FM assgn :18: Amit Arora
Multiple Choice Multiple Answer
Question Gross Profit can be increased by either
Correct Answer Increased Sales price, Reduced Production cost, Increased Sales price, Production cost
remaining the same , Reduced Production cost, sales price 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
Select The Blank
Question If the amount of interest is considered as a part of expenses, the ________ liability of the
company reduces proportionately
Correct Answer tax
Your Answer current
Multiple Choice Multiple Answer
Question The sources of cash are
Correct Answer Cash from operations, sale of machinery, Issue of new shares
Your Answer Cash from operations , sale of machinery , Issue of new shares
Select The Blank
Question In case of Mortgage, the party who transfers the interest is called ________
Correct Answer Mortgager
Your Answer Mortgagee
Select The Blank
Question Private limited company and Public limited company are the companies based on the
classification of ________
Correct Answer Number of members
Your Answer Control
True/False
Question The Stock Dividends are more expensive to administer as compared to cash dividends
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question Earnings / Price Approach to compute cost of equity shares is objected on the following
grounds
Correct Answer 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
Your Answer This presupposes that an investor looks forward only to receive dividend on equity shares
which may not be correct , 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
Match The Following
Question Correct Answer Your Answer
Increase in liabilities inflow of funds inflow of funds
Decrease in liabilities outflow of funds outflow of funds
Increase in current assets increases working capital decreases working capital
Increase in current liabilities decreases working capital increases working capital
Multiple Choice Multiple Answer
1
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 Modigliani - Miller approach closely resembles ________
approach
Correct Answer Net operating income
Your Answer Net Profitability
Select The Blank
Question Factoring indicates the relationship between ________ and
a business organisation
Correct Answer Financial institutions
Your Answer Financial institutions
True/False
Question In an organisation, Dividend distribution is the function
of a Finance Controller
Correct Answer False
Your Answer True
Multiple Choice Single Answer
Question Registered Debentures are those
Correct Answer which can be transferred to another person only
through the company
Your Answer which can be transferred to another person only through
the company
Select The Blank
Question The fixed assets are expressed at ________
Correct Answer Cost - Depreciation
Your Answer Market value - Depreciation
Multiple Choice Multiple Answer
Question The causes of undercapitalisation are
Correct Answer Company following too conservative policy for paying
the dividends , Future earnings may be underestimated
Your Answer Company following too conservative policy for paying
the dividends , Future earnings may be underestimated
Multiple Choice Multiple Answer
Question Disadvantages of Preference shares from shareholders point
of view
Correct Answer Preference Dividend rate is rather modest , Price
fluctuation preference shares is greater than price fluctuation of
debentures , Preference shareholders are vulnerable to arbitrary managerial
actions
Your Answer Preference shareholders are vulnerable to arbitrary
managerial actions , They enjoy the lowest priority on income and assets
of the firm
True/False
Question Under hypothecation mode of security neither the property
not the possession of the goods hypothecated is transferred to the Bank
Correct Answer True
2
Your Answer
True
True/False
Question Introduction of a heavy amount of debt capital in the
capital structure will not only reduce the valuation of the firm but will
also increase the cost of capital
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question Requirement of working capital is low is case of
Correct Answer Infrastructure oriented projects
Your Answer Machine tool industry
True/False
Question Retained earnings or ploughed back profits is one of the
best source of raising long term funds for the company
Correct Answer True
Your Answer False
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 Single Answer
Question The cost which remains constant irrespective of changes in
the sales revenue is termed as
Correct Answer Fixed cost
Your Answer Fixed cost
True/False
Question Internal rate of return considers time value of money
Correct Answer True
Your Answer True
True/False
Question Proprietary ratios is the relationship between owners
funds and total assets
Correct Answer True
Your Answer True
Select The Blank
Question The analytical method of inventory control which aims at
concentrating efforts in those areas where attention is required most is
termed as ________
Correct Answer ABC Analysis
Your Answer ABC Analysis
True/False
Question Overdraft is given by the bank for a very short period of
time, at the end of which the company is supposed to repay the same
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question The Proprietary concern is owned by
3
Correct Answer Only one person
Your Answer Only one person
True/False
Question The approved credit rating agencies prevailing in the
