FM assgn : 5:
True/False
Question
Ordering cost of inventory includes cost incurred for insurance
Correct Answer False
Your Answer
True
Multiple Choice Single Answer
Question
The price currently being paid in the stock market for every one rupee of Earnings per
share is termed as
Correct Answer Price Earning ratio
Your Answer
Earnings per share
Multiple Choice Single Answer
Question
If the issue of Debentures is having the maturity period of more than 18 months, the
company shall appoint a
Correct Answer Debenture Trustee
Your Answer
Debenture Trustee
Multiple Choice Single Answer
Question
Cost theory of capitalization considers the amount of capitalization
Correct Answer On the basis of cost of various assets required to set up the organization
Your Answer
True/False
Question
On the basis of past record
Wages/salaries is considered under Operating cash inflow
Correct Answer False
Your Answer
False
Multiple Choice Single Answer
Question
The ratio which measures the extent to which borrowed funds support the firm's assets is
termed as
Correct Answer Debt-Asset ratio
Your Answer
Debt-Asset ratio
Multiple Choice Single Answer
Question
Working Capital is computed as
Correct Answer Current assets - Current liabilities
Your Answer
Current assets - Current liabilities
Multiple Choice Multiple Answer
Question
Limitations of credit rating are
Correct Answer Credit rating is based upon the evaluation made by the agencies which may vary
depending upon the experience, knowledge and individual opinion of the rators which may
be biased in some cases , Credit rating is primarily based upon the past performance
whereas the future prospects should be given more importance while deciding the credit
rating , Multiplicity of the rating agencies can be considered to be the limitation of the
credit rating
Your Answer
Credit rating is based upon the evaluation made by the agencies which may vary
depending upon the experience, knowledge and individual opinion of the rators which may
be biased in some cases , Credit rating is primarily based upon the past performance
whereas the future prospects should be given more importance while deciding the credit
rating
Multiple Choice Multiple Answer
Question
Under the Financial Analysis of the company done by Credit rating and Information
Services of India Ltd. the following points are covered
Correct Answer Accounting policies followed by the company , Adequacy of cash flows for fixed capital
Your Answer
Existing as well as potential competitors in the industry , Market position of the company
Multiple Choice Single Answer
Question
The Proprietary concern is owned by
Correct Answer Only one person
Your Answer
Only one person
Multiple Choice Multiple Answer
Question
Gross Profit can be increased by either
Correct Answer Reduced Production cost, sales price remaining the same , Increased Sales price, Reduced
Production cost , Increased Sales price, Production cost remaining the same
Your Answer
Reduced Production cost, sales price remaining the same , Increased Sales price, Reduced
Production cost , Increased Sales price, Production cost remaining the same
Multiple Choice Single Answer
Question
The Policy which attracts the shareholders who are willing to devote short term dividend
income for long term capital gains and share in the increased prosperity of the company
is termed as
Correct Answer No immediate Dividend policy
Your Answer
No immediate Dividend policy
Multiple Choice Multiple Answer
Question
The advantages of ratio analysis are
Correct Answer It helps in planning and forecasting , It makes possible comparison of the performance of
the different divisions of the firm , It simplifies the comprehension of financial statements
Your Answer
It helps in planning and forecasting , It makes possible comparison of the performance of
the different divisions of the firm , It simplifies the comprehension of financial statements
True/False
Question
The assumptions of capital structure theories is that Corporate Income Tax does not exist
Correct Answer True
Your Answer
False
Select The Blank
Question
As per the II method suggested by the Tandon committee, the borrower should finance
________ of current assets out of long term funds and the banks provide the remaining
finance
Correct Answer 0.25
Your Answer
0.25
Multiple Choice Single Answer
Question
Purchases of raw material appear in the cash budget under the head
Correct Answer Operating cash outflow
Your Answer
Non-operating cash inflow
Select The Blank
Question
Assets and liabilities in the Balance Sheet are shown at ________ prices
Correct Answer Historical
Your Answer
Historical
Match The Following
Question
Correct Answer
Your Answer
Internal rate of return less than
cost of capital
Project rejected
indicates that period within which
the discounted cash inflows equal to
the discounted cash outflows
Internal rate of return
breakeven rate of borrowing for
the company
ratio between total discounted cash
inflows and total discounted cash
outflows
Profitability Index
ratio between total discounted
cash inflows and total discounted
cash outflows
Project accepted
Profitability Index more than one
Project accepted
Project rejected
Multiple Choice Multiple Answer
Question
The classification of return on Investment are
