Scdl Financial Management part4

	Scdl Financial Management part4 Multiple Choice Single Answer
	Question	A private limited company and a public limited company are similar on the basis of
	Correct Answer	Limited liability
	Your Answer	Invitation to public for subscription for any shares
	Select The Blank
	Question	Subscription list of a public issue of shares shall be kept open for minimum ________ working days
	Correct Answer	3
	Your Answer	3
	True/False
	Question	Loans from financial corporations etc. are sources of cash
	Correct Answer	True
	Your Answer	False
	Multiple Choice Single Answer
	Question	According to the Irrelevance approach of dividend policy, the value of the company
	Correct Answer	remains unaffected by the dividend policy of the company
	Your Answer	will increase if dividend payout is on the higher side
	Multiple Choice Multiple Answer
	Question	International financial function of the organisation comprises of :
	Correct Answer	Study of flow of funds beyond national boundaries , Exchange of currencies
	Your Answer	Study of flow of funds beyond national boundaries , Exchange of currencies , Financial matters of Government
	Multiple Choice Single Answer
	Question	The hidden cost of capital which is not incurred directly is referred to as
	Correct Answer	Implicit cost
	Your Answer	Explicit cost
	True/False
	Question	In calculating funds from operations non-business expenses like dividends paid etc. as well as non cash expenses like depreciation etc. are added back in the net profits shown by the Profit & Loss Account
	Correct Answer	True
	Your Answer	True
	True/False
	Question	Accounts Receivable is an example of current assets
	Correct Answer	True
	Your Answer	True
	Multiple Choice Multiple Answer
	Question	The advantages of leasing for the lessee are
	Correct Answer	The payment of lease rents is the tax deductible expenditure , It is the quickest method of financing the requirements of long term capital , Avoids risk of ownership
	Your Answer	The payment of lease rents is the tax deductible expenditure , It is the quickest method of financing the requirements of long term capital , Avoids risk of ownership
	Multiple Choice Multiple Answer
	Question	The book-keeping and accounting activities in relation to the receivables management undertaken by the factor includes
	Correct Answer	Maintenance of debtors ledger , Various periodical reports about outstanding from the customers , Age-wise analysis of the outstanding
	Your Answer	Maintenance of debtors ledger , Preparing financial statements , Age-wise analysis of the outstanding
	Select The Blank
	Question	________ is one of the current assets that takes the longest time to get converted into cash
	Correct Answer	Stock
	Your Answer	Stock
	Select The Blank
	Question	From the following data, the Earning per share is ________ : Net Profit before tax Rs. 2,00,000/-, Taxation at 50% of Net Profit, 10% Preference Share Capital (Rs. 10 each) Rs. 1,00,000/-, Equity Share Capital (Rs. 10 each) Rs. 1,00,000/-
	Correct Answer	9
	Your Answer	4
	Multiple Choice Multiple Answer
	Question	Advantages of Preference shares from shareholders point of view
	Correct Answer	For a corporate investor, preference dividend income , It earns a stable dividend rate
	Your Answer	For a corporate investor, preference dividend income , It earns a stable dividend rate , No collateral is pledged in favour of preference shareholders

 

	LIST OF ATTEMPTED QUESTIONS AND ANSWERS
	Multiple Choice Single Answer   Question   The capacity of the existing owners of the company to retain control over operations of the company is termed under   Correct Answer   Control factor   Your Answer   Control factor    Multiple Choice Single Answer   Question   The entire requirement of working capital arises due to the   Correct Answer   time gap involved in various stages of the cycle   Your Answer   time gap involved in various stages of the cycle      True/False   Question   The term Accrued Income and Outstanding Income have synonymous meaning   Correct Answer   False   Your Answer   False      Select The Blank   Question   ________ will be shown as source of funds net of proposed dividend   Correct Answer   Operating Profit   Your Answer   Earning after tax    Multiple Choice Multiple Answer   Question   Overall profitability ratio includes   Correct Answer   Return on Asset , Return on Shareholders Funds   Your Answer   Return on Asset , Return on Shareholders Funds      Multiple Choice Single Answer   Question   The ratio which indicate the long term financial prospects of the company are   Correct Answer   Solvency ratios   Your Answer   Solvency ratios      Select The Blank   Question   The comparison of the ratios of one organisation with that of the other organisation is termed as ________ comparison   Correct Answer   Inter-firm   Your Answer   Inter-firm      True/False   Question   Quick Assets are the most liquid of current assets   Correct Answer   True   Your Answer   True      Select The Blank   Question   As per the Tandon Committee, the norms