'nswer Too long
Multiple Choice Multiple Answer
Question The shares of the company
can "e "ought "ac! out of the following amounts
Correct Answer Free #eserves of the company * $hare Premium 'ccount of the company * Proceeds of
issue of any shares or other specified securities
Your Answer
Free #eserves of the company * $hare Premium 'ccount of the company
Multiple Choice Single Answer
Question From the following data* wor! out the .conomic order /uantity 7 'nnual -emand 7 8999 units*
Ordering cost #s6 :9 per order* Price per unit #s6 ;99* 1nventory carrying cost is ;8< on average inventory
Correct Answer 299 units
&our 'nswer 299 units
Multiple Choice Single Answer
Question 1ncrease in average credit period to maintain sales in view of falling demand can "e indicated "y
Correct Answer -e"tors turnover ratio
&our 'nswer -e"tors turnover ratio
Match The Following
Question Correct Answer Your Answer
1ncrease in current lia"ilities - decreases wor!ing capital - increases wor!ing
capital
1ncrease in lia"ilities - inflow of funds - inflow of funds
-ecrease in lia"ilities - outflow of funds - outflow of funds
1ncrease in current assets - increases wor!ing capital - cash flow analysis
Select The Blank
(uestion The situation of watered capital may arise due to ________
%orrect 'nswer %ompany pays higher price to the vendors of the assets transferred
Your Answer %ompany pays higher price to the vendors of the assets transferred
True/False
Question .conomic Order (uantity model is a very
useful model of determining the order /uantity
Correct Answer True
&our 'nswer True
Multiple Choice Multiple Answer
(uestion The advantages of operating lease is
Correct Answer 1n an operating lease arrangement the e/uipment ris! is transferred to the lessor * 1t
minimi5es investment in e/uipment * #educes expenditure on maintenance
&our 'nswer 1n an operating lease arrangement the e/uipment ris! is transferred to
the lessor * 1t minimi5es investment in e/uipment * #educes expenditure
on maintenance
Select The Blank
(uestion ________ in assets involves inflow of funds
Correct Answer -ecrease
&our 'nswer -ecrease
Multiple Choice Multiple Answer
Question The functions of a Finance %ontroller are 7
Correct Answer ,udgeting * #ecord =eeping * 'nnual #eporting
Your Answer ,udgeting * #ecord =eeping * 'nnual #eporting
Multiple Choice Single Answer
Question The symptom of low capacity utilisation will "e shown "y
Correct Answer Fixed 'ssets Turnover ratio
Your Answer Fixed 'ssets Turnover ratio
Multiple Choice Single Answer
Question 1f a company decides to invite pu"lic deposits
Correct Answer 1t should pu"lish an advertising in leading newspaper
Your Answer 1t should pu"lish an advertising in leading newspaper
Multiple Choice Multiple Answer
Question The techni/ues of 'nalysis and 1nterpretation of financial statements are Correct Answer #atio
'nalysis * %ash flow 'nalysis
Your Answer #atio 'nalysis * %ash flow 'nalysis
Multiple Choice Multiple Answer
Question 'dvantages of ',% 'nalysis are
Correct Answer
' close and strict control is facilitated on the most
important items * 3elps in maintaining a high inventory turnover ratio *
Optimum utilisation of the availa"le funds can "e assured
Your Answer
1t ena"les to locate slow and non-moving items * ' close and strict
control is facilitated on the most important items * Optimum utilisation
of the availa"le funds can "e assured
$elect The ,lan!
Question The amount of profit earned after recovering the interest on long term
sources of capital is referred to as ________
Correct Answer Profit "efore taxes
Your Answer Profit "efore taxes
Multiple Choice Single Answer
Question Mr6 ' invested #s6 ;9*999 in fixed deposit carrying interest >;9< p6a6 compounded annually6
%alculate the value of investment after two years
Correct Answer #s6 ;2*;99
&our 'nswer #s6 ;2*;99
Multiple Choice Single Answer
Question 1ncrease in the amount of "ills paya"le results in
Correct Answer 1ncrease in cash
Your Answer -ecrease in cash
Multiple Choice Single Answer
Question The assets held "y a "usiness which can "e converted in the form of cash or used during the
course of normal operations is termed as
Correct Answer %urrent assets
Your Answer %urrent assets
True/False
Question 1nade/uate provision for depreciation may "e the cause of overcapitalisation
Correct Answer True
Your Answer True
Select The Blank
Question Factoring indicates the relationship "etween ________ and a "usiness organisation
Correct Answer Financial institutions
Your Answer Financial institutions
True/False
Question 1nade/uate provision for depreciation may "e the cause of overcapitalisation
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question ?ross Profit can "e increased "y either
Correct Answer #educed Production cost* sales price remaining the same * 1ncreased $ales price*
#educed Production cost * 1ncreased $ales price* Production cost remaining the same
Your Answer #educed Production cost* sales price remaining the same * 1ncreased $ales price* #educed
Production cost * 1ncreased $ales price* Production cost remaining the same
Multiple Choice Multiple Answer
Question 2imitations of cash flow analysis are
Correct Answer 1t cannot "e e/uated with the income statement * %annot replace the fund flow statement *
-ose not represent real li/uid position
Your Answer %annot replace the fund flow statement * -ose not represent real li/uid position
Multiple Choice Multiple Answer
Question -isadvantages of factoring are
Correct Answer The financial "urden on the company increases * 1t may "e considered to "e a symptom of
financial wea!ness on the part of the selling company * 1n 1ndian circumstances* factoring is mainly with-
recourse factoring6 The ris! of non-payment on the part of customer is "orne "y the selling firm6 This restricts
its popularity
Your Answer 1t may "e considered to "e a symptom of financial wea!ness on the part of the selling
company * 1n 1ndian circumstances* factoring is mainly with-recourse factoring6 The ris! of non-payment on
the part of customer is "orne "y the selling firm6 This restricts its popularity
True/False
Question 1n calculating funds from operations non-"usiness expenses li!e dividends paid etc6 as well as non
cash expenses li!e depreciation etc6 are added "ac! in the net profits shown "y the Profit @ 2oss 'ccount
Correct Answer True
Your Answer False
True/False
Question $emi-varia"le cost is the cost which varies in direct proportion to the sales revenue
Correct Answer False
Your Answer False