Correct Answer Return on Asset , Return on Capital Employed
Your Answer
Return on Asset , Return on Capital Employed , Debt Equity ratio
Match The Following
Question
Recurring duties of finance
executive
Correct Answer
Your Answer
Raising of funds
Promotional expenditure
Objective of finance function
Profit maximization
Profit maximization
Treasurer
Cost management
Internal Auditing
Finance Controller
Internal Auditing
International Finance
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
True/False
Question
Corporate entity
Reorder level is calculated as Maximum Lead Time * Minimum Usage
Correct Answer False
Your Answer
False
Select The Blank
Question
According to the provisions of the companies Act 1956, ________ can declare the interim
dividend
Correct Answer Board of Directors
Your Answer
Board of Directors
Select The Blank
Question
The ________ is used as the capitalisation rate to decide the amount of capitalisation in
case of a new concern
Correct Answer cost of capital
Your Answer
cost of capital
Multiple Choice Single Answer
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
Correct Answer Bonneville and Dewey
Your Answer
True/False
Question
Kenneth Midgley and Ronald Burns
Debt equity ratio is alternately called Leverage ratio
Correct Answer True
Your Answer
True/False
Question
True
Credit rating does not create any legal relationship between the rating agency and the
investor
Correct Answer True
Your Answer
True
Select The Blank
Question
Modigliani - Miller approach closely resembles ________ approach
Correct Answer Net operating income
Your Answer
Net Profitability
Multiple Choice Multiple Answer
Question
The letter of credit may be
Correct Answer Revocable letter of credit , Confirmed letter of credit
Your Answer
Revocable letter of credit , Permanent letter of credit , Temporary letter of credit
Select The Blank
Question
The ________ collections may be useful for reducing the postal float as well as bank float
Correct Answer Decentralised
Your Answer
True/False
Question
Centralised
Carrying cost of inventory includes cost incurred for preparation of purchase requisition
Correct Answer False
Your Answer
True
Multiple Choice Multiple Answer
Question
Unsecured loans includes
Correct Answer Fixed Deposit , Inter corporate unsecured deposits
Your Answer
Loans and Advances from Banks , Inter corporate unsecured deposits
Multiple Choice Single Answer
Question
The comparison of ratios of the same organisation for different years is termed as
Correct Answer Intra-firm comparison
Your Answer
True/False
Question
Intra-firm comparison
Semi-variable cost is the cost which varies in direct proportion to the sales revenue
Correct Answer False
Your Answer
False
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
Implicit cost
True/False
Question
The basic limitation of the capital budgeting process lies in this fact that it involves
various estimations
Correct Answer True
Your Answer
True
Select The Blank
Question
The projects having Profitability index of more than ________ will be accepted
Correct Answer one
Your Answer
five
Multiple Choice Multiple Answer
Question
Shortcomings of Debentures from Investor's point of view
Correct Answer The interest on debentures is fully taxable , They do not carry the right to vote ,
Debenture prices are vulnerable to increase in interest rates
Your Answer
They do not carry the right to vote , Debenture prices are vulnerable to increase in
interest rates
Multiple Choice Single Answer
Question
From company's point of view return paid on own capital is
Correct Answer is not a tax deductible expenditure
Your Answer
calculated from Profit before tax
Select The Blank
Question
One of the tools available to the company to ensure the maintenance of ________ cash
balance is to prepare cash budget
Correct Answer Optimum
Your Answer
Optimum
Select The Blank
Question
________ is an example of Intangible asset
Correct Answer Goodwill
Your Answer
Goodwill
Multiple Choice Single Answer
Question
A project involves the investment of Rs. 5,00,000 which yields profit after depreciation
and tax Rs. 2,30,000. At the end of 5 years, the machineries in the project can be sold for
Rs. 40,000. Find the Average rate of return
Correct Answer 0.1
Your Answer
True/False
Question
0.25
Secured Premium notes did not carry any interest during the first three years
Correct Answer True
Your Answer
True
Select The Blank
Question
The most crucial financial decisions of the organisation are taken by ________
Correct Answer Board of Directors
Your Answer
Financial Manager
Multiple Choice Multiple Answer
Question
Gross Profit is ascertained by the difference between sales and normally the following
expenses
Correct Answer Cost of Purchases , Expenses related to Purchases , Stock Adjustments
Your Answer
Cost of Purchases , Expenses related to Purchases
Multiple Choice Multiple Answer
Question
The cost of managing inventory includes
Correct Answer Ordering cost , Carrying cost
Your Answer
Maintenance cost , Ordering cost , Carrying cost
Multiple Choice Multiple Answer
Question
Measurement of cost of capital can be done through
Correct Answer Cost of Debt , Cost of Preference shares , Cost of Equity shares
Your Answer
Cost of Equity shares , Cost of other liabilities