Strategic Finance Final

Strategic Finance
1.
2.
Requirement for short term finance can be met through which of the following :
Ans - Issue of short term debentures, debenture can be issued at any predetermined fixed rate
also,offered at a floating rate,issue of share
Which of these are revealed in Gordons model of dividend policy?
Ans-the market value of the share po increase with the retention ratio,b,for thr firm with growth
opporunties when r>k, mrkt value of the share po,increase with the payout ratio(1-b)for declining
firm with r<k,mrkt value of the share is not affected by dividend policy when r=k,mkt value of the
3.
share po increases with the payout ratio (1-b)for deciling firm with r=k
Tha company loses out on growth opportunities after a share buy-back to erosion of cash
4.
5.
resources
The close interaction among working capital implies what? : Efficient management
If according to terms of credit availability to the company it is required to make payment within the
6.
stipulated period it should not make the payment before specified date : false
The traditional subject matter of merger and acquisition has been expended to include which of
7.
the following groups of restructuring : Expansions, sell offs, corporate control

Defining a Asset value for individual staff may assist in decisions regarding the adoption of such
8.
alternative form of organization

According to which of the methods of share repurchase, a company announces that it is willing to
9.
10.
11.
buy its shares at a substantial premium above the market share : Signaling hypothesis
Long term investments are usually carried at cost
Capital structure implies the proportion of debt and equity in the total capital of a company
According to which of the following Modigliani Miller theorem it is considered unrealistic :
12.
13.
Transaction cost
Investment in current assets represents a substantial portion of total investment
The activity accountant will have to apply professional judgment while selecting data and
14.
source
According to net operating income approach, Ko and Kd are constants for all level of leverage :
15.
True
According to which method of share repurchase, if there is a tax subsidy associated with the
deductibility of interest payments on debt, and if this subsidy is passed through top the
16.
shareholders, would the price of the stock increase : Leverage hypothesis

When a change in the method of depreciation is made, depreciation should be recalculated in
17.
accordance with the new method from date of liability coming into use
Which of these costs cannot be identified under traditional system of accounting : services,
18.
customer relationship, advertising

According to which of assumptions of walters model of dividend, do beginning earnings and
dividends never change : Constant EPS & DIV
19.
Horizontal Merger - Glaxo welcome PLC and smith Beecham PLC Mega merger
Vertical Merger - Usha martin and usha beltron
Conglomeate Merger - Formed though the combination of unrelated business
Concentic Merger - Prudentials acquisition of bache & company
20.
Where a company has resorted to buyback of its shares, it can not make a further issue of the
21.
same kind of securities within a period of 6 months

Which of these are the features of regular and stable dividend payments policy : Firms are
generally careful to set the dividend at a sustainable level, firms may cut dividends in adverse
Strategic Finance
situations, firms are against cutting dividends because of the extremely unfavorable news it
22.
conveys to the market

A business segment is a distinguishable component of an enterprise that is engaged in providing
23.
an individual product or service or a group of related products or services : True

Which of these are the criticisms of walters model of dividend policy : No external financing is
simply valid, assumption of constant rate of return is not valid, constant opportunity cost of capital
24.
does not hold true

An enterprises should disclose which of the following for each reportable segment : segment
revenue classified into segment revenue from sales to external customers and segment revenue
25.
from transactions with other segments, segment result, total carrying amount of segment assets
According to cost and benefit of merger, benefit of merger is equal to the difference between the
value of the combined identity (PVAB) and the sum of the value of both firms as a separate unity :
26.
True
Which of these policies results in slower growth and lower market price per share : High payout
27.
policy
A primary issue in accounting for inventories in which of the following : determination of the value
28.
at which inventories are called out

According to Gordons model of dividend policy assumption of constant cost of capital,
29.
appropriate discount rate for the firm keeps on changing : True

Asset acquired under finance lease : for each class of assets the net carrying amount at the
balance sheet date; A reconciliation between total of minimum lease payments : Balance sheet
date and present value; Contingent rents : Income statement of profit and loss; Description of
lessees leasing arrangements including but not limited to : Basis on which contingent rent
30.
payments are determined

The management of a business selects the most appropriate method of depreciation based on
31.
various important factors like Type of asset

According to the capital structure theory of stakeholder which of these are implicit claims : Right
32.
to provide service to customers, Job security for employers, satisfy the lenders
Determination of useful life of a depreciable asset is a matter of estimating and is normally
33.
based on various factors including experience with similar type of assets.

According to Modigliani Miller theorem, time span of money has no influence on accounting
34.
35.
numbers : True
Mandatory implies Compulsory : True
According to Modigliani Miller theorem, which of these are shortcominigs of accounting numbers :
Firms use different kinds of accounting methods, business and financial risk do not have any
36.
influence on accounting numbers, dividend policy has no influence on accounting numbers

In case of a company which has branches at different places, the company can have
37.
decentralized collection centres : True

The cost of conversion include costs directly related to the units of production such as : Direct
38.
39.
40.
41.
42.
Labour
The financial statements should disclose : The acc policies adopted in measuring inventories
Central disbursements involve increase in the transit time : True
Wastage is considered in direct traceable cost : False
A cash discount is different from a trade discount or a quality discount
Which of this information is required in order to apply DCF technique of the mergers : Estimation
of cash flow, Time of cash flow, Discount rate
Strategic Finance
43.
According to method of share buy-back, when the management of a company enters into a
44.
negotiated purchase, what is it referred as : Greenfield

Which of these are the basic assumptions of the Modigliani Miller approach : Capital markets are
45.
perfect, companies can be divided in homogeneous risk classes, there are no taxes
According to which of the processes the investors would borrow in the proportion of the degree of
46.
leverage present in the firm : Arbitrage

For which of the financial decisions, the financial manager use the concepts of Capital Asset
Pricing Method (CAPM) : Valuation of securities, cost of capital measurement, investment risk
47.
analysis
The quantum of depreciation to be provided in an accounting period involves the exercise of
48.
judgment by management in the light of technical, accounting and Legal requirements

Examples of segment liabilities include which of the following : Trade and other payables,
49.
Accured liabilities, Customer advances

Sales Per employee : General employment productivity; Recovery Rate : Aggregate
compensation and benefits then divide by revenue; Utilisation : Allocating appropriate work, profit
50.
51.
per head : Shareholders and business analysts

Developing the activity model involves knowledge of which of the following : Organisation
Which of these are the features of constant payout dividend policy : very few firms elect to pay
dividends that equal to a constant percentage of their earnings, For most firms earnings are quite
volatile fluctuating with changes in the economy and firmsc own special circumstances, the
52.
volatility in the dividends will match the volatility in earnings

Field warehouse receipt is required when : The pledged inventory is located at the borrowers
premises, company reserves a designated area on the borrowers premises for inventory pledged
as collateral, company has sole access to the area and is supposed to maintain strict control over
53.
it
Which of these are the results of the smoothing theory of dividends : Firms have long run target
dividend payout ratios, Managers focus more on dividend changes than absolute levels, dividend
54.
changes follow shifts in the long run sustainable earnings

According to Investor theory of dividend, some of the investments would be in shares with high
55.
payout ratio for consumption needs and others with low payout ratio for capital appreciation
Which of these are assumptions of Pecking order theory : Firms prefer internal ways to finance
projects, Firms adapt their target dividend payout ratios to available investment resources,
56.
57.
internal resources of a firm are fluctuating because of unpredictable fluctuations of profitability

Which of these are traceable cost : Personnel cost
Which of these are the important steps involved in the analysis of merger and acquisitions:
58.
Planning, Searching and screening, Financial evaluation

The Specific costs that are attributed to identified items of inventory are termed as Specific
59.
identification of costs
Compile bill of activities, find cost per cost object, ass direction cost and non traceable cost : are
60.
steps involved in costing of raw materials, products and services : True

According to Modigliani Miller theorem, one of the problem of asymmetric information is that when
a company needs external capital, and therefore issues stocks, gains a lower price than the fair
value of the stocks : True
Strategic Finance
61.
According to capital asset pricing model, which of these are alpha risks, The risk that the
company managers will turn out to be bad, Global recession can not be eliminated through
62.
63.
diversification
All the risks and rewards incident to legal ownership are transferred by lessor in finance lease
Which of the following documents represents some investments that have no physical existence :
64.
Shares, Debentures, Bonds

According to which type of merger, backword integration takes place when a manufacturer , finds
65.
a cheap source of raw material : Vertical merger

Firms value in merger : Quantitative and qualitative factors; Book value in Merger : Balance
sheet value of owners equity; Appraisal value in merger : Replacement cost of assets; market
66.
67.
value in merger : Stock market quotations

Throughout the activity of the accounting process the resultant cost is a true cost : True
A single organization activity model allows for : More than one project team, multiple teams in
68.
operations at the same time, no different perceptions

In which of these activities the value of the output is less than the value of inputs : Significant cost
69.
70.
71.
consumption
The input in the activity are in the form of : Materials and information
Traditional accounting systems are adequate for more than the intended purpose : False
According to Modigliani Miller theorem, the more a firm finances his business with debts, the less
72.
the corporate taxes are

When two companies merge through an exchange of shares, the shareholders of selling
73.
company can save tax : True

Which theory of merger states that when the cash flow rate of the acquirer is greater than that of
the acquired firm, capital is relocated to the acquired firm and its investment opportunities
74.
improve : Financial synergy theory

Which of these are the cons of the share repurchase : May have a negative signaling effect on
the market place, management may not seek to utilize any existing excess cash effectively by
acquiring new investments, possible mismanagement may arise if too high a price is paid for the
75.
repurchased shares
An investment that is by nature readily realizable and is intended to be held for not more than one
76.
77.
78.
year, is called current investment

Investment in current assets and level of current liabilities have to be quick to change in records
Unilateral action of the activity accountant does not display performance of organization
The deficiency or surplus arising from the retrospective recomputation of depreciation in
accordance with the new method should be adjusted in accounts in year in which the method of
79.
depreciation in respect of past years

The wages bill may be understood but other financial aspects of employee / HRM decisions are
80.
81.
not always so well appreciated : True

From the investors point of view which of these documents is important : Divident documents
The primary aim of commercial business enterprises is to generate and secure wealth for its
owners
82.
Revenues = total operating income
83.
Expenses = operating expenditure excluding
84.
Profit = R less E= Revenue less
85.
Cash less rewards = emoluments, salaries
Strategic Finance
86.
according to Modigliani- Miller Theorem, the more a firm finances his business
with debt, the less the corporate taxes are.
87.
according to which method of share buy-back, based on the old received the
company selects the offer price from lowest price onwards at which the
cumulative number of shares offered equals or exceeds the maximum
number of shares the company proposes to buy: book-building method.
88.
which of the following are the methods of share buyback? Repurchase

tender
offers;
open
market
purchases;
privately
negotiated
repurchases
89.
the tender offer is used primarily for large equity repurchases.
90.
the management of a business selects the most appropriate method of

depreciation based on various important factors like type of asset.
91.
the portions of organisations not involved in the project have a little

understanding.
92.
according to the net income approach, capital structure is relevant to the

valuation of the firm. True
93.
according to the net operating income approach, Ko and Kd are constants for
all levels of leverage. True
94.
according to Modigliani- Miller Theorem, in asymmetric information costs,

who knows more about the firm than the shareholders and debt financiers?
Firm Managers
95.
in case of a company which has branches at different places, the company

can have decentralized collection centres. True
96.
if there is any suspicion or fear, the data becomes questionable.
97.
the corporate tax savings from interest deductions will be offset completely
by the gross- up of interest payments necessary to induce the marginal
investor to hold corporate debt this is called the Miler equilibrium.
98.
some of the most difficult portions of cost are: to capture; to distribute;

overheads
99.
the activity based accounting analysis provides a meaningful appraisal of

the identified activity costs along several dimensions.
100.
Assets acquired under finance lease = for each class of assets the net
101.
A reconciliation between total of minimum lease payments = balance sheet

date and present
102.
Contingent rents = income statement of profit and
Strategic Finance
103.
description of lessees leasing arrangements including but not limited to =

basis on which contingent rent
104.
which of these costs are considered as overhead costs? Electricity; wages

and salaries
105.
business and geographical segments of an enterprise for external reporting

purposes should be which of the following? Organisational units; Board of
Directors; CEO
106.
according to Walter model of dividend, in case of growth firms, internal rate is

more than opportunity. True
107.
the specific costs that are attributed to identified items of inventory are
termed as: specific identification of costs
108.
which of these are the features of regular and stabled dividend payment
policy? Firms
are
generally
careful
to
set
the
dividend
at
sustainable level; firms may cut dividends in adverse situations;

firms are against cutting dividends, because of the extremely
unfavourable news it conveys to the market
109.
mergers and acquisitions lead to diseconomies of scale and decrease income

with proportionality high investment. False
110.
which of these are the empirical results of capital asset pricing method
(CAPM)? The positive relationship between returns and betas are not
strong; no relationships between betas and returns; Ex-ante model
111.
the resources and managerial efforts are realigned by the activity model with
which of the following? Real functions
112.
which of the approaches is stated on a perfect market? Modigliani-Miller

Approach
113.
according to Gordons dividend capitalization model, market value of a share

is equal to the present value of an infinite stream of dividends to be received
by shareholders. True
114.
according to cost and benefits of the merger, the benefit of the merger is
equal to the difference between the value of the combined identity (PVAB)
and the sum of the value of both firms as a separate unity. True
115.
segment expense is the aggregate of which of the following? The expenses

resulting from operating activities of a segment that is directly
attributable to the segment; relevant portion of enterprise expenses
that can be allocated on a reasonable basis to the segments;
Strategic Finance
expense relating to transactions with other segments of the
enterprise
116.
the organisations accounting system is not the major source of cost data.
False
117.
according to which theory of capital structure does a firm not have a certain
target debt ratio? Pecking order theory
118.
according to Modigliani- Miller Theorem, transaction costs keep firm

managers from 100% debt financing.
119.
contingent rents are recognised as income in the statement of profit and

loss for the period.
120.
which of these are traceable costs? Personnel costs
121.
according to which of the approaches overall capitalization rate remains

constant for all levels of financial leverage? Net operating income
approach
122.
the limitations of which of the dividend models are similar? Walter and
Gordon model
123.
according to Modigliani- Miller Theorem, in agency costs, the conflict of

interest between the groups gives rise to costs, both opportunity and real
costs, which decrease the market value of the firm. True
124.
the risks and returns of an enterprise are influenced by the geographical

location of its operations and also by: the location of its customers; the
location of production or service facilities and other assets of an
enterprise; the location of its employees
125.
which of these steps are involved in costing of raw materials, products and
services? Ascertain nature of costs; separate primary and secondary
activities; account all traceable costs per activity
126.
central disbursements involve increase in the transit time. True
127.
the arbitrage process ensures the investor the same return at lower outlay
as he was getting by investing in the firm whose total value was higher and
yet his risk is not increased.
128.
in which of these activities the value of the output is less than the value of
the inputs. Significant cost consumption
129.
the objective of activity model is that the costs are to be gathered and
allocated within the organisation at lowest possible structural layer.
Strategic Finance
130.
depreciation in loss of value of an asset is described as: a measuring of

wearing out; consumption or other loss of value of a depreciable
asset arising from use, passage of time; distribution of total cost of
assets over its useful life
131.
according to traditional system of accounting, which of these do not have a

proper system of allocation? Inflation; interest rate
132.
what is the focus of the investor rationally theory of dividend? Psychological

preferences of individual investor
133.
which of these models concludes that the expected return of an asset equals
the riskless return plus a measure of the assets nondiversifiable risk times
the market-wide risk premium? Capital asset pricing model
134.
according to which model of share buy-back, shareholders are invited to

make bid quoting a price and the number of shares offered for buyback?
Book-building method
135.
which of these models is more difficult to implement in practice compared to

binomial option pricing model. Capital asset pricing model
136.
in case of a company which has branches at different places, the company

can have decentralized collection centres. True
137.
which of these are important guidelines of SEBI for takeovers of listed

companies? Notification; trigger point for public offer; offer price
138.
requirements for short term finance can also be met through which of the
following? Issue of short term debentures; debentures can be issued
at any predetermined fixed rate also; offered at a floating rate
139.
which of these are the shortcomings of Modigliani- Miller Theorem: the

highly leveraged a firm, the less chance there is to obtain the tax
shield; there does not exist an optimum capital structure for a
individual firm; at a certain points, the raise of bankruptcy costs is
higher than the tax shield
140.
according to legal provisions of the companys act, which of these are the
prohibition for buyback in certain circumstances? Through any subsidiary
company including its own subsidiary companies; through any
investment company or group of investment companies; if a default
is subsisting in repayment of deposits or interest due, redemption of
debentures or preference shares
Strategic Finance
141.
which capital provides expert services as consulting, financial planning and

assurance services which are valuable and very much in demand? Human
capital
142.
bill of activities = description of the route a product
143.
performance measures = quality, cost, flexibility, efficiency
144.
output measures = need to be measured for proper
145.
cost objects = it may be services, marketing
146.
financial statements classify fixed assets investments and: current assets
147.
which of these costs are considered as overhead costs? Electricity; wages

and salaries
148.
which factors should be considered in identifying geographical segments?

Similarity
of
economic
and
political
conditions;
proximity
of
operations; exchange control regulations

149.
which of these is a basic element of vertical merger? Costs of searching for

prices; contracting; payment collection and advertising
150.
what type of date does the acquiring firm require during planning analysis?
Market growth; nature of competition; capital and labour intensity
151.
returning excess cash by way of a share buy-back gives a company greater

flexibility with regard to its dividend policy.
152.
according to Miller-Modigliani model of dividend, when does the situation

arise that the firm does not have sufficient cash to pay dividends? The firm
issues new shares to finance the payment of dividends; wealth of the
shareholders does not change; the existing shareholders transfer a
part of their claim to the new shareholder in exchange or cash
153.
according to Modigliani- Miller Theorem, one of the problem of asymmetric

information is that when a company needs external capital, and therefore
issues stocks, gains a lower price than the fair value of the stocks. True
154.
process analysis to be identified and focus should be on basis of which of the

following objections: not adhering to benchmarks
155.
the specific costs that are attributed to identified items of inventory are
termed as: specific identification of costs
156.
overtime = overstates true costs
157.
overhead expense = utilities, maintenance
158.
support elements = no contribution to output
159.
operational = contribute to output
Strategic Finance
160.
according to which of the approaches any change in leverage will not lead to
any change in the total value of the firm and market price of shares? Net
operating income approach
161.
the current accounting system is not able to provide the actual value of a
company, as each year the cost on human resource development are
recruitment increases.
162.
according to the financial framework of a merger, which of these qualitative

factors of value are difficult to determine? Managerial talent; strong sales
staff; excellent production department
163.
according to financial evaluation during merger and acquisition, in a

competitive market structure with capital market efficiency, the current
market value is the correct and fair value of the share of the target firm. True
164.
the value of human capital to organisations is also known as intellectual

capital of the organisation.
165.
which type of merger involves two firms that operate and complete in a
similar kind of business? Horizontal merger
166.
FTE is full time equivalent staff. True
167.
according to the net income approach, capital structure is relevant to the

valuation of the firm. True
168.
an accountant sees an asset as something with a value on the balance sheet.

True
169.
the cost of an investment includes acquisition charges such as brokerage,

fees and duties.
170.
developing the activity model involves which of the following? Interviews

with other subject matter experts
171.
the company cannot afford to keep the cash idle as it involves opportunity
cost in investment of excess cash balance. True
172.
which of the following are the methods of share buyback? Repurchase

tender
offers;
open
market
purchases;
privately
negotiated
repurchases
173.
the operational justification of Modigliani- Miller approach is the arbitrage

process.
174.
a major deterrent of HRA is due to the lack of which aspect? Industry

standards
Strategic Finance
175.
a good working condition for a worker may increase worker efficiency, but
does not add value to a customer. True
176.
which of these theory of merger, discuss indivisibilities of resources like

people, equipment and overhead? Operating synergy theory
177.
estimates become more reliable when managers are not closer to actual
work. False
178.
excessive levels of current assets can easily result in a firm realising a

substandard return on investment.
179.
which of these policies has more current dividend and less retained earnings?
High payout policy
180.
which of the following are the basic assumptions of the Net Income
Approach? There are no taxes; cost of debt is less than equitycapitalization rate; use of debt does not change the risk perception
of investors
181.
it is important to overcome the strain by keeping extensive records of

processes and procedures. True
182.
at the inception of finance lease the lessee should recognise the lease as an
asset and a liability at an amount equal to value of leased asset at inception
of lease.
183.
a trade discount is greater for one class of customers than for others; greater
for wholesalers than for Retailers.
184.
nontraceable cost should be less than 5% of the activity.
185.
from the investors point of view which of these documents is important?

Dividend document
186.
what type of date does the acquiring firm require during planning analysis?
Market growth; nature of competition; capital and labour intensity
187.
the voluntary rewarding method develops a consistent framework supported

by rewarding mechanisms once introduced and approved at enterprise
level.
188.
which of these are types of value chain? Primary activities; secondary

activities
189.
according to investor theory of dividend, some of the investments would be

in shares with high payout ratio for consumption needs and others with low
payout ratio for capital appreciation.
Strategic Finance
190.
according to activity based costing, which of these are involved in decision

process to construct the wall by the contractor? Design Wall; Build Wall;
Backfill Wall
191.
according to residual theory of dividends, when a firm attracts investors

falling into a particular dividend clientele, it suggests that the firm should
vary the dividend policy for them. False
192.
the activity based costing is a process that requires professional

judgement and creativity when applied to a traditional business process
model.
193.
the activity accountant will have to apply professional judgement while

selecting data and source.
194.
according to which of the methods of share repurchases, a company

announces that it is willing to buy its shares at a substantial premium above
the market share? Signaling hypothesis
195.
according to which method of share buy-back, the deposit in the escrow shall
be made before the date of the public announcement? Book building
196.
according to methods of buy-back, the tender offer price is generally higher

than the market price at the time of offer. True
197.
which of these are the currently established accounting system to capture

and
distribute
resource
cost?
organisational
element;
budgetary
account; traditional cost accounting

198.
warehouse receipt can be non-negotiable or negotiable. A non-negotiable

receipt is issued in favour of a specific party in which of the following cases?
In case the lender is given the title to the goods; lender has the sole
authority to release the title
199.
which capital provides expert services as consulting, financial planning and

assurance services which are valuable and very much in demand? Human
capital
200.
open market share repurchase occurs less often than tender offers to
repurchase. False
201.
which of the following are advantages of Modigliani- Miller Theorem when

firms capital structure consists of a high proportion of debt? Fiscal
advantage; financing with a high percentage of debt prevents firms
from investing too much; employees are trade unions will diminish
their demands
Strategic Finance
202.
the difference between current assets and liabilities is called Net Working
Capital.
203.
which of these are measured by activity based costing? Determined the

cost of business process outputs; identifies opportunities to improve
process efficiency and effectiveness; measures process and activity
performance
204.
according to which theory of dividend, increase in the firms investment

schedule should result in growth in the value of shares to the extent that
retained cash flows are reinvested in profitable projects? Span of control
theory
205.
according to financial evaluation during merger and acquisition, the acquiring

firm will pay premium if it thinks that after merger by improving the
operations and due to synergy it can increase the target firms market value.
True
206.
time required from receiving the cheque from the customer through the post
office is called Postal Float.
207.
there are no changes in the organisation and its missions. False
208.
activity accounting is a fully inclusive management information concept.
209.
bank credit = source of financing working
210.
overdraft = borrower is allowed to withdraw
211.
cash credit = company need not have a formal
212.
bills purchased = borrower can obtain credit from
213.
the raw materials of the firm required for production purposes may be bought
in cash or credit.
214.
according to which method of share repurchases, do excess cash and

marketable securities finance the repurchases? Leverage hypothesis
215.
arbitrary allocations based on the best understanding makes the selected

distribution as strong as accuracy of assumptions.
216.
the activity accountant in full enterprise: interacts with major elements;

determines allocations; allocates overheads
217.
according to regulations of mergers and acquisition, financial support is a

useful device for improving the quality of management and efficiency of
operations. True
218.
according to which theory of dividends, the firm should follow its policy of
accepting all positive NPV projects? Residual theory
Strategic Finance
219.
in traditional organisations, the only costs that are identified to the

organisational elements are the direct salary costs.
220.
which theory of dividend focuses on growth? Residual theory
221.
Walters model of dividend = the payouts of cash dividends is
222.
Gordons model of dividend = the retained earnings are
223.
Miller-Modigliani model of dividend = dividend policy, growth and the
224.
bird in the hand model of dividend = dividends are preferred to
225.
which of these are direct traceable costs? Raw materials; sub assemblies
226.
according to Modigliani- Miller Theorem managers also invest in projects that

will improve their prestige or power. True
227.
according to Modigliani- Miller Theorem, the chances of bankruptcy are

small when the leverage of firm is small.
228.
which of these types of cost are included in activity-based costing? Product

innovation cost; brand building cost; service cost
229.
which of the theories of merger is not relevant to the conglomerate type of

mergers? Managerial synergy theory
230.
according to mergers and acquisitions, total risk reduces if operations of

combining firms are positively correlated. False
231.
according to traditional system of accounting, which costs in turn lead to

distortion of cost? cost of innovation; new technology; new methods
232.
according to which of the assumptions of Miller- Modigliani model of dividend,

r = k = kr for all? No risk
233.
open account credit appears on the buyers balance sheet as accounts

payable.
234.
which of these are involved in financial evaluation of merger: Determining

the earnings and cash flows; area of risk; maximum price payable to
target company
235.
which of these are quantitatively measured in activity based costing? Cost

and
performance
of
activities;
resources
and
cost
objectives;
overheads
236.
what does ROI stands for? Return on investment
237.
for full activity model, pertinent costs are to be captured that pertain to
total cost structure.
238.
costs of infrastructure for initiating and maintaining contracts of employment

and co ordinating the employers policies and practices in respect of
Strategic Finance
delivering its obligations to those that it employs, is a legal obligation for the
employer.
239.
firms value in merger = quantitative and qualitative factors
240.
book value in merger = balance sheet value of owners equity
241.
appraisal value in merger = replacement cost of assets
242.
market value in merger = stock market quotations
243.
in case of dividend taxation hypothesis, investors can offset tax liabilities in a

number of ways. True
244.
for which of the financial decisions, the financial managers use the concepts
of capital asset pricing method (CAPM)? Valuation of securities; cost of
capital measurement; investment risk analysis
245.
the inputs in the activity are in the form of: materials and information
246.
which of these are the basic assumptions of the Modigliani-Miller approach?

