SCDL Assignments : Financial Management 7
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
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
Select The Blank Question
Preparation of Financial plan at the time of company promotion is ________ duty of the finance executive
Correct Answer
Non-recurring
Your Answer Non-recurring
Multiple Choice Single Answer
Question The ratio which indicates the extent to which the Owners' funds
are sunk in different kinds of assets is termed as
Correct Answer Proprietory ratio
Your Answer Proprietory ratio
Select The Blank
Question ________ is the summary of cash book or Receipts and Payments
Statement
Correct Answer Cash flow statement
Your Answer Cash flow statement
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 True
True/False
Question When a company issues bonus shares, reserves of the company get reduced and share capital of the company increases
Correct Answer True Your Answer True
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 , Management committee
Multiple Choice Multiple Answer Question The
approaches to compute the cost of equity shares are
Correct Answer Dividend / Price Approach , Realised Yield Approach , Earnings / Price
Approach
Your Answer Dividend / Price Approach , Realised Yield
Approach , Earnings / Price Approach
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
True/False
Question
Before the company can pay the dividend on Equity shares, it is bound to
pay the dividend on Preference shares
Correct Answer True Your Answer True
Multiple Choice Multiple Answer
Question Uses of financial leverage are
Correct Answer It acts as a guideline in setting maximum limit upto which the company should use the debt capital , It gives an indication regarding the extent to which
Earning per share may be affected due to every change in Earning before
Interest and tax
Your Answer It acts as a guideline in setting maximum limit upto which the company should use the debt capital , It gives an indication regarding the extent to which Earning per share may be affected due to every change in Earning before Interest and tax , It provides useful guidelines for determining the optimal capital structure
Multiple Choice Multiple Answer
Question The methods which consider the risk in capital budgeting decision are
Correct Answer Informal method , Risk adjusted discounting rate , Certainty-Equivalent approach
Your Answer Informal method , Risk adjusted discounting rate , Certainty-Equivalent approach
Select The Blank
Question Profit after taxes can be distributed among the owners of the company by way of ________
Correct Answer dividend
Your Answer dividend
Multiple Choice Single Answer
Question Interest Coverage ratio is calculated as
Correct Answer Profit before Interest and taxes / Interest charges
Your Answer Profit before Interest and taxes / Interest charges
True/False
Question Internal rate of return indicates that the discounting rate at
which net present value is zero
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
True/False
Question Semi-variable cost is the cost which varies in
direct proportion to the sales revenue
Correct Answer False Your
Answer False
True/False
Question One of the most common methods to
monitor the receivables on macro basis is to calculate age-wise analysis of
receivables
Correct Answer False
Your Answer False
Multiple Choice Single Answer
Question Tangible net worth means
Correct Answer share capital plus free reserves
Your Answer Current assets less Current liabilities
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
True/False
Question Solvency ratios consists of current ratio and Price earnings ratio
Correct Answer False Your Answer False
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
Select The Blank Question
For the selection of the period for which capital expenditure budget should be prepared , ________ a period may not be useful
Correct Answer Too long
Your Answer Too long
Multiple Choice Multiple Answer
Question The shares of the company
can be bought back out of the following amounts
Correct Answer Free Reserves of the company , Share Premium Account of the company , Proceeds of issue of any shares or other specified securities
Your Answer
Free Reserves of the company , Share Premium Account of the company
Multiple Choice Single Answer
Question From the following data, work out the Economic order quantity : Annual Demand : 5000 units, Ordering cost Rs. 60 per order, Price per unit Rs. 100, Inventory carrying cost is 15% on average inventory
Correct Answer 200 units
Your Answer 200 units
Multiple Choice Single Answer
Question Increase in average credit period to maintain sales in view of falling demand can be indicated by
Correct Answer Debtors turnover ratio Your Answer Debtors turnover ratio
Match The Following
Question Correct Answer Your Answer Increase
in current liabilitiesdecreases working capitalincreases working
capitalIncrease in liabilitiesinflow of fundsinflow of fundsDecrease in
liabilitiesoutflow of fundsoutflow of fundsIncrease in current
assetsincreases working capitalcash flow analysis
Select The Blank
Question The situation of watered capital may arise due to ________
Correct Answer Company pays higher price to the vendors of the assets transferred
Your Answer Company pays higher price to the vendors of the assets
transferred