suggested for consumption of raw materials should be in ________   Correct Answer   months   Your Answer   months      Multiple Choice Single Answer   Question   The ratio which indicates the credit policy followed by a business firm is known as   Correct Answer   Debtors turnover ratio   Your Answer   Debtors turnover ratio      Multiple Choice Single Answer   Question   Gross Profit ratio is calculated as   Correct Answer   [(Gross Profit / Net Sales)] * 100   Your Answer   [(Gross Profit / Net Sales)] * 100      Multiple Choice Multiple Answer   Question   Advantages of Centralised disbursements   Correct Answer   It increases the transit time , Minimum cash balance can be maintained only in case of central bank account instead of four different branches , To maintain the bank accounts at different branches may prove to be administratively difficult   Your Answer   Minimum cash balance can be maintained only in case of central bank account instead of four different branches , To maintain the bank accounts at different branches may prove to be administratively difficult      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      Select The Blank   Question   The ratio of Market Price per share and Earning per share is termed as ________   Correct Answer   Price earnings ratio   Your Answer   Price earnings ratio      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   Sole      True/False   Question   Under Hire Purchase agreement, depreciation is considered by the hirer as an expenditure, debited the same to Profit and Loss account and hence becomes the tax deductible expenditure   Correct Answer   True   Your Answer   True      Match The Following Question Correct Answer Your Answer Ratio which measures the profitability of the investments in a firm Return on Asset Return on Asset The relation of Net Sales and Working Capital Working Capital turnover ratio Working Capital turnover ratio The ratio which indicates the speed at which the Sundry debtors are converted in the form of cash Debtors turnover ratio Debtors turnover ratio The ratio which indicates the efficiency of the organisation with which the capital employed is being utilised Capital turnover ratio Capital turnover ratio      True/False   Question   Accounts Receivable is an example of current assets   Correct Answer   True   Your Answer   True      True/False   Question   Semi-variable cost is the cost which varies in direct proportion to the sales revenue   Correct Answer   False   Your Answer   True      True/False   Question   The redemption of preference shares if they carry too high rate of dividend is the remedy to overcome the situation of overcapitalisation   Correct Answer   True   Your Answer   False      Multiple Choice Multiple Answer   Question   The normal process which may be followed under the capital rationing situations may be   Correct Answer   Rank the projects according to some measure of profitability , Select projects in the descending order of profitability till the available funds are exhausted   Your Answer   Rank the projects according to some measure of profitability , Select projects in the descending order of profitability till the available funds are exhausted      True/False   Question   If the cash is held to take advantage of profit making opportunities arising out of changes in the value of securities, the cash holding is called Precautionary motive   Correct Answer   False   Your Answer   True      True/False   Question   Credit rating is not a recommendation for buying, selling or holding a security   Correct Answer   True   Your Answer   True      Select The Blank   Question   ________ in assets involves inflow of funds   Correct Answer   Decrease   Your Answer   Decrease      Multiple Choice Single Answer   Question   Unclaimed Dividends is shown in the balance sheet under the head   Correct Answer   Current liabilities and Provisions   Your Answer   Current liabilities and Provisions      Multiple Choice Single Answer   Question   The main function of finance under the traditional approach comprises of   Correct Answer   Procurement of funds   Your Answer   Procurement of funds      True/False   Question   An ideal investor makes an comparison between the current market price and future Earning per share as the market value of shares depends upon the future Earnings per share   Correct Answer   True   Your Answer   True      Select The Blank   Question   The objective of the management in the investment decisions is in the form of ________   Correct Answer   maximisation of the wealth of the shareholders   Your Answer   maximisation of the wealth of the shareholders      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      Select The Blank   Question   Venture Capitalist is not interested in keeping his investment in the project on a ________ basis   Correct Answer   Permanent   Your Answer   Permanent      Multiple Choice Multiple Answer   Question   The patterns of Dividend policy are   Correct Answer   Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy   