Financial Management

Multiple Choice Single Answer & Multiple Choice Multiple Answer


Question: Earnings per share is calculated as

Answer ( Profit after tax - Preference Dividend ) / No. of equity shares
 
Question: The main function of finance under the traditional approach comprises of


Answer Procurement of funds


Question How many days in a year are to be considered for the calculation of daily sales


Answer 360

 Question Floor rate is


Answer the minimum rate of interest payable by the company on the bonds even is the base rate falls below a certain limit

Question The symptom of large inventory accumulation in anticipation of price rise in future will be indicated by


Answer Inventory turnover ratio

 Question The Purpose of cash budget is


Answer to co-ordinate the timings of cash needs , It pinpoints the period when there is likely to be excess cash , it helps to arrange needed funds on the most favourable terms and prevents the accumulation of excess funds
Question Current assets are also referred to as

Answer Working Capital 
 
Question Under the Business Analysis of the company done by Credit rating and Information Services of India Ltd. the following points are covered


Answer Existing as well as potential competitors in the industry , Market position of the company  
 
Question Assuming the current ratio is 2, in which cases would the current ratio decline


Answer Purchase of fixed Assets , Borrow Money on an Interest bearing promissory note


Question The combined or weighted average cost of capital of the various individual components is termed as


Answer Composite cost

Question The mix of sources from which the long term funds required by a business are raised is termed as


Answer Capital Structure


Question Revenue reserves represents


Answer Accumulated retained earnings from the profits of normal business operations

Question Undue decrease in Gross Profit ratio may indicate


Answer Non-consideration of sales invoices , Under-valuation of closing stock , Improper utilisation of infrastructural facilities
 
Question The cost of managing inventory includes


Answer Ordering cost , Carrying cost

Question The effects of undercapitalisation are


Answer Increase tax liability of the company , Demand of the employees to increase wages

Question Utility of cash flow analysis


Answer Helps in efficient cash management , helps in internal financial management , Discloses the movements of cash


Question The traditional approach to financial management refers only to the procurement of funds by


Answer Corporate entity


Question The effect of Purchase of machinery by issue of debentures on the funds flow is that there will be


Answer No effect on the funds flow

Question An organized collection of data according to logical and consistent accounting procedure is known as


Answer Financial Statement

Question Limitations of capital budgeting is


Answer Life of the project cannot be estimated accurately , Cash inflows cannot be eatimated accurately , Difficulties in deciding the cost of capital

Question Fixation of Inventory levels are based on the following propositions


Answer There has to be a constant watch on the actual stock level of various kinds of materials so that proper action can be taken , The various levels fixed are not fixed on a permanent basis and are subject to revision regularly

Question The lending Bank does not commit any physical outflow of funds in a


Answer Non-Fund based lending

Question Financing consists of the raising, providing, managing of all the money, capital or funds of any kind to be used in connection with the business' is defined by


Answer Bonneville and Dewey

Question The amount of cheques deposited by a Bank awaiting clearance is called


Answer Collection float

 

Fill in the Blanks:

Question: When a company issues bonus shares ________ of the company get reduced


Answer:  Reserves

Question Operating Lease is also referred to as ________ lease


Answer Service

 
Question The fixed assets are expressed at ________


Answer Cost - Depreciation
 
Question Financial Statement is useful to ________ in order to enable to decide whether to retain the investment in the company


Answer Shareholders
 
Question Depreciation is sometimes treated as ________ funds


Answer source


Question In financial terms, the operating profit earned by the company is also referred to as ________


Answer Profit before Interest and Taxes
 
Question In case of Mortgage, the party in whose favour the interest is so transferred is called ________


Answer Mortgagee

Question The ________ has been empowered to order the company that fails to repay any deposit to make the repayment of such deposits


Answer Company Law board

Question ________ is calculated on the basis of current profits and not on the basis of retained profits


Answer Earnings per share

 
True/False


Question If Average credit period works out to be more than the Normal credit period, it indicates efficiency on the part of collection department of the company in collecting the dues from the customers

Answer False

Question Accounts Receivable is an example of current assets


Answer True

 Question Wealth maximization goal is only an extension of Profit maximization goal of the organisation


Answer True

Question Internal rate of return considers time value of money


Answer True

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


Answer True

Question Reorder level is calculated as Maximum Lead Time * Minimum Usage


Answer False

Question:Current ratio and Acid test ratio are categorised under liquidity group


Answer True

Question Projects for venture capital financing are more risky in nature and involve larger gestation period


Answer True