FM – Match the following
Assgn :1:
01)***a) Term loan => represents a source of debt finance which is generally repayable in more than one
**
year but less than ten years
b) Lessee => Not able to claim depreciation on asset
c) Hirer => Claims the depreciation on the asset
d) Retained earnings => Residue left behind from earnings available to equity shareholders after the
payment of annual dividend
02)***a) Increase in current liabilities => decreases working capital
**
b) Increase in liabilities => inflow of funds
c) Decrease in liabilities => outflow of funds
d) Increase in current assets => increases working capital
Assgn :2:
03)***a) Disadvantage of Accounting rate of return => uses profits after depreciation and taxes and not the
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cash inflows for evaluating the projects
b) Disadvantage of Pay back period => ignores time value of money
c) Advantage of Discounted Pay back period => considers time value of money
d) Advantage of Net present value => considers cash inflows from the project throughout its life
04)***a) The relation of Net Sales and Working Capital => Working Capital turnover ratio
*
b) The ratio which indicates the speed at which the Sundry debtors are converted in the form of cash
=> Debtors turnover ratio
c) The ratio which indicates the efficiency of the organization with which the capital employed is being
utilized => Capital turnover ratio
d)Ratio which measures the profitability of the investments in a firm => Return on Asset
Assgn :3:
05)***a) Earnings per share => ratio to measure the profits available to the equity shareholders on a per
*
share basis
b) Price earning ratio => indicates the price currently being paid in the stock market for every one rupee
of Earning per share
c) Operating leverage => measures the effect of change in sales quantity on earnings before interest
and taxes
d) 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
06)***a) Maximum lead time * Maximum usage => Re-order level
*
b)Reorder level + Re-order quantity - ( Minimum usage * Minimum lead time ) => Maximum level
Danger level
c) Re-order level - ( Normal usage * Normal lead time ) => Minimum level
d) Normal Usage * Lead time for emergency purchases => Danger level
Assgn :4:
07)***a) Financial ratios => Ratios disclosing the financial position or solvency of the firm
*
b) Profitability ratio => Ratios which reflect the final results of business operations
c) Turnover ratios => Ratios measuring the efficiency with which the assets are employed by a firm
d) Overall profitability ratio => Ratios which indicates the percentage of return on the total capital
employed in the business
Assgn :5:
08)* a) Internal rate of return less than cost of capital => Project rejected
b) Internal rate of return => breakeven rate of borrowing for the company
c) Profitability Index => ratio between total discounted cash inflows and total discounted cash outflows
d)Profitability Index more than one => Project accepted
09)***a) Recurring duties of finance executive => Raising of funds
******b) Objective of finance function => Profit maximization
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c) Treasurer => Cost management
d) Finance Controller => Internal Auditing
Assgn :6:
10)***a) Financial leverage =>Earning before interest and tax / ( Earning before interest and tax - Interest )
b)Earnings per share => (Profit after tax - Preference dividend) / Number of Equity shares
c)Price earning ratio => Market Price per share / Earnings per share
d)Operating leverage => Contribution / Earnings before interest and tax
Assgn :9:
11)***a) Credit rating symbol for Commercial Paper of Default by Investment Information and Credit rating
agency => A5
b) Credit rating symbol for Debentures of Inadequate safety by CRISIL => BB
1
c) Credit rating symbol for Fixed Deposits of High risk by CRISIL => FC
d) Credit rating symbol for Fixed Deposits of Adequate safety by Investment Information and Credit
rating agency => MA
12)***a) Safety Stock => below which the actual stock should not be allowed to fall below which the actual
*
stock should not be allowed to fall
b) ABC Analysis => Vital few Trivial Many above which the actual stock should not exceed
c) 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
d) 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
Assgn :10:
13)** a) 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
b) Undue increase in Gross Profit ratio => Over-valuation of closing stock
c) Undue decrease in Gross Profit ratio => Under-valuation of closing stock
d) Gross Profit ratio => Indicates the relation between production cost and Sales
Assgn :11:
14)***a) 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
b) Chhore committee => to review mainly the system of cash credit management policy by banks
c) Marathe committee => to review the credit authorization scheme
d) Nayak committee => to recognize the contribution made by the SSI sector to the economy
Assgn :13:
15)***a) Role of Client =>Sends the invoice copy
*
b) Without Recourses factoring => risk of non-payment assumed by factor
c) With Recourses factoring => risk of non-payment assumed by selling company
d) Role of factor => Follows up
Assgn :14:
16)* a) Contribution => Sales less variable operating cost
b) Operating Profit => Contribution less Fixed Operating cost
c) Fixed cost => remains constant
d) Variable cost => varies in direct proportion to the sales revenue
Assgn :16:
17)***a) Mortgage => Mode of security pertains to immovable properties like land and building
b) Hypothecation => Neither the property not the possession of the goods is transferred to the bank
c) Pledge => Possession of the goods is with the bank
d) Lien => Bank has a right to retain the goods belonging to the company until the debt due to the bank
is paid
Assgn :24:
18)***a) Classification of ratios => Profitability ratio
b) Advantages of Ratio Analysis => It helps in planning and forecasting
b) Limitation of Ratio Analysis => Facts only those which can be expressed in financial terms are
considered
c) Precautions before using ratio analysis technique => Impact of the inflationary conditions of changing
price levels to be taken in account
19)*
a) Legal charges => Miscellaneous expenditure
b) Unclaimed dividend => Current liabilities
c) Risk Capital => Equity Capital
d) Loose tools => Current assets
Assgn :28:
20)* a) Interpretation => Explaining the meaning and significance of the financial data
b) Accounting ratio => It is the relationship expressed in mathematical terms between two accounting
figures related with each other
c)Composite ratios => Ratios based on figures of profit and loss Account as well as the balance sheet
d) Financial ratios => Ratios disclosing the financial position or solvency of the firm
Assgn :35:
21)
a) Risk adjusting discounting rate method of capital budgeting decision => discounting rate is increased
in case of projects involving greater risk
b) Capital rationing => situation where the company has more acceptable proposals requiring a greater
amount of funds
c) Problems relating to situation of capital rationing => Project Indivisibility
d) Informal method of capital budgeting decision => subjective method
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