Capital
markets
are
perfect;
companies
can
be
divided
in
homogeneous risk classes; there are no taxes

247.
according to share buy-back, fixed price tender offers are accompanied by an

abnormal announcement period return of how much percentage? 8-10%
248.
a business segment is a distinguishable component of an enterprise that is

engaged in providing an individual product or service or a group of related
products or services. True
249.
while financing mergers, what is the future payment linked to the firms
earnings called? Earn-out plan
250.
according to methods of share buy-back, which of these can be spread out

over longer time periods than tender offers? Open market purchase
251.
the managerial cost data cannot be applied until the activities are defined for
the organisation model. This defines: activity based accounting
252.
the primary aim of commercial business enterprise is to generate and secure

wealth for its owners.
253.
according to which share repurchase model, the borrowing rate equals the
lending rate? Capital asset pricing method
254.
the sale of an asset by the vendor and leasing of same asset back to the
vendor happens in sales and leaseback.
255.
capturing all relevant expenses that pertain to selected model is called

gather costs.
Strategic Finance
256.
the best time to frame look for an appropriate and sufficient amount of data
is first previous full fiscal year. True
257.
according to which method of financing merger, the purchaser approaches

the shareholders of the firm and encourages them to sell their shares
generally at a premium over the current market price? Tender offers
258.
a merger will create an economic advantage when the combined present

value of the firms is greater than the sum of their individual present values as
separate entities.
259.
according to Modigliani- Miller Theorem, in agency costs, which of these form

groups of participants in a firm? Supplier of equity; debt supplier; firm
managers
260.
which of these are provided by financial conglomerates? Flow of funds to

every
segment
of
their
operations;
exercise
control;
ultimate
financial risk taking

261.
according to pure diversification theory of merger, how does a firm preserve

its reputation and goodwill? Investment in advertising; investment in
employees; research and development
262.
costs are allocated based on the interviews with managers on the functions.
True
263.
the most crucial financial decisions of the organisation are taken by financial
manager.
264.
what does HRA stands for? Human resource accounting
265.
types of trade credit are which of the following? Notes payable; trade
acceptances; open accounts
266.
what type of data the target firm requires before planning for merger?
Quality of management; profitability; production and marketing
capabilities
267.
investment in current assets represents a substantial portion of total

investment.
268.
all the risks and rewards incident to legal ownership are transferred by lessor
in finance lease.
269.
investment in current assets and level of current liabilities have to be quick to

change in records.
270.
organisational changes are similar to mission changes. True
Strategic Finance
271.
the costs of conversion include costs directly related to the units of

production such as: direct labour
272.
defining a asset value for individual staff may assist in decisions regarding
the adoption of such alternative forms of organisation.
273.
time require by the banker of the company to collect the payment from
customers bank is called bank float.
274.
according to the capital structures theories, which of the theory presumes

that there are enormous conflicts of interest between shareholders and
stakeholders? Free cash flow theory
275.
when is this type of interest accrued before the acquisition of an interestbearing investment, and is therefore included in price paid for investment?
Unpaid interest
276.
according to which model of dividend, in a world without any market

imperfections like taxes, transactions costs or asymmetric information, a
companys dividend policy should have no effect on its market value? MillerModigliani model
277.
total cost of activity = is the total amount of direct and
278.
cost driver = the number of iterations and
279.
elapsed time = an iteration of the cost driver
280.
cycle time = iteration of the cost driver without
281.
which of these methods of value assets and calculating the cost of capital for
an alternative has come to dominate modern finance? Capital Asset Pricing
Model
282.
the full enterprise model has: adequate time; adequate capability;

adequate funds
283.
the service sector emphasizes the qualities and expertise of staff. True
284.
which of these are assumptions of pecking order theory? Firms prefer

internal ways to finance projects; firms adapt their target dividend
pay-out ratios to available investment resources; internal resources
of a firm are fluctuating because of unpredictable fluctuations of
profitability
285.
wastage is considered in direct traceable cost. False
286.
investments = carried to profit
287.
assets = stock in trade
288.
shares and debentures = securities
Strategic Finance
289.
long term investments = carried to costs
290.
the financial statements should disclose the accounting policies adopted in

measuring inventories. True
291.
according to Gordons model of dividend policy assumption of constant cost

of capital, appropriate discount rate for the firm keeps on changing. False
292.
if rights are not subscribed to but are sold in the market, the sale proceeds
considered in the profit and loss statement.
293.
according to the dividend payment procedures, the date from which the stock
begins to trade without the right to receive the dividend declared is called
Ex-dividend date.
294.
which of these are involved in financial evaluation of merger? Determining

the earnings and cash flows; areas of risk; maximum price payable
to target company
295.
which of these are the features of constant payout dividend policy? Very few
firms elect to pay dividends that equal to a constant percentage of
their earnings; for most firms, earnings are quite volatile, fluctuating
with changes in the economy and firms own special circumstances;
the volatility in the dividends will match the volatility in earnings
296.
according to mergers and acquisitions, how can the companies enhance

profitability? Economies of scale; operating economies; synergy
297.
which of these may not accurately explain the investment behaviour of

investors and beta may fail to capture the risk of investment? Capital asset
pricing model
298.
the activity is defined as a unique process when it processes which of the

following? Processes inputs and produces output
299.
the equity method comprises which of the following: accounting whereby the
investment is initially recorded at cost; identification of good will or capital
reserve arising at the time of acquisition; the carrying amount of investment
is adjusted thereafter for the post-acquisition change in investors share of
results of operations of the investee
300.
if according to terms of credit available to the company it is required to make

payment within the stipulated period it should not make the payment before
specified date. True
301.
which of these are the problems of earn-out plan during financing merger?
Target firm should be capable of operating autonomous business
Strategic Finance
entity; there should be freedom of operation to the management of
the newly acquired firm; there must be willing cooperation to work
towards the success and growth of target firm
302.
which index takes into account the market shares of all firms in the industry.
Herfindhal-Hirchman Index
303.
the classification of leases adopted in the statement, is based on the extent

to which risks and rewards incident to ownership of a leased asset lie with
lessor or the lessee.
304.
according to the stakeholder theory of capital structure, financial structure

may also depend on a firms net organisational capital and on the nature of
its stakeholders. True
305.
according to method of share buy-back, when the management of a company

enters into a negotiated purchase, what is it referred as? Greenfield
306.
in pursuit of competitiveness and profits, firms will implement redundancies

also called: down-sizing or right sizing
307.
a great deal of time is spend by finance manager in doing which of the

following? Controlling the movement of cash; monitoring investment
in inventories; administering accounts receivables
308.
determination of residual value of an asset is normally a difficult matter.
309.
the company shall buy-back its shares through the stock exchange as
provided the public announcement shall be made at least 7 days prior to the
commencement of buy-back.
310.
which share repurchases model describes the relationship between risk and
expected return, and serves as a model for the pricing of risky securities?
Capital asset pricing model
311.
according to Walter model of dividend, which of these are summarized in

declining firms? Optimum payout ratio is 100 percent; when r < k the
firm should not reinvest any profit
312.
use of promissory notes instruments and trade acceptance is limited as

compared to open trade credit.
313.
traditional accounting systems are adequate for more than the intended
purpose. False
314.
which of this information is required in order to apply DCF technique of the

mergers? Estimation of cash flows: time of cash flows; discount rate
Strategic Finance
315.
which of these are the advantages of mergers and acquisitions? Infusion of

better management; consolidating capacities to economic level;
healthy growth of capital market
316.
when two companies merge through an exchange of shares, the shareholders

of selling company can save tax. True
317.
in which of these activities is there evidently larger consumptions of inputs

and mechanisms? Significant cost consumption
318.
which of these types of cost are included in activity-based costing? Product

innovation cost; brand building cost, service cost
319.
investment decisions of the firm affects the asset decisions.
320.
according to Modigliani- Miller Theorem, which of these are shortcomings of

accounting numbers? Firms use different kinds of accounting numbers;
business and financial risks to not have any influence on accounting
numbers; dividend policy has no influence on accounting numbers
321.
according to FEI survey, how much percentage of share repurchase is found

under use of shares in mergers and acquisitions? 5.7
322.
according to financial evaluation during merger and acquisition, if the

acquiring firm pays cash equal to the value of the acquiring firm, then the
entire advantage of the merger will accrue to the shareholders of the
acquiring firm. True
323.
hedging approach is a method of financing where each asset would be offset

with which of the following? Financing instruments; an instrument with
adequate maturity
324.
conducting informal interviews within the other portions of organisation

determines casual relationships.
325.
according to pure diversification theory, which of these results in financial

synergy and tax benefits? Increases the corporate debt capacity;
reduces the present value of future tax liability of the firm
326.
which of these are disadvantages of tender offer during financing merger: if

the target firms management attempts to block it, the cost of
executing the offer may increase substantially; the purchasing
company may fail to acquire a sufficient number of shares to meet
the objective of controlling the firm
327.
the capital asset pricing method provides a logic and quantitative

approach for estimating risk.
Strategic Finance
328.
the crux of Miller-Modigliani model is that shareholders do not necessarily

depend upon dividends for obtaining cash.
329.
according to which of these theories of share repurchases are cash dividends

taxable at ordinary tax rates? Tax differential theory
330.
disposal of investments = difference between carrying
331.
profits and losses = difference between assets and
332.
accounting standards = accounting for investments in
333.
control = ownership
334.
335.
dealers = buying or leasing an asset
336.
customer = borrowing of funds
337.
profit or loss = on basis of negotiation between
338.
sales revenue = profit from outright sale of asset
339.
ABC has to fit in with which of the following? Strategy of the company
340.
according to which model of dividend, the market discounts future earnings

according to the risk of the company, regardless of whether those earnings
will be retained or distributed? Bird in hand theory
341.
according
to
Modigliani-
Miller
Theorem,
the
result
of
asymmetrical
information is that companies must provide reliable information that is less

costly. False
342.
gather costs involves capturing, constructing or synthesising correct

figures.
343.
a tender offers as a method of acquiring a firm involves a bid by the

acquiring firm for controlling interest in the acquired firm.
344.
examples of events or transactions that generally give rise to extraordinary

items
for
most
enterprises
are:
attachment
of
property
of
the
enterprise; an earthquake
345.
the revenue from sales to external customers, as reported in the statement of

profit and loss, is called enterprise revenue.
346.
the firms investment in current assets like cash, inventory etc are called
gross working capital.
347.
according to the dividend payment procedures, the date on which the

announcement is made of new dividend is called declaration date.
Strategic Finance
348.
mergers and acquisitions create an image of aggression and strategic

opportunism, empire building and amassing vast economic powers of the
company. True
349.
lease income from operating leases should be recognised in statement of

profit and loss on a straight line basis over lease term.
350.
according to which method of share repurchase, if there is a tax subsidy

associated with the deductibility of interest payments on debt, and if this
subsidy is passed through to the shareholders, would the price of the stock
increase. Leverage Hypothesis
351.
the indirect costs of production that remain relatively constant regardless of

volume of production like depreciation and maintenance of factory buildings
are called as: Fixed Production Overhead
352.
an enterprise should disclose which of the following for each reportable

segment: segment revenue classified into segment revenue from
sales to external customers and segment revenue from transactions
with other segments; segment result; total carrying amount of
segment assets
353.
control of the composition of the board of directors in the case of a company,

of the corresponding governing body in case of any other enterprise, to
obtain economic benefits from its activities includes which of the following? A
subsidiary which is an enterprise that is controlled by another
enterprise; a parent which is an enterprise that has one or more
subsidiaries; a group which is a parent and all its subsidiaries
354.
which of the types of strategies can be employed in corporate acquisitions?

Friendly takeover, hostile takeover
355.
according to which theory of dividend, a firm should pay a low or zero

dividend in order to minimize its cost of capital and maximise its value. Tax
differential
356.
the terms 2/10, net 30 indicate that the seller offers a 2 percent discount if
the bill is paid within 10 days else the buyer may pay full amount within 30
days.
357.
attempts should be made by the company to get maximum credit for goods
or service supplied. True
Strategic Finance
358.
according to the capital structure theory which of these reduces the freedom
of decisions, because a firm is forced to pay at certain times interest and
payoffs? Debt
359.
a cash discount is different from a trade discount or a quantity discount.
360.
according to which of the processes the investors would borrow in the

proportion of the degree of leverage present in the firm? Arbitrage
361.
the quantum of depreciation to be provided in an accounting period involved

the exercise of judgement by management in the light of technical,
commercial accounting and legal requirements.
362.
examples of segment liabilities include which of the following? Trade and

other payables; accrued liabilities; customer advances
363.
sales per employee = general employee productivity
364.
recovery rate = aggregate compensation and benefits then divide by

revenue
365.
utilisation = allocating appropriate work
366.
profit per head = shareholders and business analysts
367.
developing the activity model involves knowledge of which of the following?

Organisation
368.
field warehouse receipt is required when: the pledged inventory is

located at the borrowers premises; company reserves a designated
area on the borrowers premises for inventory pledged as collateral;
company has sole access to the area and is supposed to maintain
strict control over it
369.
which of these are the results of the smoothing theory of dividend? Firms
have long-run target dividend payout ratios; managers focus more
on dividend changes than absolute levels; dividend changes follow
shifts in the long run, sustainable earnings
370.
organisation can find out which of the following assets of a company are
often worth 3 or 4 times the tangible book value? Intellectual aspects
371.
which of these are the important steps involved in the analysis of merger and
acquisitions? Planning; searching and screening; financial evaluation
372.
compile bill of activities, find cost per cost object, add direct cost and nontraceable cost, are steps involved in costing of raw materials, products and
services. True
Strategic Finance
373.
according to capital asset pricing model, which of these are alpha risks? The
risk that the company managers will turn out to be bad; global
recession cannot be eliminated through diversification
374.
the estimated selling price in the ordinary course of business less the
estimated costs of completion and estimated costs necessary to make the
sale, is called which of these? Gross realizable value
375.
which of the following documents represent some investments that have no

physical existence? Shares; debentures; bonus
376.
according to which type of merger, backward integration takes place when a

manufacturer, finds a cheap source of raw material? Vertical merger
377.
throughout the activity of the accounting process the resultant cost is a true
cost. True
378.
a single organisation activity model allows for: more than one project
team; multiple teams in operation at the same time; no different
perceptions
379.
which theory of merger states that when the cash flow rate of the acquirer is
greater than that of the acquired firm, capital is relocated to the acquired firm
and its investment opportunities improves? Financial synergy theory
380.
which of these are the cons of the share repurchase? May have a negative
signaling effect on the market place; management may not seek to
utilise
any
existing
excess
cash
effectively by
acquiring
new
investments; possible mismanagement may arise if too high a price

is paid for the repurchased shares
381.
an investment that is by nature readily realizable and is intended to be held

for not more than one year, is called current investment.
382.
unilateral action of the activity accountant does not display performance of

organisation.
383.
mandatory implies compulsory. False
384.
the deficiency or surplus arising from the retrospective recomputation of

depreciation in accordance with the new method should be adjusted in
accounts in year in which the method of depreciation in respect of past
years.
385.
the
wages
bill
may
be
understood
but
other
financial
employee/HRM decisions are not always so well appreciated. True
aspects
of
Strategic Finance
386.
requirement for short term finance can be met through which of the
following? Issue of short term debentures; debentures can be issued
at any predetermined fixed rate also; offered at a floating rate, issue
of share
387.
which of these are revealed in Gordons model of dividend policy? The

market value of the share Po increase with the retention ratio, b, for
firms with growth opportunities when r>k; the market value of the
share Po, increase with the payout ratio(1-b)for declining firm with
r<k, the market value of the share is not affected by dividend policy
when r=k
388.
the company loses out on growth opportunities after a share-buy back due
to erosion of cash resources.
389.
the close interaction among working capital implies what?
efficient
employees
Multiple Choice Multiple Answer

Question 1
If a company is following multiple accounting system, the activity accountant will have
to match data across :Correct Answer Codes , Time periods , Systems
Your Answer
Codes , Time periods , Systems
Select The Blank

Question 2
Combination of 2 or more companies into existing company is called ________.
Correct Answer Absorption
Your Answer
Absorption

Question 4
For M & As, the acquiring firm needs industry data on :Correct Answer Market growth , Nature of competition , Degree of regulation
Your Answer
Market growth , Nature of competition , Degree of regulation

Question 5
A high payout policy on dividends implies :Correct Answer More current dividends , Less retained earnings
Strategic Finance
Your Answer
More current dividends , Less retained earnings
Select The Blank

Question 6
HLL the largest FMCG company has a turnover of Rs. ________.
Correct Answer 118 Bn
Your Answer
118 Bn
True/False
Question 7
The scope of the data required relates to the scope of the activity model & processes
under review.
Correct Answer True
Your Answer
True
Select The Blank

Question 8
The total cost of the activity model allocated by the applied activity drivers to the output
of the activity model is called________.
Correct Answer The cost of the output
Your Answer
Total cost of activity
Multiple Choice Single Answer

Question 9
The voluntary market based method means :Correct Answer Develop a consistent framework which can be operational across sectors and countries
Your Answer
Develop a consistent framework which can be operational across sectors and countries

Question 10
Exit costs are classified into 3 categories namely :Correct Answer Lost efficiency prior to separation , Job vacancy cost during the new search ,
Termination pay
Your Answer
Lost efficiency prior to separation , Job vacancy cost during the new search , Recruiting
new employee as a replacement of the left employee
Question 11
The offer price by the acquiring company should be an average of the weekly high &
low for :Correct Answer The last 26 months
Your Answer
Last 180 days

Question 12
One of the advantages of trade credit is its flexibility i.e. the firm does not :Correct Answer Have to sign a note , Pledge collateral , Adhere to strict payment schedule
Your Answer
Negotiate formally , Have to sign a note , Adhere to strict payment schedule
Strategic Finance
Question 13
A firm with a judicious mixture of debt and equity will have :Correct Answer Lowest cost of capital , High value of firm , Good market reputation
Your Answer
Good market reputation , Lowest cost of capital , High value of firm

Question 14
The acquirer should intimate to the target company & the concerned stock exchanges
as soon as its holding touches :Correct Answer 5 % of the voting capital of the target company
Your Answer
35 % of the voting capital of the target company

Question 15
What is a very important factor in any kind of merger?
Correct Answer Exchange ratio
Your Answer
Exchange ratio
True/False
Question 16
For determining exchange ratio, the model developed by Conn & Nielson is used.
Correct Answer True

Your Answer
True

Question 17
As per Pecking order theory, which is the costliest means of funding :Correct Answer Equity Shares
Your Answer
Secured debt
Select The Blank

Question 19
Capital gains are taxed at ________.
Correct Answer Preferentially lower rate
Your Answer
Transaction costs
True/False
Question 20
Articles of association should authorise buy back of securities as per the Company's
Act.
Correct Answer True
Your Answer
True
Select The Blank
Strategic Finance
Question 21
In today's fast moving world, the quickest way to get information on a firm is through
________.
Correct Answer Internet
Your Answer
Internet

Question 22
Suppliers of equity are interested in :Correct Answer High share prices
Your Answer
High share prices
True/False
Question 23
The buyback shall be made only on stock exchanges with electronic trading facility.
Correct Answer True

Your Answer
True

Question 24
Accounting standard 19 for leases statement is applied in accounting for all leases
other than :Correct Answer Lease agreements to explore for or use natural resources , Licensing agreements for
items such as motion picture films , Lease agreements to use land
Your Answer
Lease agreements to explore for or use natural resources , Licensing agreements for
True/False
Question 25
Odd lots purchase is not a method of buy back of shares.
Correct Answer False

Your Answer
True

Question 26
Segment liabilities do not include :Correct Answer Borrowings & other liabilities that are incurred for financing rather than operating
purpose
Your Answer
Borrowings & other liabilities that are incurred for financing rather than operating
purpose
Question 27
Economic analysis usually covers :Correct Answer A small number of improvement alternatives
Your Answer
Different projected costs of the suggested process

Question 28
A firm using a conservative policy for determining the requirements of current assets :-
Strategic Finance
Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales
Your Answer
Has fewer production stoppages , Ensures quick deliveries to customers , Increases the
ROI
Select The Blank
Question 29
Forfeiting is mostly used for ________.
Correct Answer Big ticket items & durable goods
Your Answer
Industrial products
True/False
Question 30
The objective of a dividend policy should be to maximize shareholder's return so that

the value of his investment is maximized.
Your Answer
True
True/False
Question 31
firms use credit policy as a marketing tool for expanding sales.
Correct Answer True

Your Answer
True
Select The Blank

Question 32
Mature companies with stable earnings generally pay out ________.
Correct Answer A high proportion of earnings
Your Answer
Conservative policy regarding payouts

Question 33
As per AS 13 Statement, the following are not considered as investments:Correct Answer Shares , Debentures , Other securities held as stock in trade
Your Answer
Shares , Debentures , Other securities held as stock in trade

Question 34
Accounting numbers are not influenced by :Correct Answer Dividend policy , Time span of money , Financial and business risk
Your Answer
Dividend policy , Time span of money , Firm's solvency
Select The Blank

Question 35
________ Assets in the balance sheet are normally excluded from the value of total
assets.
Correct Answer Intangible
Strategic Finance
Your Answer
Intangible

Question 36
The development aspect of training in firms focus on :Correct Answer Promotion to higher job levels
Your Answer
Acquisition of necessary skills essential for a job
True/False
Question 37
work in progress means the inventories are semi manufactured products.
Correct Answer True

Your Answer
True

Question 38
A company is permitted to buy back its shares through stock exchange in the following
situations :Correct Answer The company shall complete the verification of acceptances within 15 days of the
payout , The identity of the company as a purchaser shall appear on the electronic
screen when the order is placed , The buy back shall be made only on stock exchanges
with electronic trading facility
Your Answer
The company shall complete the verification of acceptances within 15 days of the
True/False
Question 39
Current accounting system is able to provide actual value of employee capabilities &
knowledge.
Your Answer
False
Select The Blank

Question 40
The ________ cost tier has the advantage of being the simplest to calculate and justify.
Correct Answer Direct
Your Answer
General overheads

Question 41
Operating economies occur due to indivisibilities of resources like :Correct Answer People , Equipment , Overheads
Your Answer
Equipment , Overheads , Printing & stationary
Select The Blank

Question 42
________ is a variable expense that can be readily eliminated with organisational
changes.
Strategic Finance
Correct Answer Rental equipment
Your Answer
Facilities

Question 43
The HHI index reflects :Correct Answer Inequality & degree of concentration
Your Answer
Inequality & degree of concentration
Select The Blank

Question 44
________ is never a part of the output.
Correct Answer Mechanisms
Your Answer
Activity
True/False
Question 45
It is essential that ABC must fit into the strategy of the company.
Correct Answer True

Your Answer
True

Question 46
In a matching approach policy, :Correct Answer There is a small risk if shortage of funds
Your Answer
Financing is totally independent of long term sources

Question 47
Which is an example out of the following to which special consideration apply for
depreciation :Correct Answer Regenerative natural resources
Your Answer
Regenerative natural resources

Question 1
Decrease in leverage results in increasing the :Correct Answer Overall cost of capital
Your Answer
Market value of debt

Question 2
Value implies that something has :Correct Answer Worth
Strategic Finance
Your Answer
Appreciation
True/False
Question 3
Organisational changes are similar to mission changes.
Correct Answer True

Your Answer
False

Question 4
In value of assets method the following is also to be included as they are also
of value to the company :Correct Answer Non trading assets
Your Answer
Trading assets
Select The Blank

Question 5
In the reproduction value method of valuation, the value of assets is taken to be
on the basis of ________
Correct Answer Replacement cost
Your Answer
Replacement cost
True/False
Question 6
Diversification helps in preserving a firm's reputation & goodwill.
Correct Answer True

Your Answer
True

Question 7
Normally the basis for identifying an enterprise segments are :Correct Answer The organizational structure of an enterprise
Your Answer
The organizational structure of an enterprise

Question 8
Investments having no physical existence includes :Correct Answer Shares , Debentures , Bonds
Your Answer
Shares , Debentures , Bonds

Question 9
The 3 groups of participants in a firm are :Correct Answer Suppliers of equity , Debt suppliers , Firm Managers
Your Answer
Suppliers of equity , Debt suppliers , Firm Managers
Strategic Finance
Question 11
A good accounting system does NOT have the characteristics such as :Correct Answer Does not cover decisions over the life cycle
Your Answer
Have a multi dimensional focus

Question 12
The direct costs tier normally only includes the following :Correct Answer The personnel payroll , Supplies , Individual rental equipment
Your Answer
Support costs , Supplies
Select The Blank

Question 13
________ are not diversible.
Correct Answer Market related risks
Your Answer
Total risks of a company

Question 14
The important aspect of dividend policy is :Correct Answer To determine the amount of earnings to be distributed to shareholders , Amount
to be retained in the firm
Your Answer
To determine the amount of earnings to be distributed to shareholders , Amount
to be retained in the firm , To dispatch the dividend warrants in time
Question 15
A company is prohibited to buy back its own shares in the following
circumstances :Correct Answer Through any subsidiary company , Through any investment company , If a
company defaults in repayment of deposits or interest due thereon
Your Answer
Through any subsidiary company , Through any investment company ,
Suppliers dues are pending for a very long time
Question 16
The main theories behind share repurchases are :Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or
signalling hypothesis
Your Answer
Dividend or personal taxation hypothesis , Leverage hypothesis , Wealth
transfer among employees and managers
True/False
Question 17
A change in the method of depreciation is treated as a change in an accounting

policy and is disclosed accordingly.
Correct Answer True
Your Answer
True
Strategic Finance
Question 18
The main characteristics of CAPM are :-
Correct Answer It is an equilibrium Model , It describes the pricing of assets as well as

derivatives , Expected security return = Riskless return + beta x (expected
market risk premium)
Your Answer
It is an equilibrium Model , Expected security return = Riskless return + beta x
(expected market risk premium) , It is easy to implement in practice
True/False
Question 19
Segment result is segment revenue less segment expenses.
Correct Answer True

Your Answer
True
True/False
Question 20
To `gather costs', means capturing all relevant expenses that pertain to the
selected model and processes.
Correct Answer True
Your Answer
True
Select The Blank

Question 21
The resource theory considers that the competitive position of a firm depends
on its ________ Assets.
Correct Answer Specific
Your Answer
Specific
Select The Blank

Question 22
Segment revenue includes ________.
Correct Answer Revenue from transactions with other segments of the enterprise
Your Answer
Revenue from transactions with other segments of the enterprise

Question 23
Deferred payment plan is also known as:Correct Answer Earn out plan
Your Answer
Cash payment plan
True/False
Question 24
The statute governing an enterprise may provide the basis for computation of
the depreciation.
Correct Answer True
Your Answer
True
Select The Blank
Strategic Finance
Question 25
The final selection of the method of shares valuation depends upon ________.
Correct Answer The purpose for which valuation is being done.

Your Answer
The resolutions passed in the board of directors meeting

Question 26
In a merger decision, the value of a firm depends upon:Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics
of acquiring firm
Your Answer
Earnings , Operating characteristics of acquiring firm , Financial characteristics
of acquiring firm
Question 27
In an aggressive approach :Correct Answer There is a very large risk of shortage of funds
Your Answer
Financing is independent of short term sources

Question 29
Significant influence is the power to :Correct Answer Participate in the financial decisions , Participate in the operating policy
decisions
Your Answer
Participate in the financial decisions , Participate in the operating policy
decisions , Control over the policies
Select The Blank
Question 30
The costs should be gathered & allocated within the organisation at the
________ structural layer.
Correct Answer Lowest possible
Your Answer
Middle
True/False
Question 31
A single organisation model serves to keep all individual initiatives to be

targeted into a co-ordinated plan.
Correct Answer True
Your Answer
True
Select The Blank

Question 32
During the costing process, we look at ________.
Correct Answer Resource consumption
Your Answer
True/False
Question 33
Expenses
Money becomes less valuable when received at a latter stage instead of in

present time.
Strategic Finance
Correct Answer True
Your Answer
True

Question 34
The external staffing performance indicators include :Correct Answer Compensation per Re. Profit , Personnel services head count , Profit per head
Your Answer
Personnel services head count , Profit per head , Recovery rate

Question 35
The Management of the Company may enter into a negotiated purchase, which
is referred to as :Correct Answer Greenfield
Your Answer
Forward Contracts

Question 36
One of the selective developments that has taken place in recent times is
companies are going in for :Correct Answer Activity based costing and management
Your Answer
Activity based costing and management
Select The Blank

Question 37
________ is not a characteristic of financial conglomerates.
Correct Answer Provide ineffective competitive process
Your Answer
Improve risk return ration

Question 38
An investment property is an investment in land or buildings :Correct Answer Not intended to be occupied substantially for use by investing enterprise , Not
intended to be in the operations of the investing enterprise
Your Answer
Not intended to be occupied substantially for use by investing enterprise , Not
intended to be in the operations of the investing enterprise , Intended to be
occupied immediately
True/False
Question 39
Notes payable means the buyer signs a note that evidences a debt to the
seller.
Correct Answer True
Your Answer
True
Select The Blank

Question 40
Business risk & financial risk do not have any influence on ________.
Strategic Finance
Correct Answer Accounting numbers
Your Answer
Accounting numbers

Question 41
During Share repurchase, it is necessary to transfer certain sum to :Correct Answer Capital redemption reserve Account
Your Answer
Company's cash credit Account

Question 42
The main assumptions for stock repurchase models are as follows :Correct Answer The market is efficient , There is perfect competition in the securities market
Your Answer
True/False
Question 43
The market is efficient , There is perfect competition in the securities market ,

Investors are not very keen to maximize the value of their investment
Cash dividends are taxable at ordinary tax rates.
Correct Answer True

Your Answer
False
Select The Blank

Question 44
When a firm invests in human resources by acquisition & training, it anticipates
a ________
Correct Answer Future generation of profits & services
Your Answer
Future generation of profits & services
Select The Blank

Question 45
The amount to be invested by any single investor in a commercial paper shall
not be less than Rs. ________.
Correct Answer 25 lacs
Your Answer
25 lacs

Question 46
Tender offers are used primarily for :Correct Answer Large Equity repurchases
Your Answer
Large Equity repurchases

Question 47
Many companies claim their main assets are their :Correct Answer People
Strategic Finance
Your Answer
People
True/False
Question 1
The accounting records serve as the major source of cost data.
Correct Answer True

Your Answer
True
Select The Blank

Question 2
________ know the best about a firm's performance.
Correct Answer Firm Managers
Your Answer
Debt financiers
True/False
Question 3
A merger will make sense to the acquiring firm if its shareholders benefit.
Correct Answer True

Your Answer
True

Question 4
The important steps involved in the analysis of mergers & acquisitions are:Correct Answer Planning , Searching & screening , Financial evaluation
Your Answer
Consultation with shareholders , Planning , Financial evaluation

Question 5
Developing a consistent framework supported by rewarding mechanisms once
it is introduced & approved at enterprise level is a characteristic of :Correct Answer The investing in people method in the united kingdom
Your Answer
The green accounting method in Denmark
True/False
Question 6
Dividends increase the current returns for shareholders.
Correct Answer True

Your Answer
True

Question 7
Internal financing means the firm finances all investments through :Correct Answer Retained earnings
Your Answer
Retained earnings
Strategic Finance
Select The Blank
Question 8
In a friendly takeover, the acquiring firm makes a financial proposal to the
largest firm's ________.
Correct Answer Management & board
Your Answer
Management & board