country are promoted by the government controlled organisations
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question The Pay Bank period is calculated as
Correct Answer Cash outlay / Annual cash inflow
Your Answer Cash outlay / Annual cash inflow
Select The Blank
Question Financial Statement is useful to ________ in order to
enable to decide whether to retain the investment in the company
Correct Answer Shareholders
Your Answer Shareholders
Multiple Choice Single Answer
Question Revenue reserves represents
Correct Answer Accumulated retained earnings from the profits of
normal business operations
Your Answer Accumulated retained earnings from the profits of
normal business operations
Multiple Choice Single Answer
Question Capital cost is
Correct Answer cost on the use of additional capital to support
credit sales
Your Answer additional expenses on the creation and maintenance of
a credit department
Multiple Choice Single Answer
Question Earnings per share is calculated as
Correct Answer ( Profit after tax - Preference Dividend ) / No. of
equity shares
Your Answer ( Profit after tax - Preference Dividend ) / No. of
equity shares
Multiple Choice Multiple Answer
Question Situation of capital rationing may involve problems in the
form of
Correct Answer Project Indivisibility , Mutually dependent project
, Multi period projects
Your Answer Project Indivisibility , Mutually dependent project ,
Avoidance of larger projects
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 Multiple Answer
4
Question Indicate which of these are Profitability ratios
Correct Answer Operating ratio , Gross Profit ratio
Your Answer Operating ratio , Gross Profit ratio
Multiple Choice Multiple Answer
Question The Economic Order Quantity model is based on the
assumption of
Correct Answer Placing and receiving orders is without any delay ,
Ordering costs and carrying costs associated with the orders are
variable in nature and they behave exactly opposite to each other , The
demand for the material concerned is uniform throughout the year
Your Answer Placing and receiving orders is without any delay ,
Ordering costs and carrying costs associated with the orders are variable
in nature and they behave exactly opposite to each other , The demand
for the material concerned is uniform throughout the year
Multiple Choice Single Answer
Question The assets held by a business which can be converted in
the form of cash or used during the course of normal operations is termed
as
Correct Answer Current assets
Your Answer Current assets
Multiple Choice Single Answer
Question The function of the Bankers to the issue is to
Correct Answer collect the application money on behalf of the
company
Your Answer develop strategies for marketing the issue properly
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 Multiple Answer
Question Advantages of cash flow statement are
Correct Answer Helps in efficient cash management , Discloses the
movements of cash , Discloses the success or failure of cash planning
Your Answer Helps in efficient cash management , Discloses the
movements of cash , Discloses the success or failure of cash planning
Multiple Choice Multiple Answer
Question The depreciation is being charged for the following assets
Correct Answer Plant and Machinery , Building
Your Answer Plant and Machinery , Building , Stock
Match The Following
Question Correct Answer Your Answer
Earnings per share ratio to measure the profits available to the equity
shareholders on a per share basis ratio to measure the profits
available to the equity shareholders on a per share basis
Price earning ratio indicates the price currently being paid in the
stock market for every one rupee of Earning per share indicates the price
currently being paid in the stock market for every one rupee of Earning
5
per share
Operating leverage measures the effect of change in sales quantity on
earnings before interest and taxes measures the effect of change in
sales quantity on earnings before interest and taxes
Financial leverage indicates firm's ability to use fixed financial
charges to magnify the effects of changes in earning before interest and
tax on the firm's earning per share indicates firm's ability to use fixed
financial charges to magnify the effects of changes in earning before
interest and tax on the firm's earning per share
Select The Blank
Question The projects having Profitability index of more than
________ will be accepted
Correct Answer one
Your Answer one
Multiple Choice Multiple Answer
Question Shortcomings of Debentures from company's point of view
Correct Answer The debenture interest and capital repayment are
obligatory payments , Debenture financing enhances the financial risk
associated with the firm
Your Answer The debenture interest and capital repayment are
obligatory payments , Debenture financing enhances the financial risk
associated with the firm , They have lowest priority in the event of
liquidation
Multiple Choice Single Answer
Question Interest coverage ratio is useful in indicating the
symptom of
Correct Answer Inability to pay interest
Your Answer Borrowing for short term and investing in long term
assets
True/False
Question Liquid assets includes all current assets except
Inventories and Prepaid expenses
Correct Answer True
Your Answer True
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