FM assgn :39: Suresh
Multiple Choice Multiple Answer
Question
Advantages of Net Present value is
Correct Answer It considers time value of money , It considers cash inflows from the project throughout
its life
Your Answer
It considers time value of money , It considers cash inflows from the project throughout
its life
Select The Blank
Question
The following data are extracted from the published accounts of a company : Sales Rs.
38,00,000/-, Net Profit after tax Rs. 2,50,000/-, Equity capital Rs. 10,00,000/-,General
Reserve Rs. 6,50,000/-, Rs. Long term debt Rs. 7,00,000/-, Creditors Rs. 6,90,000/-,
Bank credit/short term loan Rs. 2,30,000/-, Fixed Assets Rs. 17,50,000/-, Inventories
Rs. 7,25,000/-, Other Current assets Rs. 5,25,000/-. The Fixed assets turnover ratio is
________ .
Correct Answer 2.17
Your Answer
2.17
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
Debenture financing enhances the financial risk associated with the firm , They have
lowest priority in the event of liquidation
Multiple Choice Multiple Answer
Question
The trading Account consists of the following items
Correct Answer Purchases , Closing Stock
Your Answer
Purchases , Closing Stock
Multiple Choice Single Answer
Question
Equity Warrants are
Correct Answer where the holders are entitled to purchase the equity shares at a specific price during
the specified period
Your Answer
where the holders are entitled to purchase the equity shares at a specific price during
the specified period
Select The Blank
Question
Cost management is the function of a ________.
Correct Answer Treasurer
Your Answer
Finance manager
Select The Blank
Question
In ABC analysis A class consist of ________.
Correct Answer only a small percentage of total number of items handled but are most important in
nature
Your Answer
only a small percentage of total number of items handled but are most important in
nature
Select The Blank
Question
Redemtion of shares/debentures is categorised under ________
Correct Answer Non-operating cash outflow
Your Answer
Non-operating cash outflow
True/False
Question
The evaluation of various proposals of capital expenditure should be done as rationally
as possible
Correct Answer True
Your Answer
True/False
Question
True
Fixed Assets turnover ratio is the relationship between fixed assets and owner's funds
Correct Answer False
Your Answer
False
True/False
Question
Internal rate of return can be computed even in the absence of the knowledge about
the firm's cost of capital
Correct Answer True
Your Answer
True
Multiple Choice Multiple Answer
Question
The following techniques can be used to delay cash payments
Correct Answer Payments can be made from a bank which is distant from the bank of the company to
which payment is to be made , Attempts should be made by the company to get the
maximum credit for the goods or service supplied , Avoid early payments
Your Answer
Payments can be made from a bank which is distant from the bank of the company to
which payment is to be made , Insist upon payment in the form of demand draft, letters
of credit , Attempts should be made by the company to get the maximum credit for the
goods or service supplied , Avoid early payments
True/False
Question
Debt equity ratio is alternately called Leverage ratio
Correct Answer True
Your Answer
True
Match The Following
Question
Correct Answer
Your Answer
Recurring duties of finance
Raising of funds
Raising of funds
executive
Objective of finance function
Profit maximization
Profit maximization
Treasurer
Cost management
Cost management
Finance Controller
Internal Auditing
Internal Auditing
Select The Blank
Question
In financial terms, the operating profit earned by the company is also referred to as
________
Correct Answer Profit before Interest and Taxes
Your Answer
Profit before Interest and Taxes
True/False
Question
Capital budgeting process involves the estimation of various future aspects regarding
future cash inflows, life of the project etc.
Correct Answer True
Your Answer
True
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 primarily based upon the past performance whereas the future prospects
should be given more importance while deciding the credit rating , It only considers
equity shares , 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
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
Increase in cash
Multiple Choice Single Answer
Question
The effect of Bonus paid in the form of fully paid shares on funds ( cash concept ) is
Correct Answer No change in cash
Your Answer
No change in cash
Select The Blank
Question
Suggestions made by the Tandon committee regarding the information system were
accepted by Reserve Bank of India and were made applicable to all the borrowers
having the overall banking limits of more than Rs.________
Correct Answer 1 crore
Your Answer
1 crore
Match The Following
Question
Correct Answer
Your Answer
Advantage of Net present value
considers cash inflows from the
project throughout its life
presupposes that the cash inflows
can be reinvested immediately to
yield the return equivalent to the
Internal rate of return
Disadvantage of Accounting rate
of return
uses profits after depreciation and uses profits after depreciation and
taxes and not the cash inflows for taxes and not the cash inflows for
evaluating the projects
evaluating the projects
Disadvantage of Pay back period
ignores time value of money
Advantage of Discounted Pay back considers time value of money
period
can be computed even in the
absence of the knowledge about
the firm's cost of capital
considers cash inflows from the
project throughout its life
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
Select projects in the descending order of profitability till the available funds are
exhausted , Select projects in the ascending order of profitability till the available funds
are exhausted , Calculate the net present value
Multiple Choice Single Answer
Question
Cash Budget is
Correct Answer the
the
Your Answer
the
the
statement showing the various estimated sources of cash receipts on one hand and
various applications of cash on another hand
statement showing the various estimated sources of cash receipts on one hand and
various applications of cash on another hand
Multiple Choice Single Answer
Question
Own capital of the company includes
Correct Answer Shares
Your Answer
Shares
Multiple Choice Single Answer
Question
Inventory turnover ratio is a measure to discover
Correct Answer The possible trouble in the form of overstocking or overvaluation
Your Answer
The possible trouble in the form of overstocking or overvaluation
Multiple Choice Single Answer
Question
A long term creditor is interested in determining whether his claims are adequately
secured. Which accounting ratio will be used by the creditors
Correct Answer Debt Service coverage ratio
Your Answer
Debt Service coverage ratio
Select The Blank
Question
Continuous verification of physical stock to ensure that the physical balance and the
book balance tallies is carried under ________.