Question 10
Long term financing strategy is used by a firm to meet :Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion
of fluctuating working capital requirement
Your Answer
Fixed assets requirements , Investment in current assets , Portion of fluctuating
working capital requirement
True/False
Question 11
Explicit cost and implicit cost are the two parts of cost of debt.
Correct Answer True

Your Answer
True

Question 12
AS 13 Does not deal with :Correct Answer The bases for recognition of interest, dividends & rentals earned on
investments , Operating or finance leases , Investment in mutual funds
Your Answer
The bases for recognition of interest, dividends & rentals earned on
investments , Accounting for investments in the financial statements of an
enterprise , Operating or finance leases
Question 13
the amount of working capital required to meet long term, minimum needs is
called :Correct Answer Permanent working capital
Your Answer
Permanent working capital
True/False
Question 14
A long term investment is an investment other than a current investment.
Correct Answer True

Your Answer
True
True/False
Question 15
Short term financing is meant for funding working capital of a company.
Correct Answer True

Your Answer
True
Strategic Finance
Question 16
Share repurchase a form of restructuring comes under :-
Correct Answer Changes in ownership structure

Your Answer
Corporate Control
True/False
Question 17
Retained earnings are the most important internal sources of financing the
growth of the firm.
Correct Answer True
Your Answer
True
True/False
Question 18
Receivables constitutes a substantial portion of current assets of several firms.
Correct Answer True

Your Answer
True

Question 19
Investment are the assets held for earning income by way of :Correct Answer Dividend , Interest , Rentals
Your Answer
Dividend , Interest , Rentals

Question 20
Personnel services expenses is made up of:Correct Answer Personnel salaries , Cost of facilities , Training & development budgets
Your Answer
Cost of facilities , Training & development budgets , Organization size
Select The Blank

Question 21
In many companies, there is no formal record of________.
Correct Answer Investment in employees
Your Answer
Investment in employees

Question 22
Value added analysis is a method to determine, if elements within a process
flow provide the :Correct Answer Values
Your Answer
Accurate costs

Question 24
The Buy back of shares shall not be made from
Strategic Finance
Correct Answer The promoters or persons in control of the company
Your Answer
From financial Institutions
Select The Blank

Question 25
traditionally avails are provided by ________.
Correct Answer Banks
Your Answer
Financial institutions
Select The Blank

Question 26
________ is not a example of segment liability.
Correct Answer Goodwill
Your Answer
Goodwill

Question 27
Examples of accrued expenses are :Correct Answer Wages , Income tax , Property tax
Your Answer
Income tax , Property tax , Investments
Select The Blank

Question 28
Liquidation value is also known as ________.
Correct Answer Realizable value
Your Answer
Net replacement value of the assets

Question 29
Indicators of the value of an investment are obtained by :Correct Answer Reference to its market value , The investee`s assets , The expected cash
flows from the investment
Your Answer
Reference to its market value , The expected cash flows from the investment ,
Current investment valuation
Question 30
The major conditions to be fulfilled for buyback of shares as per the legal
provisions include :Correct Answer Articles of association should authorize buyback of shares , The shares which
are sought to be bought back should be fully paid up , After the buy back the
ratio of debt to total capital and free reserves should not be more than 2 : 1
Your Answer
Articles of association should authorize buyback of shares , After the buy back
the ratio of debt to total capital and free reserves should not be more than 2 :
1 , The amount involved in the buyback should not exceed 50 % of the total
paid up capital & free reserves of the company
True/False
Strategic Finance
Question 31
optimum cash balance under certainty i.e. Baumul`s model allows the cash flow
to fluctuate.
Your Answer
True
Select The Blank

Question 32
Cost accounted for per activity is classified under ________.
Correct Answer Traceable cost
Your Answer
Non traceable cost

Question 33
The following categories of personnel are taken into account to calculate the
actual manpower strength :Correct Answer Full time equivalents , Temporary staff , Part time personnel
Your Answer
Temporary staff , Part time personnel , Casual workers
Select The Blank

Question 34
The cost of facilities is usually included & distributed as ________.
Correct Answer Depreciation
Your Answer
Overheads

Question 35
In value of assets approach the value of which of the following should be
deducted to calculate the net assets available to the equity shareholders :Correct Answer Outstanding preference shares
Your Answer
Outstanding preference shares

Question 36
usually the `controlling block' tends to be between :Correct Answer 20 & 40 percent
Your Answer
20 & 40 percent

Question 37
When competition is high in the market, it is :Correct Answer Essential to maintain a larger inventory of finished goods
Your Answer
Necessary that firms should have less working capital requirement
Select The Blank

Question 38
Segment expense includes ________.
Strategic Finance
Correct Answer The relevant portion of enterprise revenue that can be allocated on a
reasonable basis to a segment
Your Answer
The relevant portion of enterprise revenue that can be allocated on a
Select The Blank
Question 39
Credit standards should be relaxed upon the point where incremental returns
________ incremental costs.
Correct Answer Equals
Your Answer
Is more than
True/False
Question 40
Management of working capital refers to the management of total assets and

liabilities of a company.
Your Answer
True

Question 41
The employer in offering the job contract assumes a range of legal obligations
such as :Correct Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
contributions to social security payments
Your Answer
Health & safety policies , Pensions & contributions to social security payments ,
Issue shares necessarily to employees on joining an organisation
Question 42
The most important internal sources of financing the growth of the firm is
through :Correct Answer Retained earnings
Your Answer
Retained earnings

Question 43
When a change in the method of depreciation is made :Correct Answer Depreciation is recalculated in accordance with the new method
Your Answer
Surplus is debited to the P & L Account

Question 44
Shortcomings of accounting numbers consist of the following :Correct Answer Firms use different kind of accounting methods , Business risk and financial risk
do not have any influence on accounting numbers
Your Answer
Firms use different kind of accounting methods , Dividend policy has lot of
influence on accounting numbers , Business risk and financial risk do not have
any influence on accounting numbers
Question 45
Profitability of a company depends upon :-
Strategic Finance
Correct Answer Cost of capital
Your Answer
Earning per share

Question 46
A normal firm shows the following characteristics :Correct Answer No unique optimum payout ratio , Market value per share unaffected by the
payout ratio , All dividend policies are similar
Your Answer
No unique optimum payout ratio , Market value per share unaffected by the
Select The Blank
Question 47
As per residual theory of dividends the focus is on ________.
Correct Answer Growth
Your Answer
Payout of dividends even if the funds are unavailable

Question 1
If a company is following multiple accounting system, the activity accountant
will have to match data across :Correct Answer
Select The Blank
Question 2
Correct Answer
Combination of 2 or more companies into existing company is called

________.
Absorption

Question 4
For M & As, the acquiring firm needs industry data on :Correct Answer

Question 5
A high payout policy on dividends implies :Correct Answer
Select The Blank

Question 6
Correct Answer
118 Bn
True/False
Question 7
Correct Answer
Select The Blank
The scope of the data required relates to the scope of the activity model &
processes under review.
True
Strategic Finance
Question 8
Correct Answer
The total cost of the activity model allocated by the applied activity drivers to
the output of the activity model is called________.
The cost of the output
Your Answer
Total cost of activity

Question 9
The voluntary market based method means :Correct Answer
Develop a consistent framework which can be operational across sectors

and countries

Question 10
Exit costs are classified into 3 categories namely :Correct Answer
Lost efficiency prior to separation , Job vacancy cost during the new
search , Termination pay

Question 11
The offer price by the acquiring company should be an average of the
weekly high & low for :Correct Answer
The last 26 months
Your Answer
Last 180 days

Question 12
One of the advantages of trade credit is its flexibility i.e. the firm does not :Correct Answer
Have to sign a note , Pledge collateral , Adhere to strict payment schedule
Your Answer
Negotiate formally ,

Question 13
A firm with a judicious mixture of debt and equity will have :Correct Answer
Lowest cost of capital , High value of firm , Good market reputation

Question 14
The acquirer should intimate to the target company & the concerned stock
exchanges as soon as its holding touches :Correct Answer

Question 15
Correct Answer
True/False
Question 16
Exchange ratio
For determining exchange ratio, the model developed by Conn & Nielson is
used.
Strategic Finance
Correct Answer
True

Question 17
As per Pecking order theory, which is the costliest means of funding :Correct Answer
Equity Shares
Select The Blank

Question 19
Correct Answer
Preferentially lower rate
Your Answer
Transaction costs
True/False
Question 20
Correct Answer
Select The Blank

Question 21
Correct Answer
Articles of association should authorise buy back of securities as per the

Company's Act.
True
In today's fast moving world, the quickest way to get information on a firm is
through ________.
Internet

Question 22
Suppliers of equity are interested in :Correct Answer
True/False
Question 23
Correct Answer
High share prices
The buyback shall be made only on stock exchanges with electronic trading
facility.
True

Question 24
Accounting standard 19 for leases statement is applied in accounting for all
leases other than :Correct Answer
Lease agreements to explore for or use natural resources , Licensing
agreements for items such as motion picture films , Lease agreements to
use land
True/False
Question 25
Correct Answer
False

Question 26
Segment liabilities do not include :-
Strategic Finance
Correct Answer
Borrowings & other liabilities that are incurred for financing rather than
operating purpose

Question 27
Economic analysis usually covers :Correct Answer
A small number of improvement alternatives
Your Answer
Different projected costs of the suggested process

Question 28
A firm using a conservative policy for determining the requirements of
current assets :Correct Answer
Has fewer production stoppages , Ensures quick deliveries to customers ,
Stimulates sales
Your Answer
, Increases the ROI
Select The Blank

Question 29
Correct Answer
Big ticket items & durable goods
Your Answer
Industrial products
True/False
Question 30
Correct Answer
The objective of a dividend policy should be to maximize shareholder's

return so that the value of his investment is maximized.
False
True/False
Question 31
Correct Answer
True
Select The Blank

Question 32
Correct Answer
A high proportion of earnings

Question 33
As per AS 13 Statement, the following are not considered as investments:Correct Answer

Question 34
Accounting numbers are not influenced by :Correct Answer
Dividend policy , Time span of money , Financial and business risk
Strategic Finance
Your Answer
Select The Blank

Question 35
Correct Answer
, Firm's solvency
________ Assets in the balance sheet are normally excluded from the value
of total assets.
Intangible

Question 36
The development aspect of training in firms focus on :Correct Answer
Promotion to higher job levels
Your Answer
True/False
Question 37
Correct Answer
True

Question 38
A company is permitted to buy back its shares through stock exchange in
the following situations :Correct Answer
The company shall complete the verification of acceptances within 15 days
of the payout , The identity of the company as a purchaser shall appear on
the electronic screen when the order is placed , The buy back shall be made
only on stock exchanges with electronic trading facility
True/False
Question 39
Correct Answer
Select The Blank

Question 40
Current accounting system is able to provide actual value of employee

capabilities & knowledge.
False
Correct Answer
The ________ cost tier has the advantage of being the simplest to calculate
and justify.
Direct
Your Answer
General overheads

Question 41
Operating economies occur due to indivisibilities of resources like :Correct Answer
Select The Blank

Question 42
Correct Answer
People , Equipment , Overheads
________ is a variable expense that can be readily eliminated with

organisational changes.
Rental equipment
Strategic Finance
Your Answer
Facilities

Question 43
The HHI index reflects :Correct Answer
Select The Blank

Question 44
Correct Answer
Mechanisms
Your Answer
Activity
True/False
Question 45
Correct Answer
True

Question 46
In a matching approach policy, :Correct Answer
There is a small risk of shortage of funds
Your Answer
Financing is totally independent of long term sources

Question 47
Which is an example out of the following to which special consideration
apply for depreciation :Correct Answer

Question 1
Decrease in leverage results in increasing the :Correct Answer
Overall cost of capital
Your Answer
Market value of debt

Question 2
Value implies that something has :Correct Answer
Worth
Your Answer
Appreciation
True/False
Question 3
Correct Answer
True
Strategic Finance
Question 4
In value of assets method the following is also to be included as they are
also of value to the company :Correct Answer
Non trading assets
Your Answer
Select The Blank

Question 5
Trading assets
Correct Answer
In the reproduction value method of valuation, the value of assets is taken to

be on the basis of ________
Replacement cost
True/False
Question 6
Correct Answer
True

Question 7
Normally the basis for identifying an enterprise segments are :Correct Answer

Question 8
Investments having no physical existence includes :Correct Answer

Question 9
The 3 groups of participants in a firm are :Correct Answer

Question 11
A good accounting system does NOT have the characteristics such as :Correct Answer
Does not cover decisions over the life cycle
Your Answer
Have a multi dimensional focus

Question 12
The direct costs tier normally only includes the following :Correct Answer
The personnel payroll , Supplies , Individual rental equipment
Your Answer
Support costs , Supplies
Select The Blank

Question 13
Strategic Finance
Correct Answer
Market related risks
Your Answer
Total risks of a company

Question 14
The important aspect of dividend policy is :Correct Answer
Your Answer
To determine the amount of earnings to be distributed to shareholders ,

Amount to be retained in the firm
, To dispatch the dividend warrants in time

Question 15
A company is prohibited to buy back its own shares in the following
circumstances :Correct Answer
Through any subsidiary company , Through any investment company , If a
Your Answer
, Suppliers dues are pending for a very long time

Question 16
The main theories behind share repurchases are :Correct Answer
Your Answer
True/False
Question 17
Correct Answer
Dividend or personal taxation hypothesis , Leverage hypothesis ,

Information or signalling hypothesis
Wealth transfer among employees and managers
A change in the method of depreciation is treated as a change in an

accounting policy and is disclosed accordingly.
True

Question 18
The main characteristics of CAPM are :Correct Answer
Your Answer
It is an equilibrium Model , It describes the pricing of assets as well as

derivatives , Expected security return = Riskless return + beta x (expected
market risk premium)
, It is easy to implement in practice
True/False
Question 19
Correct Answer
True
True/False
Question 20
Correct Answer
Select The Blank
To `gather costs', means capturing all relevant expenses that pertain to the
selected model and processes.
True
Strategic Finance
Question 21
Correct Answer
The resource theory considers that the competitive position of a firm

depends on its ________ Assets.
Specific
Select The Blank

Question 22
Segment revenue includes ________.
Correct Answer

Question 23
Deferred payment plan is also known as:Correct Answer
Earn out plan
Your Answer
Cash payment plan
True/False
Question 24
Correct Answer
Select The Blank

Question 25
The statute governing an enterprise may provide the basis for computation
of the depreciation.
True
Correct Answer
The final selection of the method of shares valuation depends upon

________.
The purpose for which valuation is being done.
Your Answer
The resolutions passed in the board of directors meeting

Question 26
In a merger decision, the value of a firm depends upon:Correct Answer
Earnings , Operating characteristics of acquiring firm , Financial

characteristics of acquiring firm

Question 27
In an aggressive approach :Correct Answer
There is a very large risk of shortage of funds
Your Answer
Financing is independent of short term sources

Question 29
Significant influence is the power to :Correct Answer
Select The Blank

Question 30
Correct Answer
Participate in the financial decisions , Participate in the operating policy

decisions
The costs should be gathered & allocated within the organisation at the
________ structural layer.
Lowest possible
Strategic Finance
Your Answer
True/False
Question 31
Middle
Correct Answer
A single organisation model serves to keep all individual initiatives to be

targeted into a co-ordinated plan.
True
Select The Blank

Question 32
Correct Answer
Resource consumption
Your Answer
Expenses
True/False
Question 33
Correct Answer
Money becomes less valuable when received at a latter stage instead of in

present time.
True

Question 34
The external staffing performance indicators include :Correct Answer
Your Answer
Compensation per Re. Profit , Personnel services head count , Profit per
head
, Recovery rate

Question 35
The Management of the Company may enter into a negotiated purchase,
which is referred to as :Correct Answer
Greenfield
Your Answer
Forward Contracts

Question 36
One of the selective developments that has taken place in recent times is
companies are going in for :Correct Answer
Select The Blank

Question 37
Correct Answer
Provide ineffective competitive process
Your Answer
Improve risk return ration

Question 38
An investment property is an investment in land or buildings :-
Strategic Finance
Correct Answer
Your Answer
True/False
Question 39
Not intended to be occupied substantially for use by investing enterprise ,

Not intended to be in the operations of the investing enterprise
Not intended to be occupied substantially for use by investing enterprise ,
Not intended to be in the operations of the investing enterprise , Intended to
be occupied immediately
Correct Answer
Notes payable means the buyer signs a note that evidences a debt to the
seller.
True
Select The Blank

Question 40
Correct Answer
Accounting numbers

Question 41
During Share repurchase, it is necessary to transfer certain sum to :Correct Answer
Capital redemption reserve Account

Question 42
The main assumptions for stock repurchase models are as follows :Correct Answer
Your Answer
The market is efficient , There is perfect competition in the securities market

, Investors are not very keen to maximize the value of their investment
True/False
Question 43
Correct Answer
True
Select The Blank

Question 44
Correct Answer
Select The Blank

Question 45
Correct Answer
When a firm invests in human resources by acquisition & training, it

anticipates a ________
The amount to be invested by any single investor in a commercial paper

shall not be less than Rs. ________.
25 lacs

Question 46
Tender offers are used primarily for :Correct Answer
Strategic Finance
Question 47
Many companies claim their main assets are their :-
Correct Answer
People
True/False
Question 1
Correct Answer
True
Select The Blank

Question 2
Correct Answer
Firm Managers
Your Answer
Debt financiers
True/False
Question 3
Correct Answer
True

Question 4
The important steps involved in the analysis of mergers & acquisitions are:Correct Answer
Planning , Searching & screening , Financial evaluation
Your Answer
Consultation with shareholders ,

Question 5
Developing a consistent framework supported by rewarding mechanisms
once it is introduced & approved at enterprise level is a characteristic of :Correct Answer
The investing in people method in the united kingdom
Your Answer
The green accounting method in Denmark
True/False
Question 6
Correct Answer
True

Question 7
Internal financing means the firm finances all investments through :Correct Answer
Select The Blank

Question 8
Correct Answer
Retained earnings
In a friendly takeover, the acquiring firm makes a financial proposal to the

largest firm's ________.
Management & board
Strategic Finance
Question 10
Long term financing strategy is used by a firm to meet :Correct Answer
Your Answer
Fixed assets requirements , Permanent working capital requirements ,

Portion of fluctuating working capital requirement
, Investment in current assets ,
True/False
Question 11
Correct Answer
True

Question 12
AS 13 Does not deal with :Correct Answer
Your Answer
The bases for recognition of interest, dividends & rentals earned on

investments , Operating or finance leases , Investment in mutual funds
, Accounting for investments in the financial statements of an enterprise ,

Question 13
the amount of working capital required to meet long term, minimum needs is
called :Correct Answer
True/False
Question 14
Correct Answer
True
True/False
Question 15
Correct Answer
True

Question 16
Share repurchase a form of restructuring comes under :Correct Answer
Changes in ownership structure
Your Answer
Corporate Control
True/False
Question 17
Correct Answer
True/False
Question 18
Retained earnings are the most important internal sources of financing the
growth of the firm.
True
Receivables constitutes a substantial portion of current assets of several

firms.
Strategic Finance
Correct Answer
True

Question 19
Investment are the assets held for earning income by way of :Correct Answer

Question 20
Personnel services expenses is made up of:Correct Answer
Personnel salaries , Cost of facilities , Training & development budgets
Your Answer
, Organization size
Select The Blank

Question 21
Correct Answer

Question 22
Value added analysis is a method to determine, if elements within a process
flow provide the :Correct Answer
Values
Your Answer
Accurate costs

Question 24
Correct Answer
The promoters or persons in control of the company
Your Answer
From financial Institutions
Select The Blank

Question 25
Correct Answer
Banks
Your Answer
Select The Blank

Question 26
Correct Answer
Goodwill

Question 27
Examples of accrued expenses are :Correct Answer
Wages , Income tax , Property tax
Strategic Finance
Your Answer
Income tax , Property tax , Investments
Select The Blank

Question 28
Correct Answer
Realizable value
Your Answer

Question 29
Indicators of the value of an investment are obtained by :Correct Answer
Your Answer
Reference to its market value , The investee`s assets , The expected cash
flows from the investment
, Current investment valuation

Question 30
The major conditions to be fulfilled for buyback of shares as per the legal
provisions include :Correct Answer
Articles of association should authorize buyback of shares , The shares
which are sought to be bought back should be fully paid up , After the buy
back the ratio of debt to total capital and free reserves should not be more
than 2 : 1
Your Answer
, The amount involved in the buyback should not exceed 50 % of the total
paid up capital & free reserves of the company
True/False
Question 31
Correct Answer
optimum cash balance under certainty i.e. Baumul`s model allows the cash
flow to fluctuate.
False
Select The Blank

Question 32
Correct Answer
Traceable cost
Your Answer
Non traceable cost

Question 33
The following categories of personnel are taken into account to calculate the
actual manpower strength :Correct Answer
Full time equivalents , Temporary staff , Part time personnel
Your Answer
, Casual workers
Select The Blank

Question 34
Correct Answer
Depreciation
Your Answer
Overheads
Strategic Finance
Question 35
In value of assets approach the value of which of the following should be
deducted to calculate the net assets available to the equity shareholders :Correct Answer

Question 36
usually the `controlling block' tends to be between :Correct Answer
20 & 40 percent

Question 37
When competition is high in the market, it is :Correct Answer
Essential to maintain a larger inventory of finished goods
Your Answer
Select The Blank

Question 38
Correct Answer
Select The Blank

Question 39

Correct Answer
Credit standards should be relaxed upon the point where incremental

returns ________ incremental costs.
Equals
Your Answer
Is more than
True/False
Question 40
Correct Answer
Management of working capital refers to the management of total assets

and liabilities of a company.
False

Question 41
The employer in offering the job contract assumes a range of legal
obligations such as :Correct Answer
Rewards - cash like & non cash like , Health & safety policies , Pensions &
Your Answer
, Issue shares necessarily to employees on joining an organisation

Question 42
The most important internal sources of financing the growth of the firm is
through :Correct Answer
Retained earnings
Strategic Finance
Question 43
When a change in the method of depreciation is made :-
Correct Answer
Depreciation is recalculated in accordance with the new method

Question 44
Shortcomings of accounting numbers consist of the following :Correct Answer
Firms use different kind of accounting methods , Business risk and financial
risk do not have any influence on accounting numbers

Question 45
Profitability of a company depends upon :Correct Answer
Cost of capital
Your Answer
Earning per share

Question 46
A normal firm shows the following characteristics :Correct Answer
Select The Blank

Question 47
Correct Answer
Growth
Your Answer
Select The Blank

Question
The advantage of ________ is that the company is not required to wait for the
payment by the bill issuer.
Correct Answer Bill discounting
Your Answer
Letter of credits
Select The Blank

Question
An asset is included in segment assets, if and only if the related depreciation or
amortisation is included in ________.
Correct Answer Segment expense
Your Answer
Segment expense

Question
The main characteristics of operating economies are :Correct Answer It is achieved through horizontal, vertical and conglomerate mergers , It occurs
due to indivisibilities of resources , It is possible in generic management
functions
Your Answer
It is achieved through horizontal, vertical and conglomerate mergers , It occurs
due to indivisibilities of resources , It is possible in generic management
Strategic Finance
functions
True/False
Question
In today's world, knowledge has become the key determinant for economic &
business success.
Correct Answer True
Your Answer
True

Question
When a change in the method of depreciation is made :Correct Answer Depreciation is recalculated in accordance with the new method
Your Answer

Question
Organisations have various records and reports from past actions such as :Correct Answer Logs to record workflow , Specific costs , External and internal audit reports
Your Answer
Logs to record workflow , General studies and processes , External and internal
audit reports

Question
The FEA Tools encompass a vast array of information & policy into :Correct Answer One evaluation
Your Answer
One evaluation
True/False
Question
Determination of residual value of an asset is normally a difficult matter.
Correct Answer True

Your Answer
True

Question
If the residual value of an asset is likely to be significant :Correct Answer It is estimated at the time of acquisition / installation
Your Answer
It cannot be subsequently revalued

Question
Shareholders returns consists of 2 components :Correct Answer Dividend , Capital gains
Your Answer
Interest , Dividend
Strategic Finance
Question
Your Answer
Dividend or personal taxation hypothesis , Leverage hypothesis , Information or
Question
80 % of the total cost is normally generated by 20 % of the activity is a
characteristic of :Correct Answer Pareto analysis
Your Answer
Pareto analysis
Select The Blank

Question
The ________ cost tier has the advantage of being the simplest to calculate
and justify.
Your Answer
Direct

Question
The characteristics of working capital are :Correct Answer It is continually required for a going concern , Quantum of working capital
fluctuates depending on the level of activity , It is impacted by numerous
transactions on a continuous basis
Your Answer
It is impacted by numerous transactions on a continuous basis , It is continually
required for a going concern , Quantum of working capital fluctuates depending
on the level of activity
Select The Blank
Question
If the segment result of a segment includes interest or dividend income its
segment assets will not include ________.
Correct Answer Payables
Your Answer
Payables
Select The Blank

Question
If a segment is not designated as a ________ it should be included as an
unallocated reconciling item.
Correct Answer Reportable segment
Your Answer
Reportable segment
True/False
Question
Decisions related to working capital are repetitive & frequent.
Correct Answer True

Your Answer
True
Strategic Finance
Question
Termination pay
Your Answer
Lost efficiency prior to separation , Job vacancy cost during the new search ,
Termination pay
Select The Blank
Question
Your Answer
Is more than

Question
The traditional balance sheet of a company does not show the valuation of:Correct Answer Human Capital
Your Answer
Human Capital

Question
For ABC Analysis the available cost data :Correct Answer Has to be adjusted for change , Has to be corrected for undocumented element
costs , Has to be combined with different types of data from alternate sources
Your Answer
Has to be adjusted for change , Has to be corrected for undocumented element
Question
Companies often need to value its own :Correct Answer Shares
Your Answer
Shares

Question
In a merger decision, the value of a firm depends upon:Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics
of acquiring firm
Your Answer
Earnings , Operating characteristics of acquiring firm , Financial characteristics
of acquiring firm
True/False
Question
Human assets accounting is still to become an accepted trend in the industry.
Correct Answer True

Your Answer
True
Select The Blank
Strategic Finance
Question
In the reproduction value method of valuation, the value of assets is taken to be

on the basis of ________
Your Answer
Replacement cost

Question
The overhead expenses include :Correct Answer Utilities , Maintenance , Security
Your Answer
Utilities , Maintenance , Security

Question
The following Act contains the provisions permitting the companies to buy back
their shares :Correct Answer Companies (Amendment) Act, 1999
Your Answer
Companies (Amendment) Act, 1999

Question
Your Answer
True/False
Question
Opportunity costs and real costs decrease the market value of a firm.
Correct Answer True

Your Answer
True
True/False
Question
Correct Answer True

Your Answer
True
Select The Blank

Question
Your Answer
True/False
Question
Direct traceable cost
The statute governing an enterprise may provide the basis for computation of
the depreciation.
Strategic Finance
Correct Answer True
Your Answer
False
Select The Blank

Question
Your Answer

Question
Generally Èmployees as balance sheet assets', show the following
characteristics:Correct Answer Take work home , Strive to generate high quality , Come to work when they are
unwell and stressed
Your Answer
Take work home , Strive to generate high quality , Come to work when they are
unwell and stressed
True/False
Question
Appraisal value of a firm can be acquired from an independent appraisal

agency.
Correct Answer True
Your Answer
True
True/False
Question
The chance of bankruptcy is small when the leverage of a firm is small.
Correct Answer True

Your Answer
True
True/False
Question
Trade credit creates book debts which the firm is expected to collect in the near
future.
Correct Answer True
Your Answer
True

Question
Book value is relevant to determine the firm's value because of the following
reasons except:Correct Answer It cannot be used as a starting point to be compared & complimented by other
analysis
Your Answer
It cannot be used as a starting point to be compared & complimented by other
analysis
Question
In the past, costing mainly focused on :Correct Answer Manufacturing costs
Strategic Finance
Your Answer
Manufacturing costs

Question
A high payout policy on dividends implies :Correct Answer More current dividends , Less retained earnings
Your Answer
Less retained earnings

Question
The acquiring firm for any M & A will require data about the target firm which
will include :Correct Answer Quality of management , Production capabilities , Profitability
Your Answer
Production capabilities , Capital & labour intensity , Profitability

Question
Which of the following is NOT A Characteristic of declining firm :Correct Answer The optimum payout ratio for a declining firm is not 100 %
Your Answer
The optimum payout ratio for a declining firm is not 100 %

Question
If the segment result of a segment includes interest expense its segment
liabilities include :Correct Answer The related interest bearing liabilities
Your Answer
The related interest bearing liabilities
Select The Blank

Question
Buy back through book building the process should be made through
________.
Correct Answer An electronically linked transparent facility
Your Answer
An electronically linked transparent facility
Select The Blank

