Financial Management 1

Multiple Choice Multiple Answer
Question Advantages of letter of credit to the Importer
Correct Answer the importer can bargain for better trading terms , he is assured to get proper supply of the goods
Your Answer the importer can bargain for better trading terms , he is assured to get proper supply of the goods
Select The Blank
Question ________ can be issued for the maturity period of 15 days to one year
Correct Answer Commercial Paper

Your Answer Commercial Paper


Select The Blank
Question ________ in assets involves inflow of funds
Correct Answer Decrease

Your Answer Decrease


Select The Blank
Question In case of Mortgage, the party who transfers the interest is called ________
Correct Answer Mortgager

Your Answer Mortgager


Multiple Choice Multiple Answer
Question Top management who can accept or reject capital expenditure proposals may be in the form of
Correct Answer Board of Directors , Executive committee , Management committee
Your Answer Board of Directors , Executive committee


Select The Blank
Question The economical use of the asset is permitted by the lessor on the payment of periodical amount which is in the form of ________.
Correct Answer Lease rent

Your Answer Lease rent


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 To meet the working capital needs of the company, banks may grant the working capital term loans for a period of ________
Correct Answer 3 to 7 years

Your Answer 3 to 7 years


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 , Multiplicity of the rating agencies can be considered to be the limitation of the credit rating


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 , Multi period projects


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 Rank the projects according to some measure of profitability , Select projects in the descending order of profitability till the available funds are exhausted


Multiple Choice Multiple Answer
Question The sources of cash are
Correct Answer Long term loans , cash from other sources
Your Answer Long term loans , cash from other sources


Multiple Choice Single Answer
Question Feature of term loan is
Correct Answer They are required to be repaid during the lifetime of the company at the predecided intervals say monthly, quarterly, yearly etc.
Your Answer They are required to be repaid during the lifetime of the company at the predecided intervals say monthly, quarterly, yearly etc.


Multiple Choice Single Answer
Question The main function of finance under the traditional approach comprises of
Correct Answer Procurement of funds
Your Answer Working Capital management


Multiple Choice Multiple Answer
Question Unsecured loans includes
Correct Answer Fixed Deposit , Inter corporate unsecured deposits
Your Answer Fixed Deposit , Inter corporate unsecured deposits


True/False
Question Reserve Bank of India appointed the Marathe Committee with the intention to recognize the contribution made by the SSI Sector to the economy
Correct Answer False

Your Answer False


Select The Blank
Question The projects having Profitability index of more than ________ will be accepted
Correct Answer one

Your Answer one


Select The Blank
Question A wrong decision in respect of capital expenditure proposals may disturb the entire ________ structure of the organisation
Correct Answer financial

Your Answer financial


True/False
Question Solvency ratios consists of current ratio and Price earnings ratio
Correct Answer False

Your Answer False


Multiple Choice Single Answer
Question Net Profit is the difference between Sales and
Correct Answer All types of cost

Your Answer All types of cost


Select The Blank
Question The project having ________ profitability index will be ranked highest
Correct Answer highest

Your Answer highest


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 Intercorporate deposit


True/False
Question Internal rate of return considers time value of money
Correct Answer True

Your Answer True


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


Multiple Choice Multiple Answer
Question Debt Service coverage ratio may be considered to be one of the most important ratios calculated by the
Correct Answer Bankers , Financial Institutions
Your Answer Bankers , Financial Institutions


Select The Blank
Question Break even point is that level of sales revenue at which there is ________
Correct Answer no profit no loss

Your Answer no profit no loss


Select The Blank
Question Financial Institution plays the role of ________ in factoring service offered
Correct Answer Factor

Your Answer Factor


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

Your Answer True


True/False
Question The lessor is the nominal owner of the asset as the possession and economic use of the asset rests with the lessee
Correct Answer True