Correct Answer Perpetual Inventory system
Your Answer
Perpetual Inventory system
True/False
Question
Turnover ratios indicate the efficiency of the organisation to use the various kinds of
assets by converting them in the form of Sales
Correct Answer True
Your Answer
False
Multiple Choice Single Answer
Question
The products which are ready for sale in the market are termed as
Correct Answer Finished goods
Your Answer
Finished goods
Multiple Choice Multiple Answer
Question
Under the Business Analysis of the company done by Credit rating and Information
Services of India Ltd. the following points are covered
Correct Answer Existing as well as potential competitors in the industry , Market position of the
company
Your Answer
Existing as well as potential competitors in the industry , Market position of the
company
Multiple Choice Single Answer
Question
The amount of funds borrowed by one company from another company, then it is
termed as
Correct Answer Intercorporate deposit
Your Answer
True/False
Question
Term loan
Public deposits are unsecured borrowings for the company
Correct Answer True
Your Answer
True
Select The Blank
Question
The concept of watered capital is confined to the time of ________ of the company
Correct Answer Promotion
Your Answer
Promotion
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
Select The Blank
Question
________ committee has extended the recommendations of Nayak committee to all the
business organisations
Correct Answer Vaz
Your Answer
Vaz
Multiple Choice Multiple Answer
Question
Fixation of Inventory levels are based on the following propositions
Correct Answer There has to be a constant watch on the actual stock level of various kinds of materials
so that proper action can be taken , The various levels fixed are not fixed on a
permanent basis and are subject to revision regularly
Your Answer
There has to be a constant watch on the actual stock level of various kinds of materials
so that proper action can be taken , The various levels fixed are not fixed on a
permanent basis and are subject to revision regularly , Minimum level indicate the level
above which the actual stock should not exceed
Select The Blank
Question
If the size of the issue is more than Rs. 100 crores, the issue is required to be rated by
at least ________ credit rating agencies
Correct Answer two
Your Answer
two
Multiple Choice Multiple Answer
Question
If Profit maximization is accepted as the only goal of finance function, it is criticised on
the following grounds
Correct Answer Ignores risk factor , Does not consider social obligation , Ignores quality aspect of
benefits associated with a financial course of action
Your Answer
Ignores risk factor , Does not consider social obligation , Ignores quality aspect of
benefits associated with a financial course of action
Multiple Choice Single Answer
Question
The ratio which compares the dividend per share with the market price of the share is
termed as
Correct Answer Dividend yield ratio
Your Answer
Earning per share
Multiple Choice Multiple Answer
Question
The letter of credit may be
Correct Answer Revocable letter of credit , Confirmed letter of credit
Your Answer
Confirmed letter of credit
True/False
Question
A revenue budget has time horizon of just a year and so many things can be reasonably
forecast and estimated
Correct Answer True
Your Answer
True
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
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
Select The Blank
Question
The mathematical expression of ________ is Value of material consumed / Average
inventory held
Correct Answer Inventory turnover
Your Answer
Maximum level
True/False
Question
Undercapitalisation indicates sound financial position and efficient management of the
company
Correct Answer True
Your Answer
False
Multiple Choice Single Answer
Question
Mr. A invested Rs. 10,000 in fixed deposit carrying interest @10% p.a. compounded
annually. Calculate the value of investment after two years
Correct Answer Rs. 12,100
Your Answer
Rs. 12,100
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
Multiple Choice Multiple Answer
Question
Indicate which of these are Profitability ratios
Correct Answer Operating ratio , Gross Profit ratio
Your Answer
Operating ratio , Gross Profit ratio