Question
Correct Answer The relevant portion of enterprise revenue that can be allocated on a
Your Answer
Question
Book value is relevant to determine the firm's value because of the following
reasons except:Correct Answer
analysis
Strategic Finance
Your Answer
It is used as a starting point
True/False
Question
Correct Answer
True

Question
Your Answer
Location of its customers

Question
FEA is a technique to analyze & evaluate :Correct Answer
Alternative process improvements
True/False
Question
Arbitrage process implies that security cannot sell at different prices.
Correct Answer
True
Select The Blank

Question
Correct Answer
True/False
Question
Correct Answer
Retained earnings are the most important internal sources of financing the growth
of the firm.
True

Question
Your Answer
Participate in the financial decisions , Participate in the operating policy decisions

, Control over the policies

Question
For paying dividends, firms will have a given amount of :Correct Answer
Select The Blank
Cash available
Strategic Finance
Question
Earning power of the company approach tries to value the ________.
Correct Answer
Current value of the assets
Your Answer
Income / profit from the assets

Question
Your Answer
Land , Debentures

Question
Operating economies of scale are achieved through the following mergers :Correct Answer
Your Answer
Horizontal , Vertical , Conglomerate

, Financial
True/False
Question
Usually only a single method is used for valuation of shares.
Correct Answer
False
Select The Blank

Question
Correct Answer
Growth
True/False
Question
Correct Answer
Management of working capital refers to the management of total assets and

liabilities of a company.
False

Question
To determine the amount of earnings to be distributed to shareholders , Amount to

be retained in the firm

Question
The cost of an investment includes charges such as :Correct Answer
Brokerage , Fees , Duties
Select The Blank

Question
Strategic Finance
Correct Answer
True/False
Question
Planning helps an acquiring firm to identify the units it should drop & it should add.
Correct Answer
True

Question
Segment information needs to be presented :Correct Answer
Only on the basis of the consolidated financial statements
Your Answer
As separate financial statements
Select The Blank

Question
Postage is an example of ________ cost.
Correct Answer
Non traceable cost

Question
Book value of the assets is directly dependent on the accounting policies followed
by the company which is used in the following areas :Correct Answer
Booking depreciation , Methods of provisions , Inventory valuation

Question
Every business requires funds on a continual basis for expenses incurred on for :Correct Answer
Purchase of raw material , Manufacturing costs , Administration
Select The Blank

Question
Forward or backward integration is a characteristic of ________.
Correct Answer
Vertical Mergers
Your Answer
Conglomerate mergers
True/False
Question
Correct Answer
According to NI Approach, decrease in leverage decreases the overall cost of

capital and increases the firm's value.
False

Question
If a firm diversifies managerial teams formed can be shifted from unproductive
activities to productive ones which leads to :Correct Answer
Improved profitability , Continuity , Growth of the firm
Your Answer
, Better facilities and work conditions
Strategic Finance
Question
Best practices, a tool for review process is similar to :-
Correct Answer
Bench marking
Your Answer
Value added analysis

Question
One of the important assumptions for capital structure theories is :Correct Answer
True/False
Question
Correct Answer
True/False
Question
Correct Answer
Select The Blank

Question
Debt and equity are the 2 kinds of funds used by the firm
If a company has resorted to buyback its shares, it cannot make a further issue of
the same kind of securities within a period of 1 year.
False
The scope of the data required relates to the scope of the activity model &
processes under review.
True
Correct Answer
The ________ cost tier has the advantage of being the simplest to calculate and
justify.
Direct
Select The Blank

Question
Stock repurchases ________ the debt / equity ratio.
Correct Answer
Increases
Select The Blank

Question
Correct Answer
The resource theory considers that the competitive position of a firm depends on
its ________ Assets.
Specific
Your Answer
General
Select The Blank

Question
Correct Answer
Goodwill
Your Answer
Product warranty provision
Select The Blank

Question
If a segment is not designated as a ________ it should be included as an

unallocated reconciling item.
Strategic Finance
Correct Answer
Reportable segment
Your Answer
Business segment

Question
Debt suppliers main concern is :Correct Answer
Interest & debt repayment

Question
The difference between current assets & current liabilities is known as :Correct Answer
Net working capital
Your Answer
Working capital cycle

Question
When the working capital is less than its peak level :Correct Answer
The surplus is invested in liquid assets

Question
According to a survey for reasons for share purchase, what is the percentage of
cash distribution to cash holders ?
Correct Answer
0.28
True/False
Question
Correct Answer
Value based approach of HRA tracking can be divided into 2 categories - Non monetary & monetary.
True
True/False
Question
The activity model is normally created by an activity Accountant.
Correct Answer
False

Question
Organisations have various records and reports from past actions such as :Correct Answer
Logs to record workflow , Specific costs , External and internal audit reports
Your Answer
Logs to record workflow , Specific costs , General studies and processes
Select The Blank

Question
Correct Answer
Depreciation
Strategic Finance
Your Answer
Fringe benefits

Question
The existence of significant influence by an investor is usually evidenced in the
following ways :Correct Answer
Participation in policy making processes , Material transactions between the
investor & the investee , Interchange of managerial personnel
Question
While accounting for human assets, the following data is to be considered :Correct Answer
Full time equivalent staff , Revenues , Expenses
Your Answer
Full time equivalent staff , Expenses , Good will
True/False
Question
Correct Answer
True

Question
Conservative policy for determining the requirements of current assets is also
known as :Correct Answer
Flexible policy
Your Answer
True/False
Question
Correct Answer
Aggressive policy
optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to
fluctuate.
False

Question
open account credit appears on the buyer's balance sheet as :Correct Answer
Accounts payable
Your Answer
Accounts receivables
Select The Blank

Question
Correct Answer
According to Altman (1984) total costs in percentage of the market value of a firm
range between ________
12.1 % & 16.7 %
Your Answer
less than 10 %

Question
According to a survey for reasons for share purchase, what is the percentage of
cash distribution to cash holders ?
Strategic Finance
Correct Answer
0.28

Question
Trade credits are of the following types:Correct Answer
Notes payable , Trade acceptances , Open accounts
Your Answer
Notes payable , Trade acceptances , Commercial paper
True/False
Question
Correct Answer
The statute governing an enterprise may provide the basis for computation of the
depreciation.
True
Select The Blank

Question
The clean up period is usually ________ months.
Correct Answer
1 to 2 months
Your Answer
3 months

Question
Any addition or extension to an existing asset which retains a separate identify & is
capable of being used after the existing asset is disposed of :Correct Answer
Is depreciated independently
Your Answer
Is depreciated along with the existing asset

Question
Acceptable audit requirements cannot be overlooked even under the pressure of :Correct Answer
Timeliness & turnaround
True/False
Question
Correct Answer
True

Question
Book value of the assets is directly dependent on the accounting policies followed
by the company which is used in the following areas :Correct Answer
Select The Blank

Question
Correct Answer
Identify disclosure on human resources as a societal concern & prepare

international regulations comes under ________
The compulsory method
Your Answer
The voluntary market based method
Strategic Finance
Question
Walter's model on dividend relevance is based on the following assumptions :Correct Answer
Your Answer
Internal financing , Constant return and cost of capital , 100 Per cent payout or
retention
, Perfect markets

Question
A manufacturing concern like a machine tool has :Correct Answer
A long operating cycle
Your Answer
Sells largely on cash basis
True/False
Question
Correct Answer
True
Select The Blank

Question
Depreciation is ________ of an asset.
Correct Answer
Loss of value

Question
Where the management's estimate of the useful life of an asset of the enterprise is
shorter than that envisaged under the provisions of the relevant statute, the
depreciation provision is approximately computed :Correct Answer
By applying a higher rate
Your Answer
Select The Blank

Question
By applying a lower rate
Correct Answer

Segment expense
Your Answer
Segment revenue

Question
The support elements consists of important functions such as :Correct Answer
Payroll , Accounting , Automatic data processing
Your Answer
Payroll , Co-ordination , Accounting

Question
Cost benefit analysis is the simplest form of comparison between :Correct Answer
Ideas to determine which is faster, better or cheaper
Strategic Finance
Your Answer
Value added & non value added activities

Question
Valuation methods are highly specific to the following for doing the valuation :Correct Answer
Select The Blank

Question
To the person , To the firm , To the Consultant
Correct Answer
Equals
Your Answer
Have no correlation with

Question
Modigliani - Miller Theoram is based on :Correct Answer
Perfect Capital Markets
True/False
Question
Correct Answer
True
True/False
Question
Correct Answer
When a company is able to assess an individual's worth, it helps in increasing its

own worth.
True

Question
The 3 main types of accounting records followed by an organisation are :Correct Answer
Organisational accounting , Budgetary accounting , Cost accounting
Select The Blank

Question
Correct Answer
Goodwill
Your Answer
Accrued liabilities
Select The Blank

Question
Correct Answer
Mechanisms
True/False
Strategic Finance
Question
It is necessary to identify all costs that may be related to an acquisition.
Correct Answer
True

Question
To determine the firm's value, what is difficult to placing a value on?
Correct Answer
Quantitative factors

Question

Question
Which of the following is NOT a disadvantage of deferred payment plan to the
acquiring firm?
Correct Answer
There is built - in cushion to the acquiring firm as total payment is not made at the
time of acquisition
Question
Free Reserves is a component of :Correct Answer
Equity

Question
Select The Blank

Question
Total risk reduces if operations of combining firms are ________.
Correct Answer
Negatively correlated

Question
As a general rule, an asset is :Correct Answer
Your Answer
A good or a right that a firm owns in a determined moment , Prepayment

adjustments , Capitalized expenses
adjustments , An Indemnity

Question
Financial statements classify the following into separate categories :Correct Answer
Fixed assets , Investments , Current assets
Strategic Finance
Question
Which of the following is not a characteristic of convertible security?
Correct Answer
It does not combine the protection of fixed security with the growth potential of
ordinary shares
It appears more attractive to the acquired firm
Your Answer

Question
Select The Blank
Question
Correct Answer
Economies of scale arises with increase in volume of production leading

to________.
Reduction in the cost of production
Your Answer

Question
A single business segment does not include products & services :Correct Answer
With significantly differing risks & returns
Your Answer
With risks & returns which are totally unrelated to each other

Question
Debt reduces :Correct Answer
Select The Blank
Question
Agency cost of free cash flow , Commitment to pay in time to all lenders ,
Freedom of decisions
Correct Answer
To make commercial sense, transaction size in forfeiting process needs to be in

excess of ________.
250000
Your Answer
250000

Question
The following of the depreciable asset may undergo subsequent changes arising
due to price adjustments :Correct Answer
Historical cost
Your Answer
Estimated residual value

Question
As per Dorsman (1995) - financing with a high percentage of debt prevents firms
from :Correct Answer
Investing too much
True/False
Question
DCF is not a method used to calculate market value of a firm.
Strategic Finance
Correct Answer
False

Question
As per the study conducted by RBI, Current assets constitute :Correct Answer
True/False
Question
More than 50 % of the total assets
Risk appetite decides the rate of capitalization.
Correct Answer True

Your Answer
True
True/False
Question
An activity model is a tool to assist in understanding & defining the organisation.
Correct Answer True

Your Answer
True
Select The Blank

Question
Your Answer
Segment expense
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer

Question
Segment reporting comes under :Correct Answer AS 17
Strategic Finance
Your Answer
AS 13

Question
Equity includes :Correct Answer Development Rebate Reserve
Your Answer
Development Rebate Reserve
Select The Blank

Question
usually credit lines are established for a period of ________.
Correct Answer 1 year
Your Answer
6 months

Question
Your Answer
Question
The financial framework of a merger decision covers 3 interrelated aspects i.e. :Correct Answer Determining the firm's value , Financing techniques in mergers , Analysis of merger as
a capital budgeting decision
Your Answer
Analysis of firm specific information , Determining the firm's value , Financing
techniques in mergers
Question
Your Answer

Question
In a merger decision, the value of a firm depends upon:Correct Answer Operating characteristics of acquiring firm , Financial characteristics of acquiring firm ,
Earnings
Your Answer
Earnings , Operating characteristics of acquiring firm , Financial characteristics of
acquiring firm
True/False
Question
under review.
Correct Answer True
Strategic Finance
Your Answer
True
True/False
Question

Your Answer
False

Question
The acquiring firm for any M & A will require data about the target firm which will include
:Correct Answer Quality of management , Production capabilities , Profitability
Your Answer
Quality of management , Production capabilities , Profitability

Question
One way to make the firm unattractive to raiders is :Correct Answer Sell the crown jewels
Your Answer
Show a long list of current assets which cannot be easily liquidated

Question
Operating economies of scale are achieved through the following mergers :Correct Answer Horizontal , Vertical , Conglomerate
Your Answer
Select The Blank

Question
The date on which the announcement is made of new dividend is called ________.
Correct Answer Declaration date
Your Answer
Declaration date

Question
A firm should consider acquisition as a :Correct Answer Capital budget decision
Your Answer
Development decision

Question
Your Answer
Strategic Finance
Question
Segment expenses include :Correct Answer Expense relating to transactions with other segments of the enterprise
Your Answer
Expense relating to transactions with other segments of the enterprise

Question
Book value of the assets is directly dependent on the accounting policies followed by
the company which is used in the following areas :Correct Answer Booking depreciation , Methods of provisions , Inventory valuation
Your Answer

Question
Your Answer
20 & 40 percent
Select The Blank

Question
If total external revenue attributable to reportable segments constitutes less than
________ of the total enterprise revenue additional segments should be identified as
reportable segments.
Correct Answer 75 percent
Your Answer
75 percent
True/False
Question
Sometimes the mechanisms may appear to be inputs for an activity.
Correct Answer True

Your Answer
True
True/False
Question
Making decision on dividend is a very crucial area of financial management for a firm.
Correct Answer True

Your Answer
True
Select The Blank

Question
Increase in cost of capital means decrease in ________.
Correct Answer Profitability
Your Answer
Profitability
Strategic Finance
Question
Your Answer
Select The Blank

Question
Your Answer
Select The Blank

Question
In the shareholding pattern of a company, the promoter's holding includes________.
Correct Answer Foreign Promoters
Your Answer
Mutual Funds
True/False
Question
Accounting standards (AS - 13) is now mandatory.
Correct Answer True

Your Answer
True
Select The Blank

Question
If the segment result of a segment includes interest or dividend income its segment
assets will not include ________.
Your Answer
Payables
Select The Blank

Question
Correct Answer Banks
Your Answer
Banks

Question
The value based approach of HRA Tracking suggests that the value of human
resources depends upon :Correct Answer Capacity to generate revenue
Your Answer
Capacity to generate revenue

Question
According to a survey for reasons for share purchase, what is the percentage of cash
distribution to cash holders ?
Strategic Finance
Correct Answer 0.28
Your Answer
0.39
True/False
Question

Your Answer
False
Select The Blank

Question
Your Answer

Question
Investment are the assets held for earning income by way of :Correct Answer Dividend , Interest , Rentals
Your Answer
True/False
Question
A change in the method of depreciation is treated as a change in an accounting policy

and is disclosed accordingly.
Correct Answer True
Your Answer
True

Question
A normal firm shows the following characteristics :Correct Answer No unique optimum payout ratio , Market value per share unaffected by the payout ratio
, All dividend policies are similar
Your Answer
No unique optimum payout ratio , Market value per share unaffected by the payout ratio
Question
As per Dorsman (1995) - financing with a high percentage of debt prevents firms from :Correct Answer Investing too much
Your Answer
Diversifying into other businesses
Select The Blank

Question
Strategic Finance
Your Answer
Traceable cost

Question
Benchmarking is :Correct Answer For gathering ideas without the stress of original creative thinking
Your Answer
The review of a best process in the industry

Question
Your Answer
Equity Shares

Question
Your Answer
High share prices

Question
The stock value for a company will be considered to be fair value for ordinary
transactions if the shares are :Correct Answer Listed
Your Answer
Listed

Question
While accounting for human assets, the following data is to be considered :Correct Answer Full time equivalent staff , Revenues , Expenses
Your Answer
Full time equivalent staff , Revenues , Good will

Question
Your Answer
Equity Shares
Select The Blank

Question
Your Answer
Amalgamation
Strategic Finance
Question
As a general rule, an asset is :Correct Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments ,
Capitalized expenses
Your Answer
A good or a right that a firm owns in a determined moment , Prepayment adjustments ,
Question
In the book building method, the company makes an offer to buy back :Correct Answer Its specified number of shares at a specified offer price range
Your Answer
Its specified number of shares at a specified offer price range
Select The Blank

Question
The resource theory considers that the competitive position of a firm depends on its
________ Assets.
Your Answer
Intangible
Select The Blank

Question
Your Answer
Declaration date

Question
In a merger decision, the value of a firm depends upon:Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of
acquiring firm
Your Answer
acquiring firm
Question
open account credit appears on the buyer's balance sheet as :Correct Answer Accounts payable
Your Answer
True/False
Question
Correct Answer True

Your Answer
True
Strategic Finance
Question
Short term sources of funds include :-
Correct Answer Current Liabilities

Your Answer
Current Liabilities
Select The Blank

Question
The number of bidding centers shall not be less than ________ for buy back through
book building.
Correct Answer 30
Your Answer
50
Select The Blank

Question
The most popular kind of dividend policy is one that pays a ________.
Correct Answer Regular, steady dividend
Your Answer
Regular, steady dividend

Question
Internal financing means the firm finances all investments through :Correct Answer Retained earnings
Your Answer
Retained earnings
Select The Blank

Question
Your Answer

Question
Investment decisions are mainly concerned with :Correct Answer Assets
Your Answer
Equity

Question
The earning power of the company approach includes :Correct Answer Mainly discounting of all future earnings
Your Answer
Realizable or liquidation value
True/False
Question
Strategic Finance
Correct Answer True
Your Answer
True

Question
Your Answer

Question
Your Answer
Worth

Question
Arbitrage means :Correct Answer Securities cannot sell at different prices
Your Answer
Selling a security
Select The Blank

Question
Segment assets are ________.
Correct Answer Directly attributable to the segment
Your Answer
Indirectly attributable to the segments
True/False
Question
Correct Answer True

Your Answer
True

Question
One of the selective developments that has taken place in recent times is companies
are going in for :Correct Answer Activity based costing and management
Your Answer

Question
Implicit claims are non written promises and rights such as :Correct Answer Right to provide service to customers , Job security for the employees
Strategic Finance
Your Answer
Right to provide service to customers , Crucial project information to customers , Job

security for the employees
Select The Blank

Question
According to Altman (1984) total costs in percentage of the market value of a firm range
between ________
Correct Answer 12.1 % & 16.7 %
Your Answer
12.1 % & 16.7 %
Select The Blank

Question
Correct Answer Increases
Your Answer
Decreases

Question
In the disclosures in financial statements, there are significant restrictions on :Correct Answer The right of ownership , Realisability of investments , The remittance of income &
proceeds of disposal
Your Answer
The right of ownership , Realisability of investments , The remittance of income &
proceeds of disposal
True/False
Question
Correct Answer True

Your Answer
True

Question
For ABC Analysis the available cost data :Correct Answer Has to be adjusted for change , Has to be corrected for undocumented element costs ,
Has to be combined with different types of data from alternate sources
Your Answer
Damages the credibility of the process , Has to be corrected for undocumented element
True/False
Question
Your Answer
True
True/False
Question
When a company is able to assess an individual's worth, it helps in increasing its own
worth.
Correct Answer True
Your Answer
True
Strategic Finance
Question
depreciation provision is approximately computed :Correct Answer By applying a higher rate
Your Answer

Question
Your Answer
True/False
Question
Correct Answer True

Your Answer
True

Question
Financial statements classify the following into separate categories :Correct Answer Fixed assets , Investments , Current assets
Your Answer

Question
Your Answer
Select The Blank
Question
Market approach is used for companies whose shares are ________ on the Stock
market.
Correct Answer Listed
Your Answer
Issued in odd lots

Question
in case of temporary working capital, the investment in current assets varies with :Correct Answer Seasonal requirements
Your Answer
Production policy
Strategic Finance
Question
Equity includes :-
Correct Answer Development Rebate Reserve

Your Answer
True/False
Question
The capital Asset pricing model describes the pricing of assets as well as derivatives.
Correct Answer True

Your Answer
True
Select The Blank

Question
The advantage of ________ is that the company is not required to wait for the payment
by the bill issuer.
Your Answer
Bill of exchange
True/False
Question
Correct Answer True

Your Answer
True

Question
capable of being used after the existing asset is disposed of :Correct Answer Is depreciated independently
Your Answer
True/False
Question
In market value approach, interested parties never manipulate the stock markets.

Your Answer
True

Question
For accounting standard (AS) 27, Significant influence may be gained by :Correct Answer Share ownership , Statute , Agreement
Your Answer
Share ownership , Statute , Agreement

Question
Accounts payable is also known as :-
Strategic Finance
Correct Answer Trade credit from suppliers
Your Answer
Trade credit from suppliers
Select The Blank

Question
Correct Answer Current value of the assets
Your Answer

Question
Your Answer

Question
Your Answer
Post merger price
Select The Blank

Question
Correct Answer The relevant portion of enterprise revenue that can be allocated on a reasonable basis
to a segment
Your Answer
General administrative expenses

Question
The depreciable assets are assets which are expected to be used :Correct Answer During more than 1 accounting period
Your Answer
During more than 1 accounting period
True/False
Question
Correct Answer True

Your Answer
True

Question
Strategic Finance
Your Answer
True/False
Question
Baumul`s Model is similar to EOQ model in inventory management.
Correct Answer True

Your Answer
True

Question
Financial evaluation involves :Correct Answer Determining the earnings , Areas of risk , Best way to finance a merger
Your Answer
Determining the earnings , Areas of risk , Best way to finance a merger

Question
The difference between current assets & current liabilities is known as :Correct Answer Net working capital
Your Answer
Net working capital
Select The Blank

Question
Your Answer
Increases

Question
Which of the following systems identifies each of the organizational elements of the
traditional bureaucratic structure and applies the identifiable costs of that element
accordingly?
Correct Answer Organization element accounting
Your Answer
Organization element accounting

Question
The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :Correct Answer Articles of association should authorize buyback of shares , The shares which are
sought to be bought back should be fully paid up , After the buy back the ratio of debt to
total capital and free reserves should not be more than 2 : 1
Your Answer
After the buy back the ratio of debt to total capital and free reserves should not be more
than 2 : 1 , Articles of association should authorize buyback of shares , The shares
which are sought to be bought back should be fully paid up
True/False
Question
Correct Answer True
Strategic Finance
Your Answer
True

Question
Free Reserves is a component of :Correct Answer Equity
Your Answer
Equity

Question
Short term sources of funds include :Correct Answer Current Liabilities
Your Answer
Capital
True/False
Question
To `gather costs', means capturing all relevant expenses that pertain to the selected
model and processes.
Correct Answer True
Your Answer
True

Question
When a company has resorted to buyback of its shares it cannot make a further issue
of the same kind of securities within a period of how many months?
Correct Answer 6 months
Your Answer
6 months
Select The Blank

Question
At times managers invest in projects that improve the company's ________.
Correct Answer Prestige or power
Your Answer
Value

Question
It is the activity accountant's job to do the following for the existing organisational
structure :Correct Answer To define the costs , To refine the costs , To document the costs
Your Answer
To define the costs , To document the costs , Support the costing of the activities

Question
One of the important assumptions for capital structure theories is :Correct Answer Debt and equity are the 2 kinds of funds used by the firm
Your Answer
Strategic Finance
True/False
Question
Assets held as stock - in - trade are also investments.

Your Answer
True
Select The Blank

Question
Your Answer

Question
Profitability of a company depends upon :Correct Answer Cost of capital
Your Answer
Earning per share
Select The Blank

Question
Your Answer
1000 crores

Question
The characteristics of working capital are :Correct Answer It is continually required for a going concern , Quantum of working capital fluctuates
depending on the level of activity , It is impacted by numerous transactions on a
continuous basis
Your Answer
It is continually required for a going concern , Quantum of working capital fluctuates
continuous basis
Question
If a firm diversifies managerial teams formed can be shifted from unproductive activities
to productive ones which leads to :Correct Answer Improved profitability , Continuity , Growth of the firm
Your Answer

Question
In the tender offer, the purchaser approaches :Correct Answer The shareholder
Your Answer
The shareholder
Strategic Finance

Question
To overcome the problems of matching data the actions can be taken as follows :Correct Answer Keep extensive records of the process , Maintain detailed procedures , Keep records of
assumptions as an audit trail
Your Answer
Keep extensive records of the process , Maintain detailed procedures , Keep records of
Select The Blank
Question
Your Answer
Foreign Promoters

Question
A current investment is an investment that is by nature :Correct Answer Readily realisable , Intended to be held for not more than 1year from the date on which
investment is made
Your Answer
Readily realisable , Intended to be held for not more than 1year from the date on which
investment is made
True/False
Question
Trade credit creates book debts which the firm is expected to collect in the near future.
Correct Answer True

Your Answer
True
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer

Question
The financial managers of a company consume a great deal of their time in activities
like :Correct Answer Monitoring the investment in inventories , Negotiating favourable credit terms ,
Administrating Accounts receivables
Your Answer
Monitoring the investment in inventories , Negotiating favourable credit terms , Defining
a proper strategy for product promotion
Strategic Finance
True/False
Question
Appraisal value of a firm can be acquired from an independent appraisal agency.
Correct Answer True

Your Answer
True

Question
The following categories of personnel are taken into account to calculate the actual
manpower strength :Correct Answer Full time equivalents , Temporary staff , Part time personnel
Your Answer
Full time equivalents , Temporary staff , Casual workers

Question
Accrued expenses represent :Correct Answer Costless financing , An interest free source of financing
Your Answer
Costless financing , An interest free source of financing , Truly discretionary financing
Select The Blank

Question
There is a ________ relationship between the number of employees & the use of
operating supplies.
Correct Answer Natural
Your Answer
Natural

Question
Value added analysis :Correct Answer Helps to identify potential activities that may be omitted immediately
Your Answer
Does not assist the planners & project teams
True/False
Question
Notes payable means the buyer signs a note that evidences a debt to the seller.
Correct Answer True

Your Answer
True

Question
A firm can manage with small inventory if the supply is :Correct Answer Prompt & adequate
Your Answer
Prompt & adequate
True/False
Question
A transport corporation has a substantial working capital requirement.
Strategic Finance
Your Answer
True

Question
Your Answer

Select The Blank

Question
As per NOI Approach - the overall capitalization rate remains ________ for all levels of
financial leverage.
Correct Answer Constant
Your Answer
Constant
Select The Blank

Question
When a firm invests in human resources by acquisition & training, it anticipates a
________
Your Answer

Question
Your Answer
Select The Blank

Question
The processes to be identified & focused should to be on the basis of not adhering to
benchmarks, bottlenecks, quality not met, time problems etc. This is called as
________.
Correct Answer Process analysis
Your Answer
Activity analysis

Question
The following is not a method of payment to the acquired firm:Correct Answer Fixed deposits of the acquiring firm
Your Answer
Tender offers
Select The Blank

Question
Strategic Finance
Your Answer
Controls
True/False
Question
Correct Answer True

Your Answer
True

Question
One of the bases for determining the residual value of similar assets is :Correct Answer Realizable value
Your Answer
Realizable value
Select The Blank

Question
In case of direct placement of commercial papers it may be issued for maturities
________ from the date of issue.
Correct Answer Between 15 days to 1 year
Your Answer
Less than 6 months

Question
Book value is relevant to determine the firm's value because of the following reasons
except:Correct Answer It cannot be used as a starting point to be compared & complimented by other analysis
Your Answer
It cannot be used as a starting point to be compared & complimented by other analysis
True/False
Question
Correct Answer True

Your Answer
True
True/False
Question

Your Answer
True

Question
A company is prohibited to buy back its own shares in the following circumstances :Correct Answer Through any subsidiary company , Through any investment company , If a company
defaults in repayment of deposits or interest due thereon
Your Answer
Through any subsidiary company , Through any investment company , If a company
Strategic Finance
True/False
Question
Correct Answer True

Your Answer
True

Question
A quantity discount is offered :Correct Answer On large shipments
Your Answer
On large shipments
True/False
Question
According to NI Approach, decrease in leverage decreases the overall cost of capital

and increases the firm's value.
Your Answer
True

Question
Human Assets accounting stands for :Correct Answer Measurement & reporting of the cost and value of people as organisational resources
Your Answer
Measurement & reporting of the cost and value of people as organisational resources

Question
Your Answer
Interest , Dividend

Question
In value of assets method the following is also to be included as they are also of value
to the company :Correct Answer Non trading assets
Your Answer
current assets
True/False
Question

Your Answer
False
Strategic Finance
Question
Your Answer

Question
Your Answer
Market growth , Marketing capabilities , Degree of regulation
Select The Blank

Question
Your Answer
Profitability

Question
Your Answer
Select The Blank

Question
Long term cash forecasting is generally for a period of ________ years.
Correct Answer 3 to 5 years
Your Answer
5 - 8 years
Select The Blank

Question
book building.
Correct Answer 30
Your Answer
50

Question
The following of the depreciable asset may undergo subsequent changes arising due to
price adjustments :Correct Answer Historical cost
Your Answer
Historical cost
Strategic Finance
Question
The 3 groups of participants in a firm are :-
Correct Answer Suppliers of equity , Debt suppliers , Firm Managers

Your Answer
Suppliers of equity , Firm Managers , Government Agencies

Question
A company that comes to the rescue of a firm that is being targeted for a takeover is
called :Correct Answer White knight
Your Answer
Controlling block
Select The Blank

Question
________ is not a example of segment asset.
Correct Answer Customer advances
Your Answer
Customer advances
True/False
Question
Correct Answer True

Your Answer
False

Question
Your Answer
10 & 30 percent
True/False
Question
Correct Answer True

Your Answer
True
Select The Blank

Question
AS 23 - Accounting for investments in associates in consolidated financial statements
comes into effect in respect of accounting periods commencing on or after ________.
Correct Answer 01.04.2002
Your Answer
01.04.2001

Question
The direct costs tier normally only includes the following :-
Strategic Finance
Correct Answer The personnel payroll , Supplies , Individual rental equipment
Your Answer

Question
Your Answer
Full time equivalents , Part time personnel , Casual workers

Question
Debt reduces :Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions
Your Answer
Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions
Question
A firm using a conservative policy for determining the requirements of current assets :Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales
Your Answer
Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales
True/False
Question
Valuation of current investments on overall basis is not considered appropriate.
Correct Answer True

Your Answer
False
Select The Blank

Question
by the bill issuer.
Your Answer
Bill of exchange

Question
A single business segment does not include products & services :Correct Answer With significantly differing risks & returns
Your Answer
With similar risks & returns
True/False
Question
Strategic Finance
Correct Answer True
Your Answer
True

Question
Termination pay
Your Answer
Job vacancy cost during the new search , Termination pay , Recruiting new employee
as a replacement of the left employee
Question
A firm's current assets include :Correct Answer Marketable securities , Receivables , Inventory
Your Answer
Marketable securities , Receivables , Inventory

Question
acquiring firm
Your Answer
Earnings , Manpower of the acquiring firm , Financial characteristics of acquiring firm
Question
Your Answer
screen when the order is placed , It is not mandatory to specify the maximum price at
which the buy back will be made
True/False
Question
Correct Answer True

Your Answer
True
Select The Blank

Question
assets.
Your Answer
Intangible
Strategic Finance
Question

Your Answer
Pre merger price
Select The Blank

Question
A shareholder expects a higher rate of return as a firm's compensation for ________.
Correct Answer Increased risk
Your Answer
Investment in projects to improve prestige or power
True/False
Question
Usually cost data is perfect for ABC Analysis & distribution.

