SCDL Assignment: Financial Management 3

1.Multiple Choice Single Answer

Question The rate at which an organisation must pay to the suppliers of capital for the use of their funds is termed as
Correct Answer cost of capital
Your Answer cost of capital
2.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
3.Select The Blank
Question ________ of the company should authorise the company to buy back its own shares
Correct Answer Articles of Association
Your Answer Articles of Association
4.Multiple Choice Single Answer
Question Tax paid is
Correct Answer Application of funds
Your Answer Application of funds
5.Multiple Choice Multiple Answer
Question The factor may provide the following services to the client
Correct Answer It may undertake the credit analysis of the customers of the client , It will undertake the various bookkeeping and accounting activities in relation to the receivables management , It undertakes the responsibility of
following up with the customers for the purpose of making the collection from the customer
Your Answer It may undertake the credit analysis of the customers of the client , It will undertake the various bookkeeping and accounting activities in relation to the receivables management , It undertakes the responsibility of
following up with the customers for the purpose of making the collection from the customer
6.Multiple Choice Multiple Answer
Question Packing credit facility can take the following form
Correct Answer Pre-shipment Packing credit , Post-shipment Packing credit
Your Answer Pre-shipment Packing credit , Post-shipment Packing credit
7.Select The Blank
Question One of the tools available to the company to ensure the maintenance of ________ cash balance is to
prepare cash budget
Correct Answer Optimum
Your Answer Optimum
8.Select The Blank
Question The comparison of the ratios of one organisation with that of the other organisation is termed as ________
comparison
Correct Answer Inter-firm
Your Answer Inter-firm
9.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

10.Multiple Choice Multiple Answer
Question The importance of various items of inventory may be decided on the following factors
Correct Answer Amount of investment in inventory , Value of material consumption , Critical nature of inventory items
Your Answer Amount of investment in inventory , Value of material consumption , Critical nature of inventory items
11.Multiple Choice Single Answer
Question A decrease in current assets
Correct Answer decreases working capital
Your Answer increases working capital
12.Multiple Choice Single Answer
Question The proxy is
Correct Answer a person appointed by the equity shareholder to attend the annual general meeting in his absence
and can vote in the meeting
Your Answer a person appointed by the equity shareholder to attend the annual general meeting in his absence and
can vote in the meeting
13.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
14.Select The Blank
Question The basic objective of ________ management is to reduce the operating cash requirement to the minimum
possible extent without affecting the routine transactions.
Correct Answer Cash
Your Answer Cash
15.True/False
Question The cost of the factor is slightly higher than the interest which the client would have paid had he borrowed
the funds from the Bank
Correct Answer True
Your Answer False
16.Select The Blank
Question ________ in assets involves inflow of funds
Correct Answer Decrease
Your Answer Decrease
17.Select The Blank
Question Liquidity ratios indicate the ________ position of the organisation
Correct Answer Short term
Your Answer Short term
18.Match The Following
Question Correct Answer Your Answer
Undue increase in Gross Profit ratio -- Over-valuation of closing stock -- Over-valuation of closing stock
Undue decrease in Gross Profit ratio -- Under-valuation of closing stock -- Under-valuation of closing stock
Gross Profit ratio -- Indicates the relation between production cost and Sales -- Indicates the relation between
production cost and Sales
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

19.Multiple Choice Single Answer

Question Technical terminology used to invest in the current assets being
Correct Answer Working Capital Management
Your Answer Working Capital Management
20.True/False
Question Reorder level is calculated as Maximum Lead Time * Minimum Usage
Correct Answer False
Your Answer False
21.Multiple Choice Single Answer
Questions 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
22.True/False
Question Fixed Assets turnover ratio is the relationship between fixed assets and owner's funds
Correct Answer False
Your Answer False
23.Multiple Choice Single Answer
Question Live Stock is an example of
Correct Answer Fixed Asset
Your Answer Fixed Asset
24.Multiple Choice Single Answer
Question The Policy which attracts the shareholders who are willing to devote short term dividend income for long
term capital gains and share in the increased prosperity of the company is termed as
Correct Answer No immediate Dividend policy
Your Answer No immediate Dividend policy
25.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
26.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
27.Select The Blank
Question Retained earnings is a source of ________ finance
Correct Answer Internal
Your Answer Internal
28.True/False
Question The assumptions of capital structure theories is that Operating earnings are not expected to grow
Correct Answer True
Your Answer True
29.Select The Blank
Question Under ________, it is not only necessary to decide profitable investments but also necessary to rank the
acceptable proposals according to their relative profitabilities
Correct Answer Capital rationing

Your Answer Capital rationing

30.Multiple Choice Multiple Answer
Question The recurring duties of Finance Executive includes
Correct Answer Working Capital Management , Fixed Assets management , Control of funds
Your Answer Working Capital Management , Fixed Assets management , Control of funds
31.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
32.Multiple Choice Multiple Answer
Question The classification of ratios under miscellaneous group includes
Correct Answer Earnings per share , Dividend Payment ratio
Your Answer Earnings per share , Dividend Payment ratio
33.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 The debenture interest and capital repayment are obligatory payments , Debenture financing enhances
the financial risk associated with the firm
34.Multiple Choice Multiple Answer
Question Earnings / Price Approach to compute cost of equity shares is objected on the following grounds
Correct Answer It wrongly assumes that earnings per share will remain constant in future , All the earnings may not be
distributed among the shareholders by way of dividend
Your Answer It wrongly assumes that earnings per share will remain constant in future , All the earnings may not be
distributed among the shareholders by way of dividend
35.True/False
Question Inventory is the intermediate stage between purchase of raw materials and consumption of raw materials
Correct Answer True
Your Answer True
36.True/False
Question Funds flow statements and cash flow statement are one and the same
Correct Answer False
Your Answer False
37.Multiple Choice Single Answer
Question The Proprietary concern is owned by
Correct Answer Only one person
Your Answer Only one person
38.Select The Blank
Question Modigliani - Miller approach closely resembles ________ approach
Correct Answer Net operating income
Your Answer Net operating income
39.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

40.Select The Blank

Question ________ financing is more preferred route for venture capital funding
Correct Answer Equity
Your Answer Equity
41.True/False
Question Credit rating is not a recommendation for buying, selling or holding a security
Correct Answer True
Your Answer True