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Wednesday, May 20, 2009

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

 

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