Your Answer
True
Select The Blank

Question
Correct Answer Vertical Mergers
Your Answer
Vertical Mergers

Question
Segment assets are determined after :Correct Answer Deducting related allowances / provisions reported as direct offsets
Your Answer
Deducting income tax assets

Question
Acceptable audit requirements cannot be overlooked even under the pressure of :Correct Answer Timeliness & turnaround
Your Answer
Mergers & acquisitions

Question
Which of the following is NOT a disadvantage of deferred payment plan to the acquiring
firm?
Correct Answer There is built - in cushion to the acquiring firm as total payment is not made at the time
of acquisition
Your Answer
Freedom of operation to the management of the newly acquired firm
True/False
Question
A single organisation model serves to keep all individual initiatives to be targeted into a
co-ordinated plan.
Strategic Finance
Correct Answer True
Your Answer
True
True/False
Question

Your Answer
True

Question
Your Answer
True/False
Question
Correct Answer True

Your Answer
False

Question
The internal staffing performance indicators are :Correct Answer Sales per employee , Recovery rate , Utilization %
Your Answer
Sales per employee , Recovery rate , Utilization %
Select The Blank

Question
Your Answer

Question
Your Answer
Takes into account time as an important parameter

Question
Fixed price tender offers are accompanied by an abnormal announcement period return
of :Correct Answer 8 - 10 %
Strategic Finance
Your Answer
6-8%

Question
Your Answer
Compensation per Re. Profit , Personnel services head count , Recovery rate
Select The Blank

Question
________.
Your Answer
Internet

Question
Your Answer
Shares

Question
Long term financing strategy is used by a firm to meet :Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement
Your Answer
Fixed assets requirements , Permanent working capital requirements
True/False
Question
Correct Answer True

Your Answer
True
Select The Blank

Question
Your Answer
3 years

Question
Shortcomings of accounting numbers consist of the following :Correct Answer Firms use different kind of accounting methods , Business risk and financial risk do not
have any influence on accounting numbers
Your Answer
Dividend policy has lot of influence on accounting numbers , Business risk and financial
risk do not have any influence on accounting numbers , There is a serious relationship
between economic value and profit
Strategic Finance
Select The Blank
Question
Investors can reduce the company related risk by diversification of their investments in
________.
Correct Answer Shares of a large number of companies
Your Answer
Mutual funds
True/False
Question
Correct Answer True

Your Answer
True

Question
The following is not a factor for reduction in the life of an asset by obsolescence :Correct Answer No study of market demand for a product / service
Your Answer
Legal restrictions

Question
Due to diversification employees seek:Correct Answer Job security , Better opportunities within the firm , Higher compensation
Your Answer
Job security , Better opportunities within the firm , More perks & benefits , Higher
compensation

Question
Research into true human resources accounting began in :Correct Answer 1960`s
Your Answer
1994
Select The Blank

Question
Your Answer
Directly attributable to the segment
True/False
Question
AS 13 statement does not deal with operating or finance leases.
Correct Answer True

Your Answer
True
Strategic Finance
Select The Blank
Question
The costs should be gathered & allocated within the organisation at the ________
structural layer.
Your Answer
Lowest possible

Question
Your Answer
Worth

Question
Examples of accounting methods used by firm are :Correct Answer FIFO , LIFO , Accrual Accounting
Your Answer
FIFO , LIFO , Accrual Accounting

Question
Your Answer
The market is efficient , Offers are minimum limit offers. , Investors are not very keen to
maximize the value of their investment

Question
Your Answer
True/False
Question
It is easy to find a risk free security.

Your Answer
False

Question
Your Answer
Mainly discounting of all future earnings
Select The Blank
Strategic Finance
Question

Your Answer
Select The Blank

Question
Your Answer

Question
Your Answer
True/False
Question

Your Answer
True

Question
Your Answer

Question
Accounts payable is also known as :Correct Answer Trade credit from suppliers
Your Answer
Select The Blank

Question
Your Answer

Question
depreciation provision is approximately computed :-
Strategic Finance
Correct Answer By applying a higher rate
Your Answer

Question
Your Answer
Post merger price
Select The Blank

Question
to a segment
Your Answer
General administrative expenses

Question
The depreciable assets are assets which are expected to be used :Correct Answer During more than 1 accounting period
Your Answer
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer
True/False
Question
Correct Answer True

Your Answer
True

Question
Strategic Finance
Your Answer

Question
Your Answer
Net working capital
Select The Blank

Question
Your Answer
Increases

Question
accordingly?
Your Answer

Question
Your Answer
After the buy back the ratio of debt to total capital and free reserves should not be more
than 2 : 1 , Articles of association should authorize buyback of shares , The shares
which are sought to be bought back should be fully paid up
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer
Equity

Question
Short term sources of funds include :-
Strategic Finance
Correct Answer Current Liabilities
Your Answer
Capital
True/False
Question
Correct Answer True
Your Answer
True

Question
When a company has resorted to buyback of its shares it cannot make a further issue
of the same kind of securities within a period of how many months?
Correct Answer 6 months
Your Answer
6 months
Select The Blank

Question
Your Answer
Value

Question
Your Answer

Question
Your Answer
True/False
Question

Your Answer
True
Select The Blank

Question
Strategic Finance
Your Answer

Question
Your Answer
Earning per share
Select The Blank

Question
Your Answer
1000 crores

Question
continuous basis
Your Answer
continuous basis
Question
Your Answer

Question
In the tender offer, the purchaser approaches :Correct Answer The shareholder
Your Answer
The shareholder

Question
To overcome the problems of matching data the actions can be taken as follows :Correct Answer Keep extensive records of the process , Maintain detailed procedures , Keep records of
Your Answer
Keep extensive records of the process , Maintain detailed procedures , Keep records of
Select The Blank
Question
Strategic Finance
Your Answer
Foreign Promoters

Question
investment is made
Your Answer
investment is made
True/False
Question
Correct Answer True

Your Answer
True
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer

Question
Your Answer
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer
Full time equivalents , Temporary staff , Casual workers
Strategic Finance

Question
Your Answer
Select The Blank

Question
operating supplies.
Your Answer
Natural

Question
Value added analysis :Correct Answer Helps to identify potential activities that may be omitted immediately
Your Answer
Does not assist the planners & project teams
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer
Prompt & adequate
True/False
Question

Your Answer
True

Question
Your Answer

Select The Blank
Strategic Finance
Question
financial leverage.
Your Answer
Constant
Select The Blank

Question
________
Your Answer

Question
Your Answer
Select The Blank

Question
________.
Your Answer
Activity analysis

Question
Your Answer
Tender offers
Select The Blank

Question
Your Answer
Controls
True/False
Question
Correct Answer True

Your Answer
True

Question
One of the bases for determining the residual value of similar assets is :-
Strategic Finance
Your Answer
Realizable value
Select The Blank

Question
Your Answer
Less than 6 months

Question
Your Answer
True/False
Question
Correct Answer True

Your Answer
True
True/False
Question

Your Answer
True

Question
Your Answer
True/False
Question
Correct Answer True

Your Answer
True

Question
Strategic Finance
Your Answer
On large shipments
True/False
Question

Your Answer
True

Question
Your Answer

Question
Your Answer
Interest , Dividend

Question
In value of assets method the following is also to be included as they are also of value
to the company :Correct Answer Non trading assets
Your Answer
current assets
True/False
Question

Your Answer
False

Question
Your Answer

Question
Strategic Finance
Your Answer
Select The Blank

Question
Your Answer
Profitability

Question
Your Answer
Select The Blank

Question
Your Answer
5 - 8 years
Select The Blank

Question
book building.
Correct Answer 30
Your Answer
50

Question
price adjustments :Correct Answer Historical cost
Your Answer
Historical cost

Question
Your Answer
Suppliers of equity , Firm Managers , Government Agencies

Question
called :Correct Answer White knight
Your Answer
Controlling block
Strategic Finance
Select The Blank
Question
Your Answer
Customer advances
True/False
Question
Correct Answer True

Your Answer
False

Question
Your Answer
10 & 30 percent
True/False
Question
Correct Answer True

Your Answer
True
Select The Blank

Question
Your Answer
01.04.2001

Question
Your Answer

Question
Your Answer
Full time equivalents , Part time personnel , Casual workers
Strategic Finance
Question
decisions
Your Answer
decisions
Question
sales
Your Answer
sales
True/False
Question
Correct Answer True

Your Answer
False
Select The Blank

Question
by the bill issuer.
Your Answer
Bill of exchange

Question
Your Answer
With similar risks & returns
True/False
Question
Correct Answer True

Your Answer
True

Question
Termination pay
Your Answer
Job vacancy cost during the new search , Termination pay , Recruiting new employee
as a replacement of the left employee
Strategic Finance
Question
A firm's current assets include :-
Correct Answer Marketable securities , Receivables , Inventory

Your Answer

Question
acquiring firm
Your Answer
Earnings , Manpower of the acquiring firm , Financial characteristics of acquiring firm
Question
Your Answer
screen when the order is placed , It is not mandatory to specify the maximum price at
which the buy back will be made
True/False
Question
Correct Answer True

Your Answer
True
Select The Blank

Question
assets.
Your Answer
Intangible

Question
Your Answer
Pre merger price
Select The Blank

Question
Correct Answer Increased risk
Your Answer
Investment in projects to improve prestige or power
Strategic Finance
True/False
Question

Your Answer
True
Select The Blank

Question
Your Answer
Vertical Mergers

Question
Segment assets are determined after :Correct Answer Deducting related allowances / provisions reported as direct offsets
Your Answer
Deducting income tax assets

Question
Your Answer
Mergers & acquisitions

Question
firm?
of acquisition
Your Answer
Freedom of operation to the management of the newly acquired firm
True/False
Question
co-ordinated plan.
Correct Answer True
Your Answer
True
True/False
Question

Your Answer
True
Strategic Finance
Question
In an aggressive approach :-
Correct Answer There is a very large risk of shortage of funds

Your Answer
True/False
Question
Correct Answer True

Your Answer
False

Question
Your Answer
Select The Blank

Question
Your Answer

Question
Your Answer
Takes into account time as an important parameter

Question
of :Correct Answer 8 - 10 %
Your Answer
6-8%

Question
Your Answer
Compensation per Re. Profit , Personnel services head count , Recovery rate
Select The Blank

Question
________.
Strategic Finance
Your Answer
Internet

Question
Your Answer
Shares

Question
Your Answer
True/False
Question
Correct Answer True

Your Answer
True
Select The Blank

Question
Your Answer
3 years

Question
Your Answer
risk do not have any influence on accounting numbers , There is a serious relationship
between economic value and profit
Select The Blank
Question
________.
Your Answer
Mutual funds
True/False
Question
Correct Answer True
Strategic Finance
Your Answer
True

Question
The following is not a factor for reduction in the life of an asset by obsolescence :Correct Answer No study of market demand for a product / service
Your Answer
Legal restrictions

Question
Your Answer
Job security , Better opportunities within the firm , More perks & benefits , Higher
compensation

Question
Your Answer
1994
Select The Blank

Question
Your Answer
True/False
Question
Correct Answer True

Your Answer
True
Select The Blank

Question
structural layer.
Your Answer
Lowest possible

Question
Your Answer
Worth
Strategic Finance
Question
Examples of accounting methods used by firm are :Correct Answer FIFO , LIFO , Accrual Accounting
Your Answer

Question
Your Answer
The market is efficient , Offers are minimum limit offers. , Investors are not very keen to
maximize the value of their investment

Question
Your Answer
True/False
Question

Your Answer
False

Question
Your Answer
Select The Blank

Question
Your Answer
Select The Blank

Question
Your Answer
Strategic Finance
Question
Your Answer
Utilization % , Sales per employee , Recovery rate

Question
Your Answer
True/False
Question
Correct Answer True

Your Answer
True
True/False
Question
Money becomes less valuable when received at a latter stage instead of in present
time.
Correct Answer True
Your Answer
True

Question
Your Answer
True/False
Question
Book value is based on the balance sheet value of owner's equity.
Correct Answer True

Your Answer
True
True/False
Question
If a company has resorted to buyback its shares, it cannot make a further issue of the
same kind of securities within a period of 1 year.
Your Answer
False
Strategic Finance
Question
Your Answer
Articles of association should authorize buyback of shares , The shares which are
Question
Your Answer
Dividend or personal taxation hypothesis , Information or signalling hypothesis , Wealth
transfer among employees and managers
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer
Select The Blank

Question
financial leverage.
Your Answer
Constant

Question
Valuation methods are highly specific to the following for doing the valuation :Correct Answer To the person , To the firm , To the Consultant
Your Answer
To the firm , To the Consultant , To the employees of the company
Select The Blank

Question
Your Answer
Prestige or power
Strategic Finance
Question
A high payout policy means :-
Correct Answer More current dividends

Your Answer
More current dividends
Select The Blank

Question
Your Answer
Firm Managers

Question
Your Answer
Interest Payable

Question
Your Answer
Current Liabilities

Question
Shortage costs are mainly in the form of :Correct Answer Disruption in production schedule , Loss of sales , Loss of customer goodwill
Your Answer
Financing a lower level of fixed assets , Disruption in production schedule , Loss of

sales
Select The Blank

Question
________.
Your Answer
Internet
Select The Blank

Question
Buy back through book building the process should be made through ________.
Your Answer
True/False
Question
Strategic Finance
Correct Answer True
Your Answer
True
Select The Blank

Question
Cost of ________ is more than other sources for raising short - term finance.
Correct Answer Bank finance
Your Answer
Bank finance

Question
Segment reporting comes under :Correct Answer AS 17
Your Answer
AS 23

Question
Your Answer

Question
The development aspect of training in firms focus on :Correct Answer Promotion to higher job levels
Your Answer
Select The Blank

Question
Your Answer
5 - 8 years

Question
Segment information needs to be presented :Correct Answer Only on the basis of the consolidated financial statements
Your Answer
As general purpose financial statement
Select The Blank

Question
Strategic Finance
Your Answer
118 Bn

Question
The budgetary records are useful for:Correct Answer Providing a rationale for division of costs , Replacing missing data , Validating
accounting costs
Your Answer
Validating accounting costs , Allocating indirect costs into different cost centres ,
Providing a rationale for division of costs
Question
Indicators of the value of an investment are obtained by :Correct Answer Reference to its market value , The investee`s assets , The expected cash flows from
the investment
Your Answer
Reference to its market value , The expected cash flows from the investment , Current
investment valuation
Question
The support elements consists of important functions such as :Correct Answer Payroll , Accounting , Automatic data processing
Your Answer

Question
Most companies focus only on :Correct Answer Return on investment
Your Answer
Return on investment

Question
Cost benefit analysis is the simplest form of comparison between :Correct Answer Ideas to determine which is faster, better or cheaper
Your Answer

Question
Accounts payable is also known as :Correct Answer Trade credit from suppliers
Your Answer
Select The Blank

Question
the commercial paper may be issued in the multiples of ________.
Correct Answer 5 lakhs
Your Answer
1 lac
Strategic Finance
True/False
Question
According to NOI Approach, any capital structure is optimum.
Correct Answer True

Your Answer
False

Question
Your Answer
True/False
Question
The intellectual assets of a company are often worth 3 or 4 times the tangible book
value.
Correct Answer True
Your Answer
True
Select The Blank

Question
________ government has made it mandatory to include in their annual reports
information on customers, processes & human capital.
Correct Answer Danish (Denmark)
Your Answer
Danish (Denmark)

Question
Your Answer
Dividend , Capital gains

Question
Your Answer
True/False
Question

Your Answer
True
True/False
Question
Strategic Finance
Your Answer
True
True/False
Question

Your Answer
False
Select The Blank

Question
financial leverage.
Your Answer
Constant

Question
The following method of valuation is used for listed companies that have an active
market for their shares :Correct Answer Market value approach
Your Answer
Market value approach

Question
The main assumption in comparative analysis is the possibility of :Correct Answer Combination or co-location of similar functions
Your Answer
Combination or co-location of similar functions

Question
The budgetary records are useful for:Correct Answer Validating accounting costs , Providing a rationale for division of costs , Replacing
missing data
Your Answer
Validating accounting costs , Providing a rationale for division of costs , Replacing
missing data
Select The Blank
Question
Your Answer
1 year

Question
As per the study conducted by RBI, Current assets constitute :Correct Answer More than 50 % of the total assets
Strategic Finance
Your Answer
Select The Blank

Question
Your Answer
Bank finance

Question
Your Answer
Seasonal requirements

Question
Your Answer
True/False
Question
The carrying amount for current investments is the lower of cost & fair value.
Correct Answer True

Your Answer
True

Question
Your Answer
True/False
Question
Correct Answer True

Your Answer
True
Select The Blank

Question
Your Answer
Vertical Mergers
Strategic Finance
Question
Your Answer
Investing too much

Question
Estimation for determining the useful life of an asset is required :Correct Answer On some reasonable basis
Your Answer
On some reasonable basis
True/False
Question

Your Answer
False

Question
Which of the following company is reaping high market valuation due to showing human
resources as an asset in its balance sheet information?
Correct Answer Infosys
Your Answer
BHEL

Question
Your Answer

Question
Your Answer
High share prices
Select The Blank

Question
Your Answer
Ex - dividend date

Question
The net income approach is based on following 3 assumptions :-
Strategic Finance
Correct Answer There are no taxes , Cost of debt is less than equity capitalization rate , Use of debt
doesn't change the risk perception of investors
Your Answer
There are no taxes , Cost of debt is less than equity capitalization rate , Use of debt
Question
Your Answer
True/False
Question
Correct Answer True

Your Answer
True

Question
Debt suppliers main concern is :Correct Answer Interest & debt repayment
Your Answer

Question
Value added analysis is a method to determine, if elements within a process flow
provide the :Correct Answer Values
Your Answer
Values
Select The Blank

Question
________.
Your Answer
Shares of a large number of companies

Question
The 3 main types of accounting records followed by an organisation are :Correct Answer Organisational accounting , Budgetary accounting , Cost accounting
Your Answer

Question
The following disclosures in financial statements in relation to investments are
appropriate :Correct Answer The accounting policies for the determination of carrying amount of investments ,
Profits & losses on disposal of current investments , The amounts included in P & L
Strategic Finance
Statement
Your Answer
The accounting policies for the determination of carrying amount of investments ,

Statement
Select The Blank

Question
Your Answer
Foreign Promoters

Question
Your Answer
Market growth , Marketing capabilities , Nature of competition

Question
Your Answer
Determining the firm's value , Financing techniques in mergers , Analysis of merger as
Question
According to Net Income Approach, the average cost of capital declines as the leverage
ratio :Correct Answer Increases
Your Answer
Increases
True/False
Question
Correct Answer True

Your Answer
True
True/False
Question
Correct Answer True

Your Answer
True

Question
Personnel services expenses is made up of:-
Strategic Finance
Correct Answer Personnel salaries , Cost of facilities , Training & development budgets
Your Answer
Cost of facilities , Training & development budgets

Question
Your Answer
Select The Blank

Question
Your Answer
5 lakhs

Question
Modigliani - Miller Theoram is based on :Correct Answer Perfect Capital Markets
Your Answer
Select The Blank

Question
Your Answer

Question
AS 13 Does not deal with :Correct Answer The bases for recognition of interest, dividends & rentals earned on investments ,
Operating or finance leases , Investment in mutual funds
Your Answer
The bases for recognition of interest, dividends & rentals earned on investments ,
True/False
Question
Correct Answer True

Your Answer
False

Question
Strategic Finance
Your Answer
The payout ratio is never 100 %

Question
Your Answer
Securities cannot sell at different prices
True/False
Question
Correct Answer True

Your Answer
True
Select The Blank

Question
operating supplies.
Your Answer
Natural
True/False
Question
Correct Answer True

Your Answer
True
Select The Blank

Question
Non value added activities helps ________.
Correct Answer To analyse the activities more carefully
Your Answer
To take a better decision
True/False
Question

Your Answer
False
Select The Blank

Question
In the reproduction value method of valuation, the value of assets is taken to be on the
basis of ________
Strategic Finance
Your Answer
Replacement cost

Question
Your Answer
Question
The Public announcement of share buy back has to be made at least :Correct Answer 7 Days prior to the commencement of buy back
Your Answer
7 Days prior to the commencement of buy back
Select The Blank

Question
Your Answer
Absorption
Select The Blank

Question
Your Answer
Accrued liabilities
Select The Blank

Question
operating supplies.
Your Answer
Natural

Question
The main characteristics of CAPM are :Correct Answer It is an equilibrium Model , It describes the pricing of assets as well as derivatives ,
Expected security return = Riskless return + beta x (expected market risk premium)
Your Answer
It is an equilibrium Model , It describes the pricing of assets as well as derivatives ,
Question
A firm using a conservative policy for determining the requirements of current assets :-
Strategic Finance
Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales
Your Answer
sales
Question
Your Answer
Equity Shares

Question
Your Answer
Equity
Select The Blank

Question
________ are those operating assets that are employed by a segment in its operating
activities.
Correct Answer Segment assets
Your Answer
Segment assets

Question
Your Answer

Question
Your Answer

Question
Your Answer
Realizable value
Select The Blank

Question
book building.
Correct Answer 30
Strategic Finance
Your Answer
30

Question
Conservative policy for determining the requirements of current assets is also known as :Correct Answer Flexible policy
Your Answer
Flexible policy
True/False
Question
Management of working capital refers to the management of total assets and liabilities of
a company.
Your Answer
False

Question
Your Answer
20 & 40 percent

Question
Your Answer
Net working capital
Select The Blank

Question
Conglomerate mergers are also called ________.
Correct Answer Concentric mergers
Your Answer
Concentric mergers

Question
The main theories behind share repurchases are :Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or signalling
hypothesis
Your Answer
Dividend or personal taxation hypothesis , Leverage hypothesis , Information or signalling
hypothesis
Question
In value of assets method the following is also to be included as they are also of value to
the company :Correct Answer Non trading assets
Your Answer
Non trading assets
Strategic Finance

Question
Every business requires funds on a continual basis for expenses incurred on for :Correct Answer Purchase of raw material , Manufacturing costs , Administration
Your Answer
True/False
Question
under review.
Correct Answer True
Your Answer
True

Question
Your Answer
Assets

Question
Your Answer
Reserves

Question
Your Answer
Earning per share
True/False
Question

Your Answer
False

Question
Your Answer
Strategic Finance
Question
Debt reduces :-
Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions
Your Answer
decisions
True/False
Question
Correct Answer True

Your Answer
True
Select The Blank

Question
Your Answer
True/False
Question

Your Answer
False
Select The Blank

Question
basis of ________
Your Answer
Replacement cost

Question
include :Correct Answer Articles of association should authorize buyback of shares , The shares which are sought
to be bought back should be fully paid up , After the buy back the ratio of debt to total
capital and free reserves should not be more than 2 : 1
Your Answer
Articles of association should authorize buyback of shares , The shares which are sought
Question
Your Answer
Select The Blank
Strategic Finance
Question

Your Answer
Absorption
Select The Blank

Question
Your Answer
Accrued liabilities

Question
continuous basis
Your Answer
continuous basis
True/False
Question
Correct Answer True

Your Answer
True
Select The Blank

Question
Your Answer
01.04.2002
True/False
Question

Your Answer
False
True/False
Question
Correct Answer True

Your Answer
True
Strategic Finance
Question
Equity includes :-
Correct Answer Development Rebate Reserve

Your Answer
Select The Blank

Question
A geographical segment cannot be ________.
Correct Answer Countries in different zones
Your Answer
Countries in different zones

Question
The Management of the Company may enter into a negotiated purchase, which is
referred to as :Correct Answer Greenfield
Your Answer
Greenfield

Question
The acquirer should intimate to the target company & the concerned stock exchanges as
soon as its holding touches :Correct Answer 5 % of the voting capital of the target company
Your Answer

Question
Significant influence is the power to :Correct Answer Participate in the financial decisions , Participate in the operating policy decisions
Your Answer

Question
An investment property is an investment in land or buildings :Correct Answer Not intended to be occupied substantially for use by investing enterprise , Not intended to
be in the operations of the investing enterprise
Your Answer
Not intended to be occupied substantially for use by investing enterprise , Not intended to
Question
The following analysis is more targeted on similar activities or firms that exist in parallel
within the activity model or process flow to ensure that they are being done the same
best way :Correct Answer Comparative analysis
Your Answer
Comparative analysis
Strategic Finance
Question
A normal firm shows the following characteristics :-
Correct Answer No unique optimum payout ratio , Market value per share unaffected by the payout ratio
Your Answer
Question
Your Answer
Net operational value

Question
Your Answer

Question
Segment liabilities do not include :Correct Answer Borrowings & other liabilities that are incurred for financing rather than operating
purpose
Your Answer
Other payables

Question
Your Answer
Secured debt
Select The Blank

Question
Your Answer
Commercial paper

Question
Your Answer
True/False
Question
Strategic Finance
Your Answer
True
True/False
Question
In value of assets approach for computation of valuation of shares, the total value of all
the assets will be divided by the total number of shares.
Correct Answer True
Your Answer
True

Question
Your Answer
Term loans

Question
Your Answer
Assets

Question
decisions
Your Answer
decisions
Question
Your Answer
Select The Blank
Question
Your Answer
Fringe benefits

Question
Strategic Finance
Your Answer
Bonds , Shares , Debentures

Question
An investment property is an investment in land or buildings :Correct Answer Not intended to be occupied substantially for use by investing enterprise , Not intended
to be in the operations of the investing enterprise
Your Answer
Not intended to be occupied substantially for use by investing enterprise , Not intended
to be in the operations of the investing enterprise
Question
If a firm opts for restrictive policy then the investments in current assets is :Correct Answer Low
Your Answer
Moderate
True/False
Question
Correct Answer True

Your Answer
True
Select The Blank

Question
Your Answer
Indirectly attributable to the segments
Select The Blank

Question
________.
Your Answer
Process analysis

Question
The main characteristics of operating economies are :Correct Answer It is achieved through horizontal, vertical and conglomerate mergers , It occurs due to
indivisibilities of resources , It is possible in generic management functions
Your Answer
Vertical integration has no connection with operating economies , It is achieved through
horizontal, vertical and conglomerate mergers , It occurs due to indivisibilities of
resources
Question
Strategic Finance
Your Answer
10 & 30 percent

Question
Your Answer

Question
Your Answer
Calculation of wages paid to casual workers

Question
Your Answer
Debt equity ratio
Select The Blank

Question
Horizontal mergers involves firms________.
Correct Answer That operate & compete in a similar kind of business
Your Answer
With a new & different entity

Question
A firm's current assets include :Correct Answer Marketable securities , Receivables , Inventory
Your Answer
Select The Blank

Question
If a segment is not designated as a ________ it should be included as an unallocated
reconciling item.
Your Answer
Operating segment
Select The Blank

Question
Your Answer
Segment liability
Strategic Finance
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer

Question
Debt is often issued at :Correct Answer The head office level
Your Answer
The head office level
True/False
Question
Correct Answer True

Your Answer
False

Question
accordingly?
Your Answer
Budgetary accounting

Question
Segment result represents :Correct Answer Operating profit or loss
Your Answer
Net of financing profit or loss

Question
firm?
of acquisition
Your Answer
There is built - in cushion to the acquiring firm as total payment is not made at the time
of acquisition
Select The Blank
Strategic Finance
Question
________ Assets.
Your Answer
Intangible
True/False
Question
Correct Answer True

Your Answer
False
True/False
Question
time.
Correct Answer True
Your Answer
False
True/False
Question
value.
Correct Answer True
Your Answer
True

Question
One of the selective developments that has taken place in recent times is companies
are going in for :Correct Answer Activity based costing and management
Your Answer

Question
Your Answer
Select The Blank
Question
Your Answer
True/False
50 percent
Strategic Finance
Question
co-ordinated plan.
Correct Answer True
Your Answer
True
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer
On large shipments

Question
Indicators of the value of an investment are obtained by :Correct Answer Reference to its market value , The investee`s assets , The expected cash flows from
the investment
Your Answer
The expected cash flows from the investment , Current investment valuation , The
investee`s assets
Question
Your Answer
Convertible securities
True/False
Question

Your Answer
False

Question
Your Answer
Select The Blank
Strategic Finance
Question
Your Answer
Related receivables
Select The Blank

Question
Your Answer
Horizontal Mergers

Question
Your Answer
True/False
Question
Correct Answer True
Your Answer
False
Select The Blank

Question
Your Answer

Question
Your Answer

Question
Your Answer
A good or a right that a firm owns in a determined moment , Capitalized expenses

Question
Deferred payment plan is also known as:-
Strategic Finance
Correct Answer Earn out plan
Your Answer
Earn out plan
True/False
Question
There are few methods of allocating depreciation over the useful life of an assets.