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
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
Select The Blank Question
Preparation of Financial plan at the time of company promotion is ________ duty of the finance executive
Correct Answer
Non-recurring
Your Answer Non-recurring
Multiple Choice Single Answer
Question The ratio which indicates the extent to which the Owners' funds
are sunk in different kinds of assets is termed as
Correct Answer Proprietory ratio
Your Answer Proprietory ratio
Select The Blank
Question ________ is the summary of cash book or Receipts and Payments
Statement
Correct Answer Cash flow statement
Your Answer Cash flow statement
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 True
True/False
Question When a company issues bonus shares, reserves of the company get reduced and share capital of the company increases
Correct Answer True Your Answer True
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 , Management committee
Multiple Choice Multiple Answer Question The
approaches to compute the cost of equity shares are
Correct Answer Dividend / Price Approach , Realised Yield Approach , Earnings / Price
Approach
Your Answer Dividend / Price Approach , Realised Yield
Approach , Earnings / Price Approach
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
True/False
Question
Before the company can pay the dividend on Equity shares, it is bound to
pay the dividend on Preference shares
Correct Answer True Your Answer True
Multiple Choice Multiple Answer
Question Uses of financial leverage are
Correct Answer It acts as a guideline in setting maximum limit upto which the company should use the debt capital , It gives an indication regarding the extent to which
Earning per share may be affected due to every change in Earning before
Interest and tax
Your Answer It acts as a guideline in setting maximum limit upto which the company should use the debt capital , It gives an indication regarding the extent to which Earning per share may be affected due to every change in Earning before Interest and tax , It provides useful guidelines for determining the optimal capital structure
Multiple Choice Multiple Answer
Question The methods which consider the risk in capital budgeting decision are
Correct Answer Informal method , Risk adjusted discounting rate , Certainty-Equivalent approach
Your Answer Informal method , Risk adjusted discounting rate , Certainty-Equivalent approach
Select The Blank
Question Profit after taxes can be distributed among the owners of the company by way of ________
Correct Answer dividend
Your Answer dividend
Multiple Choice Single Answer
Question Interest Coverage ratio is calculated as
Correct Answer Profit before Interest and taxes / Interest charges
Your Answer Profit before Interest and taxes / Interest charges
True/False
Question Internal rate of return indicates that the discounting rate at
which net present value is zero
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
True/False
Question Semi-variable cost is the cost which varies in
direct proportion to the sales revenue
Correct Answer False Your
Answer False
True/False
Question One of the most common methods to
monitor the receivables on macro basis is to calculate age-wise analysis of
receivables
Correct Answer False
Your Answer False
Multiple Choice Single Answer
Question Tangible net worth means
Correct Answer share capital plus free reserves
Your Answer Current assets less Current liabilities
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
True/False
Question Solvency ratios consists of current ratio and Price earnings ratio
Correct Answer False Your Answer False
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
Select The Blank Question
For the selection of the period for which capital expenditure budget should be prepared , ________ a period may not be useful
Correct Answer Too long
Your Answer Too long
Multiple Choice Multiple Answer
Question The shares of the company
can be bought back out of the following amounts
Correct Answer Free Reserves of the company , Share Premium Account of the company , Proceeds of issue of any shares or other specified securities
Your Answer
Free Reserves of the company , Share Premium Account of the company
Multiple Choice Single Answer
Question From the following data, work out the Economic order quantity : Annual Demand : 5000 units, Ordering cost Rs. 60 per order, Price per unit Rs. 100, Inventory carrying cost is 15% on average inventory
Correct Answer 200 units
Your Answer 200 units
Multiple Choice Single Answer
Question Increase in average credit period to maintain sales in view of falling demand can be indicated by
Correct Answer Debtors turnover ratio Your Answer Debtors turnover ratio
Match The Following
Question Correct Answer Your Answer Increase
in current liabilitiesdecreases working capitalincreases working
capitalIncrease in liabilitiesinflow of fundsinflow of fundsDecrease in
liabilitiesoutflow of fundsoutflow of fundsIncrease in current
assetsincreases working capitalcash flow analysis
Select The Blank
Question The situation of watered capital may arise due to ________
Correct Answer Company pays higher price to the vendors of the assets transferred
Your Answer Company pays higher price to the vendors of the assets
transferred
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