SCDL Assignments : Financial Management 10

True/False
Question Accounts Receivable is an example of current assets
Correct Answer True

Your Answer True
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 If the customer fails to pay the amount due from him the legal action should be initiated against the customer after the limitation period is over
Correct Answer False
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 Single Answer
Question The Capital Structure decision mainly refers to the decision of
Correct Answer Financing
Your Answer Financing

True/False
Question Banks or financial institutions granting the term loans are the creditors of the company
Correct Answer True
Your Answer True

Multiple Choice Single Answer
Question A systematic record of the events of the business leading to a presentation of a complete financial picture is known as
Correct Answer Accounting
Your Answer Accounting

Multiple Choice Multiple Answer
Question Proprietory ratio can be calculated as
Correct Answer Total Assets / Owners Funds , Fixed Assets / Owners Funds , Current Assets / Owners Funds
Your Answer Total Assets / Owners Funds

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 External sources of cash are as follows :
Correct Answer Issue of new shares , long term loans , short term borrowings
Your Answer Issue of new shares , long term loans , short term borrowings

SCDL Assignments : Financial Management 10


True/False
Question If Average credit period works out to be more than the Normal credit period, it indicates efficiency on the part of collection department of the company in collecting the dues from the customers
Correct Answer False
Your Answer False

Select The Blank
Question As per the II method suggested by the Tandon committee, the borrower should finance ________ of current assets out of long term funds and the banks provide the remaining finance
Correct Answer 0.25
Your Answer 0.25

True/False
Question Internal rate of return is difficult to use , calculate and understand
Correct Answer True
Your Answer True

True/False
Question As per the SEBI guidelines revaluation reserve can be used for issue of bonus share
Correct Answer False
Your Answer False

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 Single Answer
Question Own capital of the company includes
Correct Answer Shares
Your Answer Shares

Multiple Choice Multiple Answer
Question The advantages of stable Dividend policy are
Correct Answer Credit standing of the company in the market increases , Share price of the company increases , Enjoys Confidence of the shareholders
Your Answer Credit standing of the company in the market increases , Share price of the company increases , Enjoys Confidence of the shareholders

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

Multiple Choice Single Answer
Question Collection cost in connection with accounts receivables involves
Correct Answer Administrative cost
Your Answer Administrative cost

Select The Blank
Question The most crucial financial decisions of the organisation are taken by ________
Correct Answer Board of Directors
Your Answer Board of Directors

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

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 main function of finance under the traditional approach comprises of
Correct Answer Procurement of funds
Your Answer Procurement of funds

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

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