Your Answer
True
Select The Blank

Question
market.
Correct Answer Listed
Your Answer
Listed

Question
Your Answer
Horizontal , Vertical , Financial

Question
Tender offers can be afforded by firms with :Correct Answer A large amount of financial Slack
Your Answer
A large amount of financial Slack

Question
Your Answer
Select The Blank

Question
between ________
Your Answer
12.1 % & 16.7 %

Question
Conservative policy for determining the requirements of current assets is also known as
:Correct Answer Flexible policy
Strategic Finance
Your Answer
Aggressive policy

Question
Yield or earning approach method of valuation uses :Correct Answer Price to earnings ratio
Your Answer
Price to earnings ratio

Question
The main categories of organisational elements are :Correct Answer Managerial , Support , Operational
Your Answer
Managerial , Partly functional , Operational
Select The Blank

Question
Your Answer
Direct

Question
following ways :Correct Answer Participation in policy making processes , Material transactions between the investor &
the investee , Interchange of managerial personnel
Your Answer
Participation in policy making processes , Material transactions between the investor &
Question
Your Answer
Equity
True/False
Question
Only firms with a large amount of financial slack can afford tender offers.
Correct Answer True

Your Answer
True
Select The Blank

Question
Your Answer
Through brokers
Strategic Finance
Question
Your Answer
True/False
Question
Correct Answer True

Your Answer
False
True/False
Question

Correct Answer True
Your Answer
True
Select The Blank

Question
Economies of scale arises with increase in volume of production leading to________.
Correct Answer Reduction in the cost of production
Your Answer
True/False
Question
Correct Answer True

Your Answer
True
Select The Blank

Question
Your Answer
Acquisition price

Question
Net period - no cash discount means :Correct Answer The seller only specifies the time period allowed for the payment
Your Answer
True/False
Cash on delivery of goods
Strategic Finance
Question
Correct Answer True

Your Answer
True

Question
Accounting standards (AS - 17) has come into effect in respect of accounting periods
commencing :Correct Answer On or after 01.04.2001
Your Answer
Prior to 01.04.2001
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer
Select The Blank

Question
assets.
Your Answer
Tangible

Question
The budgetary records are useful for:Correct Answer Validating accounting costs , Providing a rationale for division of costs , Replacing
missing data
Your Answer
Validating accounting costs , Allocating indirect costs into different cost centres ,
Providing a rationale for division of costs
Question
As per the new sections of the company's act, funds out of which buy back may be
financed include :Correct Answer Free reserves of the company , Securities premium account , Proceeds of any shares
or other specified securities
Your Answer
Loans taken from banks and financial institutions , Free reserves of the company ,
Securities premium account
Question
Due to diversification employees seek:-
Strategic Finance
Correct Answer Job security , Better opportunities within the firm , Higher compensation
Your Answer
Job security , Better opportunities within the firm , More perks & benefits
Select The Blank

Question
________.
Your Answer
Internet

Question
It is often not possible to directly attribute, or reasonably allocate :Correct Answer The interest bearing liabilities to segments
Your Answer
Goodwill
True/False
Question

Your Answer
True

Question
Your Answer
It is used as a starting point
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer
Location of its customers

Question
FEA is a technique to analyze & evaluate :-
Strategic Finance
Correct Answer Alternative process improvements
Your Answer
True/False
Question
Correct Answer True

Your Answer
False
Select The Blank

Question
Your Answer
True/False
Question
Retained earnings are the most important internal sources of financing the growth of
the firm.
Correct Answer True
Your Answer
True

Question
Your Answer
Participate in the financial decisions , Participate in the operating policy decisions ,

Control over the policies

Question
For paying dividends, firms will have a given amount of :Correct Answer Cash available
Your Answer
Cash available

Question
continuous basis
Your Answer
The decisions related are one time decisions only , It is continually required for a going
concern , Quantum of working capital fluctuates depending on the level of activity
Select The Blank
Question
Strategic Finance
Your Answer
Income / profit from the assets

Question
As per AS 13 Statement, the following are not considered as investments:Correct Answer Shares , Debentures , Other securities held as stock in trade
Your Answer
Land , Debentures

Question
Your Answer
Vertical , Conglomerate , Financial
True/False
Question

Your Answer
False
Select The Blank

Question
Your Answer
Growth
True/False
Question
Management of working capital refers to the management of total assets and liabilities
of a company.
Your Answer
False

Question
The important aspect of dividend policy is :Correct Answer To determine the amount of earnings to be distributed to shareholders , Amount to be
retained in the firm
Your Answer
To determine the amount of earnings to be distributed to shareholders , Amount to be
Question
The cost of an investment includes charges such as :Correct Answer Brokerage , Fees , Duties
Strategic Finance
Your Answer
Select The Blank

Question
Your Answer
True/False
Question
Correct Answer True

Your Answer
True

Question
Segment information needs to be presented :Correct Answer Only on the basis of the consolidated financial statements
Your Answer
As separate financial statements
Select The Blank

Question
Correct Answer Non traceable cost
Your Answer
Input cost

Question
Your Answer

Question
Your Answer
Select The Blank

Question
Your Answer
Strategic Finance
True/False
Question

Your Answer
True

Question
Your Answer
Improved profitability , Growth of the firm , Better facilities and work conditions

Question
Best practices, a tool for review process is similar to :Correct Answer Bench marking
Your Answer
Value added analysis

Question
Your Answer
True/False
Question
Your Answer
True
True/False
Question
under review.
Correct Answer True
Your Answer
True
Select The Blank

Question
Your Answer
Direct
Select The Blank
Strategic Finance
Question

Your Answer
Decreases
Select The Blank

Question
________ Assets.
Your Answer
General

Question
Your Answer
People

Question
Your Answer
Select The Blank

Question
Your Answer
Product warranty provision
Select The Blank

Question
reconciling item.
Your Answer
Business segment

Question
Your Answer
Question
Debt suppliers main concern is :-
Strategic Finance
Correct Answer Interest & debt repayment
Your Answer
True/False
Question
Correct Answer True

Your Answer
False

Question
Your Answer
Working capital cycle

Question
Your Answer

Question
When the working capital is less than its peak level :Correct Answer The surplus is invested in liquid assets
Your Answer

Question
Correct Answer 0.28
Your Answer
0.28
True/False
Question
Correct Answer True
Your Answer
False
True/False
Question
Strategic Finance
Your Answer
False

Question
Your Answer
Select The Blank

Question
________.
Your Answer
Internet
Select The Blank

Question
Your Answer
Fringe benefits

Question
following ways :Correct Answer Participation in policy making processes , Material transactions between the investor &
Your Answer
Participation in policy making processes , Material transactions between the investor &
Question
Your Answer
The personnel payroll , Support costs , Supplies

Question
Your Answer
Full time equivalent staff , Expenses , Good will

Question
Strategic Finance
Your Answer
True/False
Question
Correct Answer True

Your Answer
True

Question
Conservative policy for determining the requirements of current assets is also known as
:Correct Answer Flexible policy
Your Answer
Aggressive policy

Question
Your Answer
True/False
Question
fluctuate.
Your Answer
True

Question
open account credit appears on the buyer's balance sheet as :Correct Answer Accounts payable
Your Answer
Select The Blank

Question
between ________
Your Answer
less than 10 %

Question
Correct Answer 0.28
Your Answer
0.28
Strategic Finance
Select The Blank
Question
Your Answer

Question
Your Answer
Consultation with shareholders , Planning , Searching & screening

Question
Trade credits are of the following types:Correct Answer Notes payable , Trade acceptances , Open accounts
Your Answer
Notes payable , Trade acceptances , Commercial paper
True/False
Question
depreciation.
Correct Answer True
Your Answer
True
Select The Blank

Question
Correct Answer 1 to 2 months
Your Answer
3 months

Question
Your Answer

Question
Your Answer
True/False
Strategic Finance
Question
Correct Answer True

Your Answer
True

Question
Your Answer
Select The Blank

Question
Identify disclosure on human resources as a societal concern & prepare international
regulations comes under ________
Correct Answer The compulsory method
Your Answer
The voluntary market based method

Question
Walter's model on dividend relevance is based on the following assumptions :Correct Answer Internal financing , Constant return and cost of capital , 100 Per cent payout or retention
Your Answer
Internal financing , Constant return and cost of capital , Perfect markets

Question
Your Answer

Question
A manufacturing concern like a machine tool has :Correct Answer A long operating cycle
Your Answer
Sells largely on cash basis
True/False
Question
Correct Answer True

Your Answer
True
Select The Blank

Question
Strategic Finance
Your Answer
Select The Blank

Question
Correct Answer Loss of value
Your Answer
Loss of value

Question
Your Answer
Participate in the financial decisions , Participate in the operating policy decisions ,

Growth & diversify
Select The Blank

Question
Your Answer
Increases
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer
Select The Blank

Question
Your Answer
Segment revenue

Question
The support elements consists of important functions such as :Correct Answer Payroll , Accounting , Automatic data processing
Strategic Finance
Your Answer

Question
Your Answer
Value added & non value added activities

Question
Your Answer

Question
Your Answer
Selling a security
Select The Blank

Question
Credit standards should be relaxed upon the point where incremental returns ________
incremental costs.
Your Answer
Have no correlation with

Question
Your Answer
True/False
Question
Correct Answer True

Your Answer
False
True/False
Question
worth.
Correct Answer True
Your Answer
True
Strategic Finance

Question
Your Answer

Question
Your Answer
Vertical , Conglomerate , Horizontal

Question
Your Answer
Market Capitalization
Select The Blank

Question
Your Answer
Select The Blank

Question
Your Answer
Vertical Mergers
True/False
Question
Correct Answer True

Your Answer
True

Question
The main categories of organisational elements are :Correct Answer Managerial , Support , Operational
Your Answer
Managerial , Support , Operational
Strategic Finance
Question
A firm can manage with small inventory if the supply is :-
Correct Answer Prompt & adequate

Your Answer
Prompt & adequate

Question
Your Answer
Question
Your Answer
Deferred Payment Liabilities
Select The Blank

Question
Your Answer
Customer advances

Question
Your Answer

Question
Your Answer
Equity Shares

Question
Your Answer
People

Question
The net income approach is based on following 3 assumptions :-
Strategic Finance
Correct Answer There are no taxes , Cost of debt is less than equity capitalization rate , Use of debt
Your Answer
True/False
Question
Correct Answer True

Your Answer
True
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer
Select The Blank

Question
Your Answer
True/False
Question
It is possible to place a single value for the acquired firm.

Your Answer
False

Question
Your Answer
Right to provide service to customers , Job security for the employees , Commitment to
pay interest in time for debentures issued
Select The Blank

Question
between ________
Your Answer
5 % & 15 %
Strategic Finance
Question
Your Answer
Select The Blank

Question
Implicit & Explicit costs are included in the ________.
Correct Answer Price of a product
Your Answer
Price of a product

Question
Your Answer
It is achieved through horizontal, vertical and conglomerate mergers , It occurs due to
Question
Your Answer

Question
Your Answer
True/False
Question

Your Answer
False

Question
Your Answer
Cash available

Question
Financial evaluation involves :-
Strategic Finance
Correct Answer Determining the earnings , Areas of risk , Best way to finance a merger
Your Answer
True/False
Question
co-ordinated plan.
Correct Answer True
Your Answer
True
True/False
Question

Your Answer
True
Select The Blank

Question
HLL is ________ % of subsidiary of Unilever PLC.
Correct Answer 0.516
Your Answer
0.5

Question
Your Answer
There is a small risk if shortage of funds
Select The Blank

Question
Your Answer
Between 15 days to 1 year
Select The Blank

Question
Your Answer

Question
Controlling block is usually acquired from:Correct Answer A single seller
Your Answer
A single seller
Strategic Finance

Question
sales
Your Answer
sales
True/False
Question
Correct Answer True

Your Answer
True

Question
Changes in the investee`s equity includes those :Correct Answer Arising from the revaluation of fixed assets , From foreign exchange translation
differences , From the adjustment of differences arising on amalgamation
Your Answer
Arising from the revaluation of fixed assets , From foreign exchange translation
True/False
Question
Correct Answer True
Your Answer
True

Question
Depreciation includes amortization of assets whose useful life is :Correct Answer Predetermined
Your Answer
Predetermined
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer
Worth
Strategic Finance
Question
Long term financing strategy is used by a firm to meet :-
Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of
Your Answer
Fixed assets requirements , Permanent working capital requirements , Portion of
Question
Your Answer

Question
Your Answer
Vertical , Conglomerate , Horizontal

Question
Your Answer
Market Capitalization
Select The Blank

Question
Your Answer
Select The Blank

Question
Your Answer
Vertical Mergers
True/False
Question
Correct Answer True

Your Answer
True

Question
The main categories of organisational elements are :-
Strategic Finance
Correct Answer Managerial , Support , Operational
Your Answer

Question
Your Answer
Prompt & adequate

Question
Your Answer
Question
Your Answer
Deferred Payment Liabilities
Select The Blank

Question
Your Answer
Customer advances

Question
Your Answer

Question
Your Answer
Equity Shares

Question
Your Answer
People
Strategic Finance

Question
The net income approach is based on following 3 assumptions :Correct Answer There are no taxes , Cost of debt is less than equity capitalization rate , Use of debt
Your Answer
True/False
Question
Correct Answer True

Your Answer
True
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer
Select The Blank

Question
Your Answer
True/False
Question

Your Answer
False

Question
Your Answer
Right to provide service to customers , Job security for the employees , Commitment to
Select The Blank
Strategic Finance
Question
between ________
Your Answer
5 % & 15 %

Question
Your Answer
Select The Blank

Question
Correct Answer Price of a product
Your Answer
Price of a product

Question
Your Answer
It is achieved through horizontal, vertical and conglomerate mergers , It occurs due to
Question
Your Answer

Question
Your Answer
True/False
Question

Your Answer
False

Question
Strategic Finance
Your Answer
Cash available

Question
Your Answer
True/False
Question
co-ordinated plan.
Correct Answer True
Your Answer
True
True/False
Question

Your Answer
True
Select The Blank

Question
Correct Answer 0.516
Your Answer
0.5

Question
Your Answer
Select The Blank

Question
Your Answer
Select The Blank

Question
Your Answer
Strategic Finance
Question
Controlling block is usually acquired from:-
Correct Answer A single seller

Your Answer
A single seller

Question
sales
Your Answer
sales
True/False
Question
Correct Answer True

Your Answer
True

Question
Changes in the investee`s equity includes those :Correct Answer Arising from the revaluation of fixed assets , From foreign exchange translation
Your Answer
True/False
Question
Correct Answer True
Your Answer
True

Question
Depreciation includes amortization of assets whose useful life is :Correct Answer Predetermined
Your Answer
Predetermined
True/False
Question
Correct Answer True

Your Answer
True

Question
Value implies that something has :-
Strategic Finance
Correct Answer Worth
Your Answer
Worth

Question
Your Answer
True/False
Question

Your Answer
False

Question
Your Answer

Question
Your Answer
Select The Blank

Question
Your Answer
Accounting numbers

Question
continuous basis
Your Answer
continuous basis
Question
Profitability of a company depends upon :-
Strategic Finance
Correct Answer Cost of capital
Your Answer
Cost of capital

Question
Your Answer
Improved profitability , Growth of the firm
Select The Blank

Question
Your Answer
Concentric mergers
True/False
Question
Correct Answer True

Your Answer
True
True/False
Question
Correct Answer True

Your Answer
True
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer

Question
Your Answer
Strategic Finance
Question
Your Answer

Question
Your Answer
Increases

Question
Your Answer

Question
The employer in offering the job contract assumes a range of legal obligations such
as :Correct Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
Your Answer
Select The Blank
Question
Your Answer

Question
Your Answer

Question
Your Answer
True/False
Bench marking
Strategic Finance
Question
Correct Answer True

Your Answer
True
True/False
Question

Your Answer
False

Question
Your Answer
Assets

Question
Your Answer
Select The Blank
Question
Your Answer

Question
Your Answer

Question
Your Answer
Select The Blank

Question
Your Answer
Segment expense
Strategic Finance
Select The Blank

Question
A company shall buyback its shares through the stock exchange by making a public
announcement at least ________ days prior to the commencement of buyback.
Correct Answer Seven
Your Answer
Seven

Question
accordingly?
Your Answer

Question
Your Answer
Current Liabilities
True/False
Question
Tender offers us an alternative approach to acquire another firm.
Correct Answer True

Your Answer
True
Select The Blank

Question
Your Answer
True/False
Question
of a company.
Your Answer
False

Question
Your Answer
Strategic Finance
Question
If competition is weak, a firm :Correct Answer Can manage with a smaller inventory of finished goods
Your Answer
Can manage with a smaller inventory of finished goods
Select The Blank

Question
________
Your Answer
Select The Blank

Question
Your Answer
That operate & compete in a similar kind of business

Question
The following of total cost of assets over its useful life is called depreciation :Correct Answer Distribution
Your Answer
Distribution

Question
The different types of floats are :Correct Answer Postal float , Deposit float , Bank float
Your Answer
Postal float , Deposit float , Bank float
Select The Blank

Question
to a segment
Your Answer
The relevant portion of enterprise revenue that can be allocated on a reasonable basis
to a segment
Question
Your Answer
Job security , Better opportunities within the firm , Higher compensation
True/False
Question
Strategic Finance
Correct Answer True
Your Answer
True

Question
Your Answer
Earn out plan

Question
Your Answer
True/False
Question

Your Answer
False

Question
Your Answer

Question
Your Answer
Select The Blank

Question
Your Answer
Accounting numbers

Question
Strategic Finance
continuous basis
Your Answer

continuous basis

Question
Your Answer
Cost of capital

Question
Your Answer
Improved profitability , Growth of the firm
Select The Blank

Question
Your Answer
Concentric mergers
True/False
Question
Correct Answer True

Your Answer
True
True/False
Question
Correct Answer True

Your Answer
True
True/False
Question
Correct Answer True

Your Answer
True

Question
Strategic Finance
Your Answer

Question
Your Answer

Question
Your Answer

Question
Your Answer
Increases

Question
Your Answer

Question
Your Answer
Select The Blank
Question
Your Answer

Question
Your Answer
Strategic Finance
Question
Your Answer
Bench marking
True/False
Question
Correct Answer True

Your Answer
True
True/False
Question

Your Answer
False

Question
Your Answer
Assets

Question
Your Answer
Select The Blank
Question
Your Answer

Question
Your Answer

Question
Strategic Finance
Your Answer
Select The Blank

Question
Your Answer
Segment expense
Select The Blank

Question
Correct Answer Seven
Your Answer
Seven

Question
accordingly?
Your Answer

Question
Your Answer
Current Liabilities
True/False
Question
Correct Answer True

Your Answer
True
Select The Blank

Question
Your Answer
True/False
Question
of a company.
Strategic Finance
Your Answer
False

Question
Your Answer

Question
If competition is weak, a firm :Correct Answer Can manage with a smaller inventory of finished goods
Your Answer
Select The Blank

Question
________
Your Answer
Select The Blank

Question
Your Answer

Question
The following of total cost of assets over its useful life is called depreciation :Correct Answer Distribution
Your Answer
Distribution

Question
The different types of floats are :Correct Answer Postal float , Deposit float , Bank float
Your Answer
Select The Blank

Question
to a segment
Your Answer
The relevant portion of enterprise revenue that can be allocated on a reasonable basis
to a segment
Strategic Finance
Question
Your Answer
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer
Earn out plan

Question
Your Answer

Question
The support elements consists of important functions such as :Correct Answer Accounting , Automatic data processing , Payroll
Your Answer

Question
The value of the asset does not include:Correct Answer Price per share
Your Answer
Price per share

Question
The bottom line of ABC Process is :Correct Answer To achieve a better method of doing the right business pf the organisation
Your Answer
To achieve a better method of doing the right business pf the organisation
Strategic Finance
Question
When the working capital is less than its peak level :-
Correct Answer The surplus is invested in liquid assets

Your Answer
True/False
Question
Act.
Correct Answer True
Your Answer
True

Question
Your Answer

Question
Comparative analysis is :Correct Answer A review to ensure consistency within the activity model & process flow
Your Answer
A review to ensure consistency within the activity model & process flow

Question
Termination pay
Your Answer
Termination pay
Question
Your Answer
Select The Blank
Question
Your Answer
Select The Blank

Question
incremental costs.
Strategic Finance
Your Answer
Equals
True/False
Question

Your Answer
False
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer
Select The Blank

Question
Your Answer
Goodwill

Question
Your Answer
Opportunity cost
Select The Blank

Question
________ are considered most desirable from shareholders point of view.
Correct Answer Dividends
Your Answer
Dividends

Question
Your Answer
Capital gains , Dividend
Strategic Finance

Question
Your Answer

Question
Your Answer
Question
Your Answer
1960`s
Select The Blank

Question
If firms have same technology ________ makes the difference i.e. firms become more
productive .
Correct Answer Solid human resource team
Your Answer
Latest & updated techniques
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer

Question
decisions
Strategic Finance
Your Answer
decisions
Select The Blank

Question
Your Answer
Increases
Select The Blank

Question
Your Answer
75 percent

Question
investment is made
Your Answer
investment is made , Not similar to current assets
Select The Blank
Question
Your Answer
Related receivables

Question
What is the maximum amount involved in the buy back of the total paid up capital & free
reserves of the company?
Correct Answer 0.25
Your Answer
0.25
Select The Blank

Question
Your Answer

Question
Your Answer
Strategic Finance
Question
Your Answer
True/False
Question
Correct Answer True

Your Answer
True
True/False
Question
Correct Answer True
Your Answer
True

Question
When the seller asks for the payment before making the delivery in order to avoid all
risks it is known as :Correct Answer Cash before delivery
Your Answer
Cash before delivery
True/False
Question
worth.
Correct Answer True
Your Answer
True

Question
The depreciation rates or the useful lives of the assets are disclosed only :Correct Answer If they are different from the principle rates specified in the statute
Your Answer
If they are different from the principle rates specified in the statute
Select The Blank

Question
Your Answer
Loss of value
Strategic Finance
Question
usually the `controlling block' tends to be between :-
Correct Answer 20 & 40 percent

Your Answer
20 & 40 percent
True/False
Question
time.
Correct Answer True
Your Answer
False
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer

Question
The limitations of value of assets approach include :Correct Answer Book value of the assets is directly dependent on the accounting policies followed by
the company , There are no standard procedures for valuation of intangible assets , No
importance to the market value of the asset
Your Answer
True/False
Question
Correct Answer True

Your Answer
False

Question
The support elements consists of important functions such as :Correct Answer Accounting , Automatic data processing , Payroll
Your Answer
Strategic Finance
Question
The value of the asset does not include:Correct Answer Price per share
Your Answer
Price per share

Question
Your Answer

Question
Your Answer
True/False
Question
Act.
Correct Answer True
Your Answer
True

Question
Your Answer

Question
Comparative analysis is :Correct Answer A review to ensure consistency within the activity model & process flow
Your Answer

Question
Termination pay
Your Answer
Termination pay
Question
As a general rule, an asset is :-
Strategic Finance
Correct Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments ,
Your Answer
Select The Blank
Question
Your Answer
Select The Blank

Question
incremental costs.
Your Answer
Equals
True/False
Question

Your Answer
False
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer
Select The Blank

Question
Your Answer
Goodwill

Question
Strategic Finance
Your Answer
Opportunity cost
Select The Blank

Question
Correct Answer Dividends
Your Answer
Dividends

Question
Your Answer
Capital gains , Dividend

Question
Your Answer

Question
Your Answer
Question
Your Answer
1960`s
Select The Blank

Question
productive .
Your Answer
Latest & updated techniques
True/False
Question
Strategic Finance
Correct Answer True
Your Answer
True

Question
Your Answer

Question
decisions
Your Answer
decisions
Select The Blank
Question
Your Answer
Increases
Select The Blank

Question
Your Answer
75 percent

Question
investment is made
Your Answer
Select The Blank
Question
Your Answer
Related receivables

Question
Correct Answer 0.25
Strategic Finance
Your Answer
0.25
Select The Blank

Question
Your Answer

Question
Your Answer

Question
Your Answer
True/False
Question
Correct Answer True

Your Answer
True
True/False
Question
Correct Answer True
Your Answer
True

Question
When the seller asks for the payment before making the delivery in order to avoid all
risks it is known as :Correct Answer Cash before delivery
Your Answer
True/False
Question
worth.
Correct Answer True
Your Answer
True
Strategic Finance
Question
Your Answer
Select The Blank

Question
Your Answer
Loss of value

Question
Your Answer
20 & 40 percent
True/False
Question
time.
Correct Answer True
Your Answer
False
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer

Question
The limitations of value of assets approach include :Correct Answer Book value of the assets is directly dependent on the accounting policies followed by
Your Answer
Strategic Finance
True/False
Question
Correct Answer True

Your Answer
False

Question
sales
Your Answer
Has fewer production stoppages , Ensures quick deliveries to customers , Increases the
ROI
Question
Your Answer
Question
In respect of depreciable assets, which do not have material value, depreciation is often
allocated :Correct Answer Fully in the accounting period for which they are acquired
Your Answer
Over the residual value

Question
Correct Answer 0.25
Your Answer
0.25
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer
Strategic Finance
Question
For ABC Analysis the available cost data :-
Correct Answer Has to be adjusted for change , Has to be corrected for undocumented element costs ,
Your Answer
Has to be adjusted for change , Has to be corrected for undocumented element costs ,
Question
Today knowledge has become a key determinant for :Correct Answer Economic & business success
Your Answer
For determining a firm's value
Select The Blank

Question
Your Answer
Expenses

Question
Your Answer
Prompt & adequate

Question
Your Answer
Select The Blank

Question
productive .
Your Answer
Solid human resource team

Question
Your Answer
Equity
True/False
Question
Strategic Finance
Your Answer
True
True/False
Question
Correct Answer True

Your Answer
True

Question
Financial statements classify the following into separate categories :Correct Answer Fixed assets , Investments , Current assets
Your Answer
Fixed assets , Current assets

Question
The cost of an investment includes charges such as :Correct Answer Brokerage , Fees , Duties
Your Answer
Brokerage , Advertisements , Fees , Duties

Question
Your Answer

Question
Your Answer
Current Liabilities
Select The Blank

Question
Your Answer
118 Bn
True/False
Question
Correct Answer True
Strategic Finance
Your Answer
True
True/False
Question
Your Answer
True
Select The Blank

