FM assgn :32:
25. The ratios which help the present or future stockholder in assessing the value of his investment is
known as
a)
b)
c)
d)
Leverage ratios
Ownership ratios
Profitability ratios
Liquidity ratios
40. The collection programme of the firm consists of
a)
b)
c)
d)
Maintaining the state of receivables
Dispatch of letters to customers whose due date is approaching
Telegraphic and Telephonic advice to customers around the due date
Maintaining record of bills payable
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Select The Blank
Question Factoring indicates the relationship between ________ and a business organisation
Correct Answer Financial institutions
Your Answer Financial institutions
True/False
Question Inadequate provision for depreciation may be the cause of overcapitalisation
Correct Answer True
Your Answer True
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 Multiple Answer
Question Limitations of cash flow analysis are
Correct Answer It cannot be equated with the income statement , Cannot replace the fund flow
statement , Dose not represent real liquid position
Your Answer Cannot replace the fund flow statement , Dose not represent real liquid position
Multiple Choice Multiple Answer
Question Disadvantages of factoring are
Correct Answer The financial burden on the company increases , It may be considered to be a symptom
of financial weakness on the part of the selling company , In Indian circumstances, factoring is mainly
with-recourse factoring. The risk of non-payment on the part of customer is borne by the selling firm. This
restricts its popularity
Your Answer It may be considered to be a symptom of financial weakness on the part of the selling
company , In Indian circumstances, factoring is mainly with-recourse factoring. The risk of non-payment
on the part of customer is borne by the selling firm. This restricts its popularity
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 False
True/False
Question 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 rate at which an organisation must pay to the suppliers of capital for the use of their
funds is termed as
Correct Answer cost of capital
Your Answer cost of capital
True/False
Question A high degree of operating leverage means that the component of fixed cost is too high in the
overall cost structure
Correct Answer True
Your Answer True
Select The Blank
Question ________ of the company should authorise the company to buy back its own shares
Correct Answer Articles of Association
Your Answer Articles of Association
Multiple Choice Single Answer
Question Tax paid is
Correct Answer Application of funds
Your Answer Application of funds
Multiple Choice Multiple Answer
Question The factor may provide the following services to the client
Correct Answer It may undertake the credit analysis of the customers of the client , It will undertake
the various book-keeping and accounting activities in relation to the receivables management , It
undertakes the responsibility of following up with the customers for the purpose of making the collection
from the customer
Your Answer It may undertake the credit analysis of the customers of the client , It will undertake the
various book-keeping and accounting activities in relation to the receivables management , It undertakes
the responsibility of following up with the customers for the purpose of making the collection from the
customer
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
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 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
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 Bonneville and Dewey
Match The Following
Question Correct Answer Your Answer
Dahejia committee to examine the extent to which credit needs of industry and trade are likely to be
inflated and how such trends could be checked to examine the extent to which credit needs of industry
and trade are likely to be inflated and how such trends could be checked
Chhore committee to review mainly the system of cash credit management policy by banks to review
mainly the system of cash credit management policy by banks
Marathe committee to review the credit authorization scheme to review the credit authorization scheme
Nayak committee to recognize the contribution made by the SSI sector to the economy to recognize the
contribution made by the SSI sector to the economy
Multiple Choice Multiple Answer
Question The importance of various items of inventory may be decided on the following factors
Correct Answer Amount of investment in inventory , Value of material consumption , Critical nature of
inventory items
Your Answer Amount of investment in inventory , Value of material consumption , Critical nature of
inventory items
Multiple Choice Single Answer
Question A decrease in current assets
Correct Answer decreases working capital
Your Answer increases working capital
Multiple Choice Single Answer
Question The proxy is
Correct Answer a person appointed by the equity shareholder to attend the annual general meeting in
his absence and can vote in the meeting
Your Answer a person appointed by the equity shareholder to attend the annual general meeting in his
absence and can vote in the meeting
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 The basic objective of ________ management is to reduce the operating cash requirement to
the minimum possible extent without affecting the routine transactions.
Correct Answer Cash
Your Answer Cash
True/False
Question The cost of the factor is slightly higher than the interest which the client would have paid had
he borrowed the funds from the Bank
Correct Answer True
Your Answer False
Select The Blank
Question ________ in assets involves inflow of funds
Correct Answer Decrease
Your Answer Decrease
Select The Blank
Question Liquidity ratios indicate the ________ position of the organisation
Correct Answer Short term
Your Answer Short term
Match The Following
Question Correct Answer Your Answer
Undue increase in Gross Profit ratio Over-valuation of closing stock Over-valuation of closing stock
Undue decrease in Gross Profit ratio Under-valuation of closing stock Under-valuation of closing stock
Gross Profit ratio Indicates the relation between production cost and Sales Indicates the relation between
production cost and Sales
Net Profit ratio Indicates that portion of sales available to the owners after consideration of all types of
expenses and cost Indicates that portion of sales available to the owners after consideration of all types of
expenses and cost
Multiple Choice Single Answer
Question Technical terminology used to invest in the current assets being
Correct Answer Working Capital Management
Your Answer Working Capital Management
True/False
Question Reorder level is calculated as Maximum Lead Time * Minimum Usage
Correct Answer False
Your Answer False
Multiple Choice Single Answer
Question The company can raise the funds in the form of Public deposits which can be used
Correct Answer For any purpose
Your Answer For any purpose
True/False
Question Fixed Assets turnover ratio is the relationship between fixed assets and owner's funds
Correct Answer False
Your Answer False
Multiple Choice Single Answer
Question Live Stock is an example of
Correct Answer Fixed Asset
Your Answer
Fixed Asset
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 Assuming the current ratio is 2, in which cases would the current ratio decline
Correct Answer Purchase of fixed Assets , Borrow Money on an Interest bearing promissory note
Your Answer Purchase of fixed Assets , Borrow Money on an Interest bearing promissory note
Select The Blank
Question In ABC analysis C class consist of ________.
Correct Answer a very large number of items which are less important
Your Answer a very large number of items which are less important
Select The Blank
Question Retained earnings is a source of ________ finance
Correct Answer Internal
Your Answer Internal
True/False
Question The assumptions of capital structure theories is that Operating earnings are not expected to
grow
Correct Answer True
Your Answer True
Select The Blank
Question Under ________, it is not only necessary to decide profitable investments but also necessary
to rank the acceptable proposals according to their relative profitabilities
Correct Answer Capital rationing
Your Answer Capital rationing
Multiple Choice Multiple Answer
Question The recurring duties of Finance Executive includes
Correct Answer Working Capital Management , Fixed Assets management , Control of funds
Your Answer Working Capital Management , Fixed Assets management , Control of funds
Multiple Choice Single Answer
Question The effect of Purchase of building against a long term loan payable on funds ( cash concept )
is
Correct Answer No change in cash
Your Answer No change in cash
Multiple Choice Multiple Answer
Question The classification of ratios under miscellaneous group includes
Correct Answer Earnings per share , Dividend Payment ratio
Your Answer Earnings per share , Dividend Payment ratio
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
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 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
True/False
Question Inventory is the intermediate stage between purchase of raw materials and consumption of
raw materials
Correct Answer True
Your Answer True
True/False
Question Funds flow statements and cash flow statement are one and the same
Correct Answer False
Your Answer False
Multiple Choice Single Answer
Question The Proprietary concern is owned by
Correct Answer Only one person
Your Answer Only one person
Select The Blank
Question Modigliani - Miller approach closely resembles ________ approach
Correct Answer Net operating income
Your Answer Net operating income
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