Your Answer False


Multiple Choice Single Answer
Question Composite cost is calculated as
Correct Answer Total weighted cost / Total weights
Your Answer Total weighted cost / Total weights


True/False
Question Cash flow statement is important financial tool for the management
Correct Answer True

Your Answer True


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


Multiple Choice Single Answer
Question The technique which tries to find out the present value of Re 1 if received or spent after n years, provided that the interest rate of I can be earned on investment is termed as
Correct Answer Discounting
Your Answer Discounting


Multiple Choice Multiple Answer
Question The committees appointed by the Reserve Bank of India to control the working capital financing
Correct Answer Tandon committee , Marathe committee , Nayak committee
Your Answer Tandon committee , Marathe committee , Nayak committee


Multiple Choice Multiple Answer
Question The patterns of Dividend policy are
Correct Answer Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy
Your Answer Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy
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


Multiple Choice Single Answer
Question An increase in the share premium account is
Correct Answer Source of funds

Your Answer Source of funds


True/False
Question Ordering cost of inventory includes cost incurred for insurance
Correct Answer False

Your Answer False


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 Single Answer
Question Which of the following assets get generated during course of operations or get utilized within one year
Correct Answer Current assets

Your Answer Current assets


Match The Following
Question Correct Answer Your Answer
Mortgage Mode of security pertains to immovable properties like land and building Mode of security pertains to immovable properties like land and building
Hypothecation Neither the property not the possession of the goods is transferred to the bank Neither the property not the possession of the goods is transferred to the bank
Pledge Possession of the goods is with the bank Possession of the goods is with the bank
Lien Bank has a right to retain the goods belonging to the company until the debt due to the bank is paid Bank has a right to retain the goods belonging to the company until the debt due to the bank is paid


Match The Following
Question Correct Answer Your Answer
Internal rate of return less than cost of capital Project rejected Project rejected
Internal rate of return breakeven rate of borrowing for the company breakeven rate of borrowing for the company
Profitability Index ratio between total discounted cash inflows and total discounted cash outflows ratio between total discounted cash inflows and total discounted cash outflows
Profitability Index more than one Project accepted Project accepted


Multiple Choice Multiple Answer
Question The recommendations of the Dahejia committee included
Correct Answer the banks should not only be security oriented but they should take into consideration total financial position of the client , all cash credit accounts with banks should be bifurcated in two categories
Your Answer the banks should not only be security oriented but they should take into consideration total financial position of the client , all cash credit accounts with banks should be bifurcated in two categories


True/False
Question Re-order level is the highest level of inventory to be maintained above which the inventory should not rise
Correct Answer False

Your Answer False


Multiple Choice Single Answer
Question The objective of Working Capital management is to ensure
Correct Answer Optimum investment in current assets
Your Answer Optimum investment in current assets


Multiple Choice Single Answer
Question An increase in current liabilities
Correct Answer decreases working capital
Your Answer decreases working capital


True/False
Question Net Present value presupposes that the cash inflows can be reinvested to yield the return equivalent to the Internal rate of return
Correct Answer False
Your Answer False


Multiple Choice Multiple Answer

Question The causes of undercapitalisation are
Correct Answer
Future earnings may be underestimated , Company
following too conservative policy for paying the dividends
Your Answer
Company following too conservative policy for paying the dividends ,
Future earnings may be underestimated


Select The Blank Question
Subscription list of a public issue of shares shall be kept open for minimum
________ working days
Correct Answer 3

Your Answer 3


Select The Blank

Question
________ in liabilities involves outflow of funds
Correct Answer Decrease
Your Answer Decrease


Multiple Choice Single Answer

Question The Investment decisions are mainly concerned with
Correct Answer Application of funds
Your Answer Application of funds


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 , Attempts should be made
by the company to get the maximum credit for the goods or service
supplied , Avoid early payments


Select The Blank Question
Till the sales revenue reaches the break even point, the company ________
Correct Answer incurs the losses
Your Answer incurs the losses

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