Question
Correct Answer 1 to 2 months
Your Answer
1 to 2 months

Question
Your Answer
Select The Blank

Question
reconciling item.
Your Answer
Operating segment

Question
If a particular item of depreciation or amortisation is included in segment expense, the
related asset is included in :Correct Answer Segment assets
Your Answer
Segment assets
True/False
Question
value.
Correct Answer True
Your Answer
True
True/False
Question
Correct Answer True

Your Answer
True
Strategic Finance

Question
Your Answer
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer
Daily wages , Maintenance , Security
True/False
Question
Correct Answer True

Your Answer
True
True/False
Question
Correct Answer True

Your Answer
True
Select The Blank

Question
Your Answer
Firm Managers

Question
The FEA Tools encompass a vast array of information & policy into :Correct Answer One evaluation
Your Answer
Many evaluations
Strategic Finance
Question
Your Answer
Select The Blank
Question
Your Answer
Accounting numbers

Question
investment is made
Your Answer
investment is made , Can be held for more than 1 year
Question
Your Answer

Question
Your Answer
Select The Blank
Question
Your Answer
Select The Blank

Question
Your Answer
Select The Blank
Strategic Finance
Question

Correct Answer Danish (Denmark)
Your Answer
Japanese
Select The Blank

Question
activities.
Your Answer
Current assets

Question
Your Answer
True/False
Question

Your Answer
False
Select The Blank

Question
financial leverage.
Your Answer
Constant

Question
Your Answer

Question
The main assumption in comparative analysis is the possibility of :Correct Answer Combination or co-location of similar functions
Your Answer
Strategic Finance
Question
The budgetary records are useful for:-
Correct Answer Validating accounting costs , Providing a rationale for division of costs , Replacing
missing data
Your Answer
Validating accounting costs , Providing a rationale for division of costs , Replacing
missing data
Select The Blank
Question
Your Answer
1 year

Question
Your Answer
Select The Blank

Question
Your Answer
Bank finance

Question
Your Answer

Question
Your Answer
True/False
Question
Correct Answer True

Your Answer
True

Question
A company is prohibited to buy back its own shares in the following circumstances :-
Strategic Finance
Correct Answer Through any subsidiary company , Through any investment company , If a company
Your Answer
True/False
Question
Correct Answer True

Your Answer
True
Select The Blank

Question
Your Answer
Vertical Mergers

Question
Your Answer
Investing too much

Question
Your Answer
True/False
Question

Your Answer
False

Question
Correct Answer Infosys
Your Answer
BHEL

Question
Strategic Finance
Your Answer

Question
Your Answer
High share prices
Select The Blank

Question
Your Answer
Ex - dividend date

Question
Your Answer
Question
Your Answer
True/False
Question
Correct Answer True

Your Answer
True

Question
Debt suppliers main concern is :Correct Answer Interest & debt repayment
Your Answer

Question
Value added analysis is a method to determine, if elements within a process flow
provide the :Correct Answer Values
Your Answer
Values
Strategic Finance
Select The Blank
Question
________.
Your Answer

Question
Your Answer

Question
appropriate :Correct Answer The accounting policies for the determination of carrying amount of investments ,
Statement
Your Answer
Statement
Select The Blank
Question
Your Answer
Foreign Promoters

Question
Your Answer

Question
Your Answer
Determining the firm's value , Financing techniques in mergers , Analysis of merger as
Question
Your Answer
Increases
Strategic Finance
True/False
Question
Correct Answer True

Your Answer
True
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer
Cost of facilities , Training & development budgets

Question
Your Answer
Select The Blank

Question
Your Answer
5 lakhs

Question
Your Answer
Select The Blank

Question
Your Answer
Strategic Finance
Question
AS 13 Does not deal with :Correct Answer The bases for recognition of interest, dividends & rentals earned on investments ,
Your Answer
True/False
Question
Correct Answer True

Your Answer
False

Question
Your Answer
The payout ratio is never 100 %

Question
Your Answer
True/False
Question
Correct Answer True

Your Answer
True
Select The Blank

Question
operating supplies.
Your Answer
Natural
True/False
Question
Correct Answer True

Your Answer
True
Select The Blank
Strategic Finance
Question

Your Answer
True/False
Question

Your Answer
False
Select The Blank

Question
basis of ________
Your Answer
Replacement cost

Question
Your Answer
Question
Your Answer
Select The Blank

Question
Your Answer
Absorption
Select The Blank

Question
Your Answer
Accrued liabilities
Strategic Finance
Select The Blank
Question
operating supplies.
Your Answer
Natural

Question
Your Answer
Question
sales
Your Answer
sales
Question
Your Answer
Equity Shares

Question
Your Answer
Equity
Select The Blank

Question
activities.
Your Answer
Segment assets

Question
Your Answer
Strategic Finance
Question
Examples of accrued expenses are :-
Correct Answer Wages , Income tax , Property tax

Your Answer

Question
Your Answer
Realizable value
Select The Blank

Question
book building.
Correct Answer 30
Your Answer
30

Question
Conservative policy for determining the requirements of current assets is also known as :Correct Answer Flexible policy
Your Answer
Flexible policy
True/False
Question
a company.
Your Answer
False

Question
Your Answer
20 & 40 percent

Question
Your Answer
Net working capital
Select The Blank

Question
Strategic Finance
Your Answer
Concentric mergers

Question
The main theories behind share repurchases are :Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or signalling
hypothesis
Your Answer
Dividend or personal taxation hypothesis , Leverage hypothesis , Information or signalling
hypothesis
Question
the company :Correct Answer Non trading assets
Your Answer
Non trading assets

Question
Your Answer
True/False
Question
under review.
Correct Answer True
Your Answer
True

Question
Your Answer
Assets

Question
Your Answer
Reserves

Question
Strategic Finance
Your Answer
Earning per share
True/False
Question

Your Answer
False

Question
Your Answer
Question
decisions
Your Answer
decisions
True/False
Question
Correct Answer True

Your Answer
True
Select The Blank

Question
Your Answer
True/False
Question

Your Answer
False
Select The Blank

Question
basis of ________
Your Answer
Replacement cost
Strategic Finance

Question
include :Correct Answer Articles of association should authorize buyback of shares , The shares which are sought
Your Answer
Articles of association should authorize buyback of shares , The shares which are sought
Question
Your Answer
Select The Blank

Question
Your Answer
Absorption
Select The Blank

Question
Your Answer
Accrued liabilities

Question
continuous basis
Your Answer
continuous basis
True/False
Question
Correct Answer True

Your Answer
True
Select The Blank

Question
Strategic Finance
Your Answer
01.04.2002
True/False
Question

Your Answer
False
True/False
Question
Correct Answer True

Your Answer
True

Question
Your Answer
Select The Blank

Question
Correct Answer Countries in different zones
Your Answer

Question
referred to as :Correct Answer Greenfield
Your Answer
Greenfield

Question
soon as its holding touches :Correct Answer 5 % of the voting capital of the target company
Your Answer

Question
Strategic Finance
Your Answer

Question
An investment property is an investment in land or buildings :Correct Answer Not intended to be occupied substantially for use by investing enterprise , Not intended to
Your Answer
Not intended to be occupied substantially for use by investing enterprise , Not intended to
Question
Your Answer
Exit cost
Historical costs
Substitution cost
Opportunity cost

Dividend or Personal Taxation Hypothesis
Leverage hypothesis
Wealth transfer among shareholders
Diversification
Lost efficiency prior to separation, Job vacancy cost

during the new search & termination pay.
Sacrifice necessary to hire & train people
Exit costs of the leaving employee & recruiting &
training of the replacement
An asset value when they are the target of an
alternative use.
Management believes that the common stock of the
company is undervalued
Cash dividends are taxable at ordinary tax rates
Stock repurchases increases the debt / equity ratio
The largest portion of wealth effect goes to the non
- tendering shareholders
Vertical mergers
Growth through the combination of firms in

unrelated fields of business
2 Firms operate & compete in a similar kind of
business
Firms in different stages of production
Different or unrelated business activity
Segment liabilities
Segment revenue
Segment result
Segment assets
Enterprise liabilities
Enterprise revenue
Enterprise net profit or loss
Enterprise assets
Mechanisms
Inputs
Performs or provides energy to an activity

Information or material used to produce the output
of an activity
Information or material that constrains an activity
Information or material produced by an activity
Horizontal mergers
Controls
Outputs
Strategic Finance
Availability of funds in the market

Flexibility
Time
Creditworthiness of the issuer
Cost of funds depends on this factor

The extent & the ease with which the funds can be
raised & paid back are very important
Takes less time to take an overdraft from the bank
If a company has a good creditworthiness it is not
difficult to raise short term funds
Segment liabilities Do not include borrowings that are incurred for financing purposes Does not include
extra ordinary items
Segment revenue Does not include extra ordinary items The qualitative characteristics include the
relevance
Segment expenses Does not include income tax expenses Determined after intra - enterprise balances
are eliminated
Segment assets Do not include income tax assets Do not include income tax assets
AS 4 Contingencies & events occurring after the balance sheet date
AS 13 Accounting for investments Accounting for investments
AS 23 Accounting for investments in associates in consolidated financial statements Accounting for
investments in associates in consolidated financial statements
AS 21 Consolidated financial statements Consolidated financial statements
Exit cost Lost efficiency prior to separation, Job vacancy cost during the new search & termination pay.
Lost efficiency prior to separation, Job vacancy cost during the new search & termination pay.
Historical costs Sacrifice necessary to hire & train people Sacrifice necessary to hire & train people
Substitution cost Exit costs of the leaving employee & recruiting & training of the replacement Exit costs of
the leaving employee & recruiting & training of the replacement
Opportunity cost An asset value when they are the target of an alternative use. An asset value when they
are the target of an alternative use.
Free cash flow theory Enormous conflicts of interest between Stakeholders and shareholders Firms
have preferences by choosing a way to finance their projects
Net income approach Cost of debt & equity do not change with a change in leverage ratio
weighted average cost of capital does not change with a change in the proportion of debt to
equity in the capital structure
Net operating income approach The overall capitalization rate remains constant for all levels of financial
leverages
The overall capitalization rate remains constant for all levels of financial leverages
Modigliani - Miller Theory
weighted average cost of capital does not change with a change in the
proportion of debt to equity in the capital structure
Cost of debt & equity do not change with a
change in leverage ratio
Earning per share

Acquisition is considered to be a function of the impact of the merger on the EPS
Divide net worth by the number of equity shares outstanding
Book value
Evaluate the impact of
the merger on EPS & price - earning ratio
Appraisal value Provides a list of the reasonableness of results obtained through methods base upon the
going concern concept Indicate the consensus of the investors
Strategic Finance
Market value Indicate the consensus of the investors Provides a list of the reasonableness of results
obtained through methods base upon the going concern concept
Amount involved in buy back
Not to exceed 25 % of the total paid up capital Not to exceed 25 % of
the total paid up capital
Articles of Association Authorize buy back of securities Resolution permitting the buy back of shares
Board of Directors
Resolution permitting the buy back of shares
Authorize buy back of securities
Shares to be bought back
Fully paid up
Fully paid up
Trust receipt
Specifically identified by serial number or other means Specifically identified by serial
number or other means
Terminal warehouse receipt
Inventory is stored with a public or terminal warehousing company
Floating lien
Loose arrangement as the lender may find it difficult to police
Well suited for financial
good inventories of capital goods
Chattel mortgage
Well suited for financial good inventories of capital goodsAffords a higher degree
of control over the collateral
PpH =
SPE =
RR =
U%=
P/H (C+B)/P
R / H (C + B ) / R
(C + B ) / R
P/H
R/(C+B)
R/(C+B)
Question 1
If a company is following multiple accounting system, the activity accountant will have to
match data across
Correct Answer
Question 2
Correct Answer
Absorption
Question 4
Question 5
Question 6
Correct Answer
118 Bn
Question 7
under review.
Correct Answer
True
Question 8
The total cost of the activity model allocated by the applied activity drivers to the output of
the activity model is called________.
Correct Answer
Question 9
Develop a consistent framework which can be operational across sectors and
countries
Question 10 Exit costs are classified into 3 categories namely :Correct Answer
Termination pay
Question 11
for :-
The offer price by the acquiring company should be an average of the weekly high & low
Strategic Finance
Correct Answer
The last 26 months
Question 12 One of the advantages of trade credit is its flexibility i.e. the firm does not :Correct Answer
Question 13 A firm with a judicious mixture of debt and equity will have :Correct Answer
Question 14 The acquirer should intimate to the target company & the concerned stock exchanges as
soon as its holding touches :Correct Answer
Question 15 What is a very important factor in any kind of merger?
Correct Answer
Exchange ratio
Question 16 For determining exchange ratio, the model developed by Conn & Nielson is used.
Correct Answer
True
Question 17 As per Pecking order theory, which is the costliest means of funding :Correct Answer
Equity Shares
Question 19 Capital gains are taxed at ________.
Correct Answer
Question 20 Articles of association should authorise buy back of securities as per the Company's Act.
Correct Answer
True
Question 21 In today's fast moving world, the quickest way to get information on a firm is through
________.
Correct Answer
Internet
Question 22 Suppliers of equity are interested in :Correct Answer
High share prices
Question 23 The buyback shall be made only on stock exchanges with electronic trading facility.
Correct Answer
True
Question 24 Accounting standard 19 for leases statement is applied in accounting for all leases other
than :Correct Answer
agreements for items such as motion picture films , Lease agreements to use land
Question 25 Odd lots purchase is not a method of buy back of shares.
Correct Answer
False
Question 26 Segment liabilities do not include :Correct Answer
purpose
Question 27 Economic analysis usually covers :Correct Answer
Question 28 A firm using a conservative policy for determining the requirements of current assets :Correct Answer
Stimulates sales
Question 29 Forfeiting is mostly used for ________.
Correct Answer
Strategic Finance
Question 30 The objective of a dividend policy should be to maximize shareholder's return so that the
value of his investment is maximized.
Correct Answer
False
Question 31 firms use credit policy as a marketing tool for expanding sales.
Correct Answer
True
Question 32 Mature companies with stable earnings generally pay out ________.
Correct Answer
Question 33 As per AS 13 Statement, the following are not considered as investments:Correct Answer
Question 34 Accounting numbers are not influenced by :Correct Answer
Question 35 ________ Assets in the balance sheet are normally excluded from the value of total
assets.
Correct Answer
Intangible
Question 36 The development aspect of training in firms focus on :Correct Answer
Question 37 work in progress means the inventories are semi manufactured products.
Correct Answer
True
Question 38 A company is permitted to buy back its shares through stock exchange in the following
situations :Correct Answer
payout , The identity of the company as a purchaser shall appear on the electronic screen when the order
is placed , The buy back shall be made only on stock exchanges with electronic trading facility
Question 39 Current accounting system is able to provide actual value of employee capabilities &
knowledge.
Correct Answer
False
Question 40 The ________ cost tier has the advantage of being the simplest to calculate and justify.
Correct Answer
Direct
Question 41 Operating economies occur due to indivisibilities of resources like :Correct Answer
Question 42 ________ is a variable expense that can be readily eliminated with organisational
changes.
Correct Answer
Rental equipment
Question 43 The HHI index reflects :Correct Answer
Question 44 ________ is never a part of the output.
Correct Answer
Mechanisms
Question 45 It is essential that ABC must fit into the strategy of the company.
Correct Answer
True
Question 46 In a matching approach policy, :Correct Answer
Strategic Finance
Question 47 Which is an example out of the following to which special consideration apply for
depreciation :Correct Answer
Question 1
Question 2
Worth
Question 3
Correct Answer
True
Question 4
the company :Correct Answer
Non trading assets
Question 5
basis of ________
Correct Answer
Replacement cost
Question 6
Correct Answer
True
Question 7
Question 8
Question 9
Question 11 A good accounting system does NOT have the characteristics such as :Correct Answer
Question 12 The direct costs tier normally only includes the following :Correct Answer
Question 13 ________ are not diversible.
Correct Answer
Question 14 The important aspect of dividend policy is :Correct Answer
Question 15 A company is prohibited to buy back its own shares in the following circumstances :Correct Answer
Question 16 The main theories behind share repurchases are :Correct Answer
Question 17 A change in the method of depreciation is treated as a change in an accounting policy
Correct Answer
True
Question 18 The main characteristics of CAPM are :-
Strategic Finance
Correct Answer
It is an equilibrium Model , It describes the pricing of assets as well as derivatives
, Expected security return = Riskless return + beta x (expected market risk premium)
Question 19 Segment result is segment revenue less segment expenses.
Correct Answer
True
Question 20 To `gather costs', means capturing all relevant expenses that pertain to the selected
Correct Answer
True
Question 21 The resource theory considers that the competitive position of a firm depends on its
________ Assets.
Correct Answer
Specific
Question 22 Segment revenue includes ________.
Correct Answer
Question 23 Deferred payment plan is also known as:Correct Answer
Earn out plan
Question 24 The statute governing an enterprise may provide the basis for computation of the
depreciation.
Correct Answer
True
Question 25 The final selection of the method of shares valuation depends upon ________.
Correct Answer
Question 26 In a merger decision, the value of a firm depends upon:Correct Answer
acquiring firm
Question 27 In an aggressive approach :Correct Answer
Question 29 Significant influence is the power to :Correct Answer
Question 30 The costs should be gathered & allocated within the organisation at the ________
structural layer.
Correct Answer
Lowest possible
Question 31 A single organisation model serves to keep all individual initiatives to be targeted into a
co-ordinated plan.
Correct Answer
True
Question 32 During the costing process, we look at ________.
Correct Answer
Question 33 Money becomes less valuable when received at a latter stage instead of in present time.
Correct Answer
True
Question 34 The external staffing performance indicators include :Correct Answer
Compensation per Re. Profit , Personnel services head count , Profit per head
Question 35 The Management of the Company may enter into a negotiated purchase, which is
referred to as :Correct Answer
Greenfield
Strategic Finance
Question 36 One of the selective developments that has taken place in recent times is companies are
going in for :Correct Answer
Question 37 ________ is not a characteristic of financial conglomerates.
Correct Answer
Question 38 An investment property is an investment in land or buildings :Correct Answer
Question 39 Notes payable means the buyer signs a note that evidences a debt to the seller.
Correct Answer
True
Question 40 Business risk & financial risk do not have any influence on ________.
Correct Answer
Accounting numbers
Question 41 During Share repurchase, it is necessary to transfer certain sum to :Correct Answer
Question 42 The main assumptions for stock repurchase models are as follows :Correct Answer
Question 43 Cash dividends are taxable at ordinary tax rates.
Correct Answer
True
Question 44 When a firm invests in human resources by acquisition & training, it anticipates a
________
Correct Answer
Question 45 The amount to be invested by any single investor in a commercial paper shall not be less
than Rs. ________.
Correct Answer
25 lacs
Question 46 Tender offers are used primarily for :Correct Answer
Question 47 Many companies claim their main assets are their :Correct Answer
People
Question 1
Correct Answer
True
Question 2
Correct Answer
Firm Managers
Question 3
Correct Answer
True
Question 4
Question 5
Developing a consistent framework supported by rewarding mechanisms once it is
introduced & approved at enterprise level is a characteristic of :Correct Answer
Question 6
Correct Answer
True
Strategic Finance
Question 7
Retained earnings
Question 8
In a friendly takeover, the acquiring firm makes a financial proposal to the largest firm's
________.
Correct Answer
Management & board
Question 10 Long term financing strategy is used by a firm to meet :Correct Answer
Question 11 Explicit cost and implicit cost are the two parts of cost of debt.
Correct Answer
True
Question 12 AS 13 Does not deal with :Correct Answer
Question 13 the amount of working capital required to meet long term, minimum needs is called :Correct Answer
Question 14 A long term investment is an investment other than a current investment.
Correct Answer
True
Question 15 Short term financing is meant for funding working capital of a company.
Correct Answer
True
Question 16 Share repurchase a form of restructuring comes under :Correct Answer
Question 17 Retained earnings are the most important internal sources of financing the growth of the
firm.
Correct Answer
True
Question 18 Receivables constitutes a substantial portion of current assets of several firms.
Correct Answer
True
Question 19 Investment are the assets held for earning income by way of :Correct Answer
Question 20 Personnel services expenses is made up of:Correct Answer
Question 21 In many companies, there is no formal record of________.
Correct Answer
Question 22 Value added analysis is a method to determine, if elements within a process flow provide
the :Correct Answer
Values
Question 24 The Buy back of shares shall not be made from
Correct Answer
Question 25 traditionally avails are provided by ________.
Correct Answer
Banks
Question 26 ________ is not a example of segment liability.
Correct Answer
Goodwill
Strategic Finance
Question 27 Examples of accrued expenses are :Correct Answer
Question 28 Liquidation value is also known as ________.
Correct Answer
Realizable value
Question 29 Indicators of the value of an investment are obtained by :Correct Answer
Reference to its market value , The investee`s assets , The expected cash flows
from the investment
Question 30 The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :Correct Answer
Articles of association should authorize buyback of shares , The shares which
are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total capital
and free reserves should not be more than 2 : 1
Question 31 optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to
fluctuate.
Correct Answer
False
Question 32 Cost accounted for per activity is classified under ________.
Correct Answer
Traceable cost
Question 33 The following categories of personnel are taken into account to calculate the actual
manpower strength :Correct Answer
Question 34 The cost of facilities is usually included & distributed as ________.
Correct Answer
Depreciation
Question 35 In value of assets approach the value of which of the following should be deducted to
calculate the net assets available to the equity shareholders :Correct Answer
Question 36 usually the `controlling block' tends to be between :Correct Answer
20 & 40 percent
Question 37 When competition is high in the market, it is :Correct Answer
Question 38 Segment expense includes ________.
Correct Answer
The relevant portion of enterprise revenue that can be allocated on a reasonable
basis to a segment
Question 39 Credit standards should be relaxed upon the point where incremental returns ________
incremental costs.
Correct Answer
Equals
Question 40 Management of working capital refers to the management of total assets and liabilities of
a company.
Correct Answer
False
Question 41 The employer in offering the job contract assumes a range of legal obligations such as
Correct Answer
Question 42 The most important internal sources of financing the growth of the firm is through :Correct Answer
Retained earnings
Strategic Finance
Question 43 When a change in the method of depreciation is made :Correct Answer
Question 44 Shortcomings of accounting numbers consist of the following :Correct Answer
Firms use different kind of accounting methods , Business risk and financial risk
Question 45 Profitability of a company depends upon :Correct Answer
Cost of capital
Question 46 A normal firm shows the following characteristics :Correct Answer
Question 47 As per residual theory of dividends the focus is on ________.
Correct Answer
Growth
Question Book value of the assets is directly dependent on the accounting policies followed by the
company which is used in the following areas :Correct Answer Inventory valuation , Booking depreciation , Methods of provisions
Question Segment expense includes ________.
to a segment
Question During the costing process, we look at ________.
Question Long term cash forecasting is generally for a period of ________ years.
Question Decisions related to working capital are repetitive & frequent.
Correct Answer True
Question Share repurchase a form of restructuring comes under :Correct Answer Changes in ownership structure
Question Explicit cost and implicit cost are the two parts of cost of debt.
Correct Answer True
Question The limitations of value of assets approach include :Correct Answer Book value of the assets is directly dependent on the accounting policies followed by
the company , There are no standard procedures for valuation of intangible assets , No importance to the
market value of the asset
Question As a general rule, an asset is :Correct Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments ,
Question In many companies, there is no formal record of________.
Question In a merger decision, the value of a firm depends upon:Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of
acquiring firm
Question The 3 main types of accounting records followed by an organisation are :Correct Answer Organisational accounting , Budgetary accounting , Cost accounting
Question Cost of ________ is more than other sources for raising short - term finance.
Strategic Finance
Question Operating economies of scale are achieved through the following mergers :Correct Answer Horizontal , Vertical , Conglomerate
Question The main assumption in comparative analysis is the possibility of :Correct Answer Combination or co-location of similar functions
Question If the segment result of a segment includes interest or dividend income its segment assets
will not include ________.
Question According to Net Income Approach, the average cost of capital declines as the leverage
Question Equity includes :Correct Answer Development Rebate Reserve
Question Long term financing strategy is used by a firm to meet :Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of
Question The employer in offering the job contract assumes a range of legal obligations such as :Correct Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
Segment liabilities Enterprise liabilities Enterprise liabilities
Segment revenue Enterprise revenue Enterprise revenue
Segment result Enterprise net profit or loss Enterprise net profit or loss
Segment assets Enterprise assets Enterprise assets
Question Organisational changes are similar to mission changes.
Correct Answer True
Question The number of bidding centers shall not be less than ________ for buy back through book
building.
Correct Answer 30
relevance
are eliminated
Question Total risk reduces if operations of combining firms are ________.
Correct Answer Negatively correlated
Question In the reproduction value method of valuation, the value of assets is taken to be on the basis
of ________
Question A good accounting system does NOT have the characteristics such as :Correct Answer Does not cover decisions over the life cycle
Strategic Finance
Question The ________ cost tier has the advantage of being the simplest to calculate and justify.
Question In today's world, knowledge has become the key determinant for economic & business
success.
Correct Answer True
Question Management of working capital refers to the management of total assets and liabilities of a
company.
Question optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to fluctuate.
Question A company under siege may look for support & help from its :Correct Answer Friends
Question If the segment result of a segment includes interest expense its segment liabilities include :Correct Answer The related interest bearing liabilities
Question To overcome the problems of matching data the actions can be taken as follows :Correct Answer Keep extensive records of the process , Maintain detailed procedures , Keep records of
Question A firm using a conservative policy for determining the requirements of current assets :Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales
Question The following Act contains the provisions permitting the companies to buy back their shares :Correct Answer Companies (Amendment) Act, 1999
Question Shortage costs are mainly in the form of :Correct Answer Disruption in production schedule , Loss of sales , Loss of customer goodwill
Question open account credit appears on the buyer's balance sheet as :Correct Answer Accounts payable
Question Business risk & financial risk do not have any influence on ________.
Question When a company is able to assess an individual's worth, it helps in increasing its own worth.
Correct Answer True
Question Which of the following is NOT a disadvantage of deferred payment plan to the acquiring firm?
of acquisition
Question Operating economies occur due to indivisibilities of resources like :Correct Answer People , Equipment , Overheads
Question Often a company borrows loans / debts by giving the following as a security :Correct Answer Shares
Question A long term investment is an investment other than a current investment.
Correct Answer True
Question Valuation of current investments on overall basis is not considered appropriate.
Correct Answer True
Strategic Finance
Question If a particular item of depreciation or amortisation is included in segment expense, the related
asset is included in :Correct Answer Segment assets
Question Segment result is segment revenue less segment expenses.
Correct Answer True
Question Walter's model on dividend relevance is based on the following assumptions :Correct Answer 100 Per cent payout or retention , Internal financing , Constant return and cost of
capital
Question A firm with a judicious mixture of debt and equity will have :Correct Answer Lowest cost of capital , High value of firm , Good market reputation
Question Investment are the assets held for earning income by way of :Correct Answer Dividend , Interest , Rentals
Question An activity model is a tool to assist in understanding & defining the organisation.
Correct Answer True
Question The most popular kind of dividend policy is one that pays a ________.
Question Assets held as stock - in - trade are also investments.
Question As per Pecking order theory, which is the costliest means of funding :Correct Answer Equity Shares
Question In the past, costing mainly focused on :Correct Answer Manufacturing costs
Question Articles of association should authorise buy back of securities as per the Company's Act.
Correct Answer True
Question Opportunity costs and real costs decrease the market value of a firm.
Correct Answer True
Question Increase in cost of capital means decrease in ________.
Question According to NI Approach, decrease in leverage decreases the overall cost of capital and
increases the firm's value.
Question Short term sources of funds include :Correct Answer Current Liabilities
Question A high payout policy means :Correct Answer More current dividends
Question Baumul`s Model is similar to EOQ model in inventory management.
Correct Answer True
Question One of the bases for determining the residual value of similar assets is :Correct Answer Realizable value
Question Investment decisions are mainly concerned with :Correct Answer Assets
Strategic Finance
Question current liabilities arise in the context of :Correct Answer Current assets
Question A high payout policy on dividends implies :Correct Answer More current dividends , Less retained earnings
Question In the stock repurchase model one of the main assumption is that ________.
Correct Answer The market is efficient
Question Normally the basis for identifying an enterprise segments are :Correct Answer The organizational structure of an enterprise
Question If a firm diversifies managerial teams formed can be shifted from unproductive activities to
productive ones which leads to :Correct Answer Improved profitability , Continuity , Growth of the firm
Question Capital gains are taxed at ________.
Question AS 13 Accounting for investments - Accounting standard comes into effect for financial
statements covering periods commencing on or after ________.
Correct Answer Àpril 1, 1995
Question Comparative analysis is :Correct Answer A review to ensure consistency within the activity model & process flow
Question The depreciation rates or the useful lives of the assets are disclosed only :Correct Answer If they are different from the principle rates specified in the statute
Question When a firm invests in human resources by acquisition & training, it anticipates a ________
Question ________ is never a part of the output.
Question It is essential that ABC must fit into the strategy of the company.
Correct Answer True
Question The 3 groups of participants in a firm are :Correct Answer Suppliers of equity , Debt suppliers , Firm Managers
Question For accounting standard (AS) 27, Significant influence may be gained by :Correct Answer Share ownership , Statute , Agreement
Question Postage is an example of ________ cost.
Question The value based approach of HRA Tracking suggests that the value of human resources
depends upon :Correct Answer Capacity to generate revenue
Strategic Finance
Question Shortcomings of accounting numbers consist of the following :Correct Answer Firms use different kind of accounting methods , Business risk and financial risk do not
Question It is necessary to identify all costs that may be related to an acquisition.
Correct Answer True
Question Cost benefit analysis is the simplest form of comparison between :Correct Answer Ideas to determine which is faster, better or cheaper
Question Modigliani - Miller Theoram is based on :Correct Answer Perfect Capital Markets
Question In today's fast moving world, the quickest way to get information on a firm is through
________.
Question Determination of residual value of an asset is normally a difficult matter.
Correct Answer True
Question The scope of the data required relates to the scope of the activity model & processes under
review.
Correct Answer True
Question Trade credits are of the following types:Correct Answer Notes payable , Trade acceptances , Open accounts
Question In case of direct placement of commercial papers it may be issued for maturities ________
from the date of issue.
Question AS 13 Does not deal with :Correct Answer The bases for recognition of interest, dividends & rentals earned on investments ,
Question Debt reduces :Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions
Question It is the activity accountant's job to do the following for the existing organisational structure :Correct Answer To define the costs , To refine the costs , To document the costs
Question
A firm can manage with small inventory if the supply is :Correct Answer
Prompt & adequate
Question
Correct Answer
False
Strategic Finance
Question
Implicit claims are non written promises and rights such as :Correct Answer
Right to provide service to customers , Job security for the employees
Question
financial leverage.
Correct Answer
Constant
Question
________
Correct Answer
Question
Free cash flow theory Enormous conflicts of interest between Stakeholders and shareholders
Firms
leverages
Question
benchmarks, bottlenecks, quality not met, time problems etc. This is called as ________.
Correct Answer
Process analysis
Question
The following is not a method of payment to the acquired firm:Correct Answer
Fixed deposits of the acquiring firm
Question
Correct Answer
Mechanisms
Question
Correct Answer
True
Question
One of the bases for determining the residual value of similar assets is :Correct Answer
Realizable value
Question
Correct Answer
Earning per share
Book value
Strategic Finance
Question
except:Correct Answer
analysis
Question
Correct Answer
True
Question
Correct Answer
False
Question
A company is prohibited to buy back its own shares in the following circumstances :Correct Answer
Question
Correct Answer
True
Question
A quantity discount is offered :Correct Answer
On large shipments
Question
According to NI Approach, decrease in leverage decreases the overall cost of capital and
Correct Answer
False
Question
Human Assets accounting stands for :Correct Answer
Measurement & reporting of the cost and value of people as organisational
resources
Question
Shareholders returns consists of 2 components :Correct Answer
Question
Non trading assets
Question
Correct Answer
False
Question
shorter than that envisaged under the provisions of the relevant statute, the depreciation provision is
approximately computed :Correct Answer
Question
Question
Correct Answer
Profitability
Question
Question
Correct Answer
3 to 5 years
Strategic Finance
Question
book building.
Correct Answer
30
Question
price adjustments :Correct Answer
Historical cost
Question
Question
White knight
Question
Correct Answer
Customer advances
Question
Correct Answer
True
Question
20 & 40 percent
Question
Correct Answer
True
Question
Correct Answer
01.04.2002
Question
Question
Question
Question
A firm using a conservative policy for determining the requirements of current assets :Correct Answer
Stimulates sales
Question
Correct Answer
True
Question
by the bill issuer.
Correct Answer
Bill discounting
Question
Question
Correct Answer
True
Strategic Finance
Question
Termination pay
Question
A firm's current assets include :Correct Answer
Question
acquiring firm
Question
Question
Correct Answer
True
Question
assets.
Correct Answer
Intangible
Question
Correct Answer
Exchange ratio
Question
Correct Answer
Increased risk
Question
Correct Answer
False
Question
Correct Answer
Vertical Mergers
Question
Segment assets are determined after :Correct Answer
Deducting related allowances / provisions reported as direct offsets
Question
Question
firm?
Correct Answer
There is built - in cushion to the acquiring firm as total payment is not made at
the time of acquisition
Question
co-ordinated plan.
Correct Answer
True
Question
Correct Answer
False
Question
Question
Strategic Finance
Correct Answer
True
Question
The internal staffing performance indicators are :Correct Answer
Question
Correct Answer
Board of Directors
Fully paid up
Fully paid up
Question
Question
of :Correct Answer
8 - 10 %
Question
Trust receipt
Floating lien
Chattel mortgage
Question
________.
Correct Answer
Internet
Question
Companies often need to value its own :Correct Answer
Shares
Question
Question
Correct Answer
True
Question
Correct Answer
1 year
Question
Question
________.
Strategic Finance
Correct Answer
Question
Question
The following is not a factor for reduction in the life of an asset by obsolescence :Correct Answer
No study of market demand for a product / service
Question
Due to diversification employees seek:Correct Answer
Question
Research into true human resources accounting began in :Correct Answer
1960`s
Question
Correct Answer
Question
Correct Answer
True
Question
structural layer.
Correct Answer
Lowest possible
Question
Worth
Question
Examples of accounting methods used by firm are :Correct Answer
Question
Question
Question
Correct Answer
False
Question
The earning power of the company approach includes :Correct Answer
Question
Correct Answer
Question
Correct Answer
Question
Question
Correct Answer
False
Question
For accounting standard (AS) 27, Significant influence may be gained by :Correct Answer
Question
Accounts payable is also known as :-
Strategic Finance
Correct Answer
Question
Correct Answer
Enormous conflicts of interest between Stakeholders and shareholders
Cost of
debt & equity do not change with a change in leverage ratio
leverages
weighted average cost of capital does not
change with a change in the proportion of debt to equity in the capital structure
Question
Question
Correct Answer
Exchange ratio
Question
Correct Answer
basis to a segment
Question
The depreciable assets are assets which are expected to be used :Correct Answer
Question
Correct Answer
True
Question
Question
Correct Answer
True
Question
Financial evaluation involves :Correct Answer
Question
Net working capital
Question
Correct Answer
Increases
Question
traditional bureaucratic structure and applies the identifiable costs of that element accordingly?
Correct Answer
Question
include :-
Strategic Finance
Correct Answer
Question
Correct Answer
True
Question
Equity
Question
Short term sources of funds include :Correct Answer
Current Liabilities
Question
Correct Answer
True
Question
When a company has resorted to buyback of its shares it cannot make a further issue of
the same kind of securities within a period of how many months?
Correct Answer
6 months
Question
Correct Answer
Prestige or power
Question
structure :Correct Answer
To define the costs , To refine the costs , To document the costs
Question
Question
Correct Answer
False
Question
Correct Answer
Growth
Question
Cost of capital
Question
Correct Answer
118 Bn
Question
The characteristics of working capital are :Correct Answer
It is continually required for a going concern , Quantum of working capital
fluctuates depending on the level of activity , It is impacted by numerous transactions on a continuous
basis
Question
to productive ones which leads to :Correct Answer
Question
In the tender offer, the purchaser approaches :Correct Answer
The shareholder
Question
To overcome the problems of matching data the actions can be taken as follows :Correct Answer
Keep extensive records of the process , Maintain detailed procedures , Keep
records of assumptions as an audit trail
Strategic Finance
Question
Correct Answer
Foreign Promoters
Question
A current investment is an investment that is by nature :Correct Answer
Readily realisable , Intended to be held for not more than 1year from the date on
which investment is made
Question
Correct Answer
True
Question
Correct Answer
True
Question
Question
like :Correct Answer
Monitoring the investment in inventories , Negotiating favourable credit terms ,
Question
Correct Answer
True
Question
Question
Accrued expenses represent :Correct Answer
Costless financing , An interest free source of financing
Question
operating supplies.
Correct Answer
Natural
Mechanisms
Performs or provides energy to an
activity
Inputs Information or material used to produce the output of an activity Information or material used to
produce the output of an activity
Controls
Information or material that constrains an activity Information or material that constrains
an activity
Outputs Information or material produced by an activity Information or material produced by an activity
Question
Value added analysis :Correct Answer
Helps to identify potential activities that may be omitted immediately
Question
Correct Answer
True
Question
Question
Realizable value
Question
to productive ones which leads to :-
Strategic Finance
Correct Answer
Question
Segment liabilities do not include :Correct Answer
purpose
Question
Equity Shares
Question
Correct Answer
Bank finance
Question
Question
Correct Answer
False
Question
Correct Answer
True
Question
Current Liabilities
Question
Investment decisions are mainly concerned with :Correct Answer
Assets
Question
Question
Question
Correct Answer
Depreciation
Question
Question
An investment property is an investment in land or buildings :Correct Answer
Question
If a firm opts for restrictive policy then the investments in current assets is :Correct Answer
Low
Question
Correct Answer
True
Question
Correct Answer
groups of non - investor stakeholders have an interest in the firm
Many
Strategic Finance
leverages
Firms have preferences by choosing a way to finance their projects
Question
Correct Answer
Process analysis
Question
The main characteristics of operating economies are :Correct Answer
due to indivisibilities of resources , It is possible in generic management functions
Question
20 & 40 percent
Question
Question
resources
Question
Cost of capital
Question
Correct Answer
Different costs are
involved
Flexibility
The extent & the ease with which the funds can be raised & paid back are very important
Time Takes less time to take an overdraft from the bank
Takes less time to take an overdraft
from the bank
Creditworthiness of the issuer If a company has a good creditworthiness it is not difficult to raise short
term funds
If a company has a good creditworthiness it is not difficult to raise short term funds
Question
Question
reconciling item.
Correct Answer
Reportable segment
Question
Correct Answer
Segment expense
Question
Correct Answer
True
Question
Strategic Finance
Question
Debt is often issued at :Correct Answer
Question
Correct Answer
True
Question
Correct Answer
Question
Segment result represents :Correct Answer
Operating profit or loss
Question
firm?
Correct Answer
Question
________ Assets.
Correct Answer
Specific
Question
Correct Answer
True
Question
Money becomes less valuable when received at a latter stage instead of in present time.
Correct Answer
True
Question
The intellectual assets of a company are often worth 3 or 4 times the tangible book value.
Correct Answer
True
Question
One of the selective developments that has taken place in recent times is companies are
Question
Question
________ of the total enterprise revenue additional segments should be identified as reportable
segments.
Correct Answer
75 percent
Question
co-ordinated plan.
Correct Answer
True
Question
Correct Answer
True
Question
On large shipments
Question
from the investment
Strategic Finance
Question
Question
Correct Answer
False
Question
Question
Correct Answer
Payables
Question
Correct Answer
Vertical Mergers
Question
Question
Value based approach of HRA tracking can be divided into 2 categories - Non - monetary
& monetary.
Correct Answer
True
Question
Correct Answer
Question
Question
Question
Earn out plan
Question
Correct Answer
False
Question
market.
Correct Answer
Listed
Question
Question
Tender offers can be afforded by firms with :Correct Answer
Question
The following method of valuation is used for listed companies that have an active market
for their shares :Correct Answer
Question
between ________
Correct Answer
12.1 % & 16.7 %
Strategic Finance
Question
Conservative policy for determining the requirements of current assets is also known as :Correct Answer
Flexible policy
Question
Yield or earning approach method of valuation uses :Correct Answer
Question
The main categories of organisational elements are :Correct Answer
Question
Correct Answer
Direct
Question
The existence of significant influence by an investor is usually evidenced in the following
ways :Correct Answer
Question
Equity
Sentiments and rumours
No fundamental basis. No effect on valuation
Unlisted shares on stock exchange
Difficult to estimate the price
Invalid valuation of shares
Manipulation of stock markets Invalid valuation of shares
Easy to estimate the price
Selective information
Valuation by various people on information available
Valuation by various
people on information available
Question
Correct Answer
True
Question
Correct Answer
Question
Question
Correct Answer
True
Question
Correct Answer
True
Question
Correct Answer
Question
Correct Answer
True
Question
Correct Answer
Question
Net period - no cash discount means :Correct Answer
The seller only specifies the time period allowed for the payment
Question
Correct Answer
True
Strategic Finance
Question
commencing :Correct Answer
On or after 01.04.2001
Question
Correct Answer
True
Question
Question
assets.
Correct Answer
Intangible
Question
The budgetary records are useful for:Correct Answer
Validating accounting costs , Providing a rationale for division of costs ,
Replacing missing data
Question
financed include :Correct Answer
Free reserves of the company , Securities premium account , Proceeds of any
shares or other specified securities
PpH =
SPE =
RR =
U%=
P/H (C+B)/P
R / H (C + B ) / R
(C + B ) / R
P/H
R/(C+B)
R/(C+B)
Question
Question
________.
Correct Answer
Internet
Question
It is often not possible to directly attribute, or reasonably allocate :Correct Answer
The interest bearing liabilities to segments
Question
Correct Answer
False
Question
analysis
Your Answer It is used as a starting point
True/False
Question
Correct Answer
True
Your Answer True
Question
Your Answer Location of its customers
Strategic Finance