Your Answer   Stable Dividend policy , Increasing Dividend policy      Multiple Choice Multiple Answer   Question   The avenues available to the company to invest the excess cash balance on short term basis may be in the form of   Correct Answer   inter-corporate bills discounting , Bank deposits , Commercial paper   Your Answer   Commercial paper , inter-corporate bills discounting , Bank deposits      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      Multiple Choice Multiple Answer   Question   The recommendations of the Dahejia committee included   Correct Answer   the banks should not only be security oriented but they should take into consideration total financial position of the client , all cash credit accounts with banks should be bifurcated in two categories   Your Answer   the banks should not only be security oriented but they should take into consideration total financial position of the client , all cash credit accounts with banks should be bifurcated in two categories      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      Multiple Choice Single Answer   Question   Calculate the Gross Profit Ratio from the following figures : Sales Rs. 1,00,000/-, Purchases Rs. 60,000/-, Sales Return Rs. 10,000/-, Opening stock Rs. 20,000/-, Purchases Return Rs. 15,000/-, Closing Stock Rs. 5,000/-   Correct Answer   0.3333   Your Answer   0.3333      Multiple Choice Single Answer   Question   Mr. A is given the opportunity to receive Rs. 10,000 after two years, when he can earn interest of 10% p.a. on his investment, what should be the amount which he should invest today so that he may be able to receive Rs. 10,000 after two years   Correct Answer   Rs. 8,264   Your Answer   Rs. 8,264      Multiple Choice Single Answer   Question   The cost of individual items of capital is termed as   Correct Answer   Component cost   Your Answer   Composite cost      Multiple Choice Single Answer   Question   Delinquency cost in connection with accounts receivables involves   Correct Answer   blocking up of funds for an extended period   Your Answer   blocking up of funds for an extended period      Select The Blank   Question   ________ is clubbed with Current Assets in the Balance Sheet   Correct Answer   Loans and advances   Your Answer   Loans and advances      Multiple Choice Multiple Answer   Question   Disadvantages of Internal rate of return is   Correct Answer   It is difficult to use and understand , It presupposes that the cash inflows can be re Unsecured loans includesinvested immediately to yield the return equivalent to Internal rate of return which is not very realistic   Your Answer   It is difficult to use and understand , It presupposes that the cash inflows can be reinvested immediately to yield the return equivalent to Internal rate of return which is not very realistic      Select The Blank   Question   The operating profit earned by the company is in the form of contribution duly reduced by the ________   Correct Answer   Fixed operating cost   Your Answer   Sales revenue      Match The Following Question Correct Answer Your Answer Safety Stock below which the actual stock should not be allowed to fall below which the actual stock should not be allowed to fall ABC Analysis Vital few Trivial Many which is fixed in such a way that the total variable cost of managing the inventory can be minimised Bill of Materials Details of the necessary materials as well as quantity of each item Details of the necessary materials as well as quantity of each item Perpetual Inventory System Maintenance of Bin Cards and Stores ledger in order to know about the stock in quantity and value at any given point of time Maintenance of Bin Cards and Stores ledger in order to know about the stock in quantity and value at any given point of time      Multiple Choice Multiple Answer   Question   Dividend / Price Approach to compute cost of equity shares is objected on the following grounds   Correct Answer   This presupposes that an investor looks forward only to receive dividend on equity shares which may not be correct , It assumes that the company will not earn on its retained earnings which is a wrong assumption   Your Answer   It assumes that the company will not earn on its retained earnings which is a wrong assumption , It wrongly assumes that earnings per share will remain constant in future , All the earnings may not be distributed among the shareholders by way of dividend      Multiple Choice Multiple Answer   Question   The internal factors affecting the dividend policy are   Correct Answer   Growth rate of the company , Composition of the shareholding   Your Answer   Growth rate of the company , Composition of the shareholding      Select The Blank   Question   Operating Lease is also referred to as ________ lease   Correct Answer   Service   Your Answer   Financial      True/False   Question   Reserve Bank of India appointed the Marathe Committee with the intention to recognize the contribution made by the SSI Sector to the economy   Correct Answer   False   Your Answer   False