Question
Your Answer Alternative process improvements
True/False
Question
Correct Answer
True
Your Answer False
Select The Blank
Question
Correct Answer
Your Answer Provide ineffective competitive process
True/False
Question
Retained earnings are the most important internal sources of financing the growth of the
firm.
Correct Answer
True
Your Answer True
Question
Your Answer Participate in the financial decisions , Participate in the operating policy decisions ,
Question
Cash available
Your Answer Cash available
Question
basis
Your Answer The decisions related are one time decisions only , It is continually required for a going
concern , Quantum of working capital fluctuates depending on the level of activity
Select The Blank
Question
Correct Answer
Your Answer Income / profit from the assets
Question
Your Answer Land , Debentures
Strategic Finance

Question
Your Answer Vertical , Conglomerate , Financial
True/False
Question
Correct Answer
False
Your Answer False
Select The Blank
Question
Correct Answer
Growth
Your Answer Growth
True/False
Question
a company.
Correct Answer
False
Your Answer False
Question
Your Answer To determine the amount of earnings to be distributed to shareholders , Amount to be
Question
Your Answer Brokerage , Fees , Duties
Select The Blank
Question
Correct Answer
Your Answer Big ticket items & durable goods
True/False
Question
Correct Answer
True
Your Answer True
Question
Your Answer As separate financial statements
Strategic Finance
Select The Blank
Question
Correct Answer
Non traceable cost
Your Answer Input cost
Question
Book value of the assets is directly dependent on the accounting policies followed by the
company which is used in the following areas :Correct Answer
Your Answer Booking depreciation , Methods of provisions , Inventory valuation
Question
Your Answer Purchase of raw material , Manufacturing costs , Administration
Select The Blank
Question
Correct Answer
Vertical Mergers
Your Answer Conglomerate mergers
True/False
Question
Correct Answer
False
Your Answer True
Question
Your Answer Improved profitability , Growth of the firm , Better facilities and work conditions
Question
Best practices, a tool for review process is similar to :Correct Answer
Bench marking
Your Answer Value added analysis
Question
Your Answer Debt and equity are the 2 kinds of funds used by the firm
True/False
Question
Correct Answer
False
Your Answer True
True/False
Strategic Finance
Question
under review.
Correct Answer
True
Your Answer True
Select The Blank
Question
Correct Answer
Direct
Your Answer Direct
Select The Blank
Question
Correct Answer
Increases
Your Answer Decreases
Select The Blank
Question
________ Assets.
Correct Answer
Specific
Your Answer General
Question
Many companies claim their main assets are their :Correct Answer
People
Your Answer People
Question
Your Answer Planning , Searching & screening , Financial evaluation
Select The Blank
Question
Correct Answer
Goodwill
Your Answer Product warranty provision
Select The Blank
Question
reconciling item.
Correct Answer
Reportable segment
Your Answer Business segment
Question
Your Answer It is an equilibrium Model , It describes the pricing of assets as well as derivatives ,
Strategic Finance
Question
Your Answer Interest & debt repayment
True/False
Question
Correct Answer
True
Your Answer False
Question
Net working capital
Your Answer Working capital cycle
Question
Your Answer Suppliers of equity , Debt suppliers , Firm Managers
Question
Your Answer The surplus is invested in liquid assets
Question
Correct Answer
0.28
Your Answer 0.28
True/False
Question
& monetary.
Correct Answer
True
Your Answer False
True/False
Question
Correct Answer
False
Your Answer False
Question
Your Answer Logs to record workflow , Specific costs , General studies and processes
Select The Blank
Question
________.
Correct Answer
Internet
Your Answer Internet
Strategic Finance
Select The Blank

Question
Correct Answer
Depreciation
Your Answer Fringe benefits
Question
Your Answer Participation in policy making processes , Material transactions between the investor &
Question
Your Answer The personnel payroll , Support costs , Supplies
Question
Your Answer Full time equivalent staff , Expenses , Good will
Question
Your Answer Costless financing , An interest free source of financing , Truly discretionary financing
True/False
Question
Correct Answer
True
Your Answer True
Question
Flexible policy
Your Answer Aggressive policy
Question
True/False
Question
fluctuate.
Correct Answer
False
Your Answer True
Strategic Finance
Question
Accounts payable
Your Answer Accounts receivables
Select The Blank
Question
between ________
Correct Answer
12.1 % & 16.7 %
Your Answer less than 10 %
Question
Correct Answer
0.28
Your Answer 0.28
Select The Blank
Question
Correct Answer
Question
Your Answer Consultation with shareholders , Planning , Searching & screening
Question
Your Answer Notes payable , Trade acceptances , Commercial paper
True/False
Question
depreciation.
Correct Answer
True
Your Answer True
Select The Blank
Question
Correct Answer
1 to 2 months
Your Answer 3 months
Question
Your Answer Is depreciated along with the existing asset
Strategic Finance
Question
Your Answer Timeliness & turnaround
True/False
Question
Correct Answer
True
Your Answer True
Question
Select The Blank
Question
Correct Answer
Your Answer The voluntary market based method
Question
retention
Your Answer Internal financing , Constant return and cost of capital , Perfect markets
Question
Your Answer Necessary that firms should have less working capital requirement
Question
Your Answer Sells largely on cash basis
True/False
Question
Correct Answer
True
Your Answer True
Select The Blank
Question
Correct Answer
Your Answer Investment in employees
Select The Blank
Question
Strategic Finance
Correct Answer
Loss of value
Your Answer Loss of value
Question
Growth & diversify
Select The Blank
Question
Correct Answer
Increases
Your Answer Increases
True/False
Question
Correct Answer
True
Your Answer True
Question
Your Answer By applying a lower rate
Select The Blank
Question
Correct Answer
Segment expense
Your Answer Segment revenue
Question
Your Answer Payroll , Co-ordination , Accounting
Question
Your Answer Value added & non value added activities
Question
Your Answer To the person , To the firm , To the Consultant
Question
Arbitrage means :Correct Answer
Strategic Finance
Your Answer
Selling a security
Select The Blank

Question
incremental costs.
Correct Answer
Equals
Your Answer Have no correlation with
Question
Your Answer Perfect Capital Markets
True/False
Question
Correct Answer
True
Your Answer False
True/False
Question
worth.
Correct Answer
True
Your Answer True

Question
Stimulates sales
Your Answer Has fewer production stoppages , Ensures quick deliveries to customers , Increases the
ROI
Question
Your Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or signalling
hypothesis
Question
allocated :Correct Answer
Fully in the accounting period for which they are acquired
Your Answer Over the residual value
Question
Correct Answer
0.25
Your Answer 0.25
Strategic Finance
True/False
Question
Correct Answer
True
Your Answer True
Question
Your Answer Ideas to determine which is faster, better or cheaper
Question
For ABC Analysis the available cost data :Correct Answer
Your Answer Has to be adjusted for change , Has to be corrected for undocumented element costs ,
Question
Today knowledge has become a key determinant for :Correct Answer
Economic & business success
Your Answer For determining a firm's value
Select The Blank
Question
Correct Answer
Your Answer Expenses
Question
Prompt & adequate
Your Answer Prompt & adequate
Question
Your Answer People , Equipment , Overheads
Select The Blank
Question
productive .
Correct Answer
Your Answer Solid human resource team
Question
Equity
Your Answer Equity
True/False
Strategic Finance
Question
Correct Answer
False
Your Answer True
True/False
Question
Correct Answer
True
Your Answer True
Question
Your Answer Fixed assets , Current assets
Question
Your Answer Brokerage , Advertisements , Fees , Duties
Question
Question
Current Liabilities
Your Answer Current Liabilities
Select The Blank
Question
Correct Answer
118 Bn
Your Answer 118 Bn
True/False
Question
Correct Answer
True
Your Answer True
True/False
Question
Correct Answer
False
Your Answer True
Select The Blank
Question
Correct Answer
1 to 2 months
Your Answer 1 to 2 months
Strategic Finance
Question
The bottom line of ABC Process is :Correct Answer
Your Answer To achieve a better method of doing the right business pf the organisation
Select The Blank
Question
reconciling item.
Correct Answer
Reportable segment
Your Answer Operating segment
Question
related asset is included in :Correct Answer
Segment assets
Your Answer Segment assets
True/False
Question
Correct Answer
True
Your Answer True
True/False
Question
Correct Answer
True
Your Answer True
Question
Your Answer Improved profitability , Continuity , Growth of the firm
True/False
Question
Correct Answer
True
Your Answer True
Question
The overhead expenses include :Correct Answer
Your Answer Daily wages , Maintenance , Security
True/False
Question
Correct Answer
True
Your Answer True
True/False
Strategic Finance
Question
Correct Answer
True
Your Answer True
Select The Blank
Question
Correct Answer
Firm Managers
Your Answer Firm Managers
Question
The FEA Tools encompass a vast array of information & policy into :Correct Answer
One evaluation
Your Answer Many evaluations
Question
The employer in offering the job contract assumes a range of legal obligations such as :Correct Answer
Your Answer Rewards - cash like & non cash like , Health & safety policies , Pensions & contributions
to social security payments
Select The Blank
Question
Correct Answer
Accounting numbers
Your Answer Accounting numbers
Question
Your Answer Readily realisable , Intended to be held for not more than 1year from the date on which
Question
The depreciation rates or the useful lives of the assets are disclosed only :Correct Answer
Your Answer If they are different from the principle rates specified in the statute
Question
The net income approach is based on following 3 assumptions :Correct Answer
There are no taxes , Cost of debt is less than equity capitalization rate , Use of
debt doesn't change the risk perception of investors
Your Answer There are no taxes , Cost of debt is less than equity capitalization rate , Use of debt
Select The Blank
Question
Correct Answer
Your Answer Between 15 days to 1 year
Strategic Finance
Select The Blank
Question
Correct Answer
Select The Blank
Question
Correct Answer
Danish (Denmark)
Your Answer Japanese
Select The Blank
Question
activities.
Correct Answer
Segment assets
Your Answer Current assets
Question
Sf-saroj-2
capital
Your Answer Internal financing , Constant return and cost of capital , 100 Per cent payout or retention
Your Answer Lowest cost of capital , High value of firm , Very high rate of interest
Your Answer Dividend , Interest , Rentals
True/False
Correct Answer True
Your Answer True
Select The Blank
Your Answer Regular, steady dividend
Strategic Finance
True/False
Your Answer True
Your Answer Equity Shares
Your Answer Manufacturing costs
True/False
Correct Answer True
Your Answer True
True/False
Correct Answer True
Your Answer False
Select The Blank
Your Answer Profitability
True/False
Your Answer True
Your Answer Term loans
Your Answer Higher market price per share
True/False
Correct Answer True
Your Answer True
Your Answer Operational value
Question Investment decisions are mainly concerned with :-
Strategic Finance
Correct Answer Assets
Your Answer Leverage
Your Answer Overheads
Your Answer High market price per share , Quick growth of the firm , More current dividends
Select The Blank
Your Answer Offers are minimum limited offers
Your Answer External financial reporting system
Select The Blank
Your Answer Preferentially lower rate
Select The Blank
Your Answer Àpril 1, 1995
Your Answer A review to ensure consistency within the activity model & process flow
Select The Blank
Your Answer Faster M & As
Select The Blank
Your Answer Mechanisms
Strategic Finance
True/False
Correct Answer True
Your Answer True
Your Answer Share ownership , Statute , Agreement
Select The Blank
Your Answer Input cost
Your Answer Historical cost
Your Answer Firms use different kind of accounting methods , Dividend policy has lot of influence on
accounting numbers , Business risk and financial risk do not have any influence on accounting numbers
True/False
Correct Answer True
Your Answer True
Select The Blank
________.
True/False
Correct Answer True
Your Answer True
Strategic Finance
True/False
review.
Correct Answer True
Your Answer True
Your Answer Notes payable , Trade acceptances , Open accounts
Select The Blank
Your Answer The bases for recognition of interest, dividends & rentals earned on investments ,
decisions
Your Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions
Your Answer To define the costs , To refine the costs , To document the costs
Your Answer Inventory valuation , Booking depreciation , Methods of provisions
Select The Blank
to a segment
Your Answer The relevant portion of enterprise revenue that can be allocated on a reasonable basis to
a segment
Select The Blank
Your Answer Benefits
Select The Blank
Your Answer More than 8 years
Strategic Finance
True/False
Correct Answer True
Your Answer True
Question Share repurchase a form of restructuring comes under :Correct Answer Changes in ownership structure
Your Answer Changes in ownership structure
True/False
Correct Answer True
Your Answer True
Your Answer Book value of the assets is directly dependent on the accounting policies followed by the
company , There are no standard procedures for valuation of intangible assets , No importance to the
Your Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments , An
Indemnity
Select The Blank
Your Answer Office equipment
acquiring firm
Your Answer Earnings , Manpower of the acquiring firm , Operating characteristics of acquiring firm
Your Answer Miscellaneous reports accounting , Budgetary accounting , Cost accounting
Select The Blank
Your Answer Commercial paper
Your Answer Horizontal , Vertical , Conglomerate
Strategic Finance
Your Answer Combination or co-location of similar functions
Select The Blank
Your Answer Related receivables
Your Answer Deferred Payment Liabilities
Your Answer Fixed assets requirements , Investment in current assets , Permanent working capital
requirements
True/False
Correct Answer True
Your Answer True
Select The Blank
building.
Correct Answer 30
Your Answer 30
Select The Blank
Your Answer Interrelated
Select The Blank
of ________
Your Answer Market value
Question A good accounting system does NOT have the characteristics such as :-
Strategic Finance
Correct Answer Does not cover decisions over the life cycle
Your Answer Does not cover decisions over the life cycle
Select The Blank
Your Answer General overheads
True/False
success.
Correct Answer True
Your Answer True
True/False
company.
Your Answer True
True/False
Your Answer True
Your Answer Suppliers
Your Answer Liabilities indirectly attributable to the segment
Your Answer Keep extensive records of the process , Maintain detailed procedures , Keep records of
sales
Your Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales
Your Answer The Companies Act, 1956
Your Answer Financing a lower level of fixed assets , Disruption in production schedule , Loss of sales
Strategic Finance
Question open account credit appears on the buyer's balance sheet as :Correct Answer Accounts payable
Your Answer Liabilities
Select The Blank
Your Answer Government Agencies sanctioning loans
True/False
Correct Answer True
Your Answer True
of acquisition
Your Answer Freedom of operation to the management of the newly acquired firm
Your Answer Equipment , Overheads , Printing & stationary
Your Answer Debentures
True/False
Correct Answer True
Your Answer True
True/False
Correct Answer True
Your Answer True
True/False
Correct Answer True
Your Answer True
Exit cost
termination pay.
Historical costs
Substitution cost
replacement
Lost efficiency prior to separation, Job vacancy cost during the new search &
Sacrifice necessary to hire & train people
Exit costs of the leaving employee & recruiting & training of the
Strategic Finance
Opportunity cost
An asset value when they are the target of an alternative use.

Management believes that the common stock of the
company is undervalued
Dividend or Personal Taxation Hypothesis
Cash dividends are taxable at ordinary tax rates
Leverage hypothesis
Stock repurchases increases the debt / equity ratio
Wealth transfer among shareholders
The largest portion of wealth effect goes to the non tendering shareholders
Diversification
Growth through the combination of firms in unrelated fields of business
Horizontal mergers
2 Firms operate & compete in a similar kind of business
Vertical mergers
Firms in different stages of production
Different or unrelated business activity
Segment liabilities
Segment revenue
Segment result
Segment assets
Mechanisms
Inputs
Controls
Outputs
Enterprise revenue
Enterprise assets

Information or material used to produce the output of an activity
Information or material that constrains an activity
Information or material produced by an activity

Flexibility
The extent & the ease with which the funds can be raised & paid back are very
important
Time
Takes less time to take an overdraft from the bank
If a company has a good creditworthiness it is not difficult to
raise short term funds
relevance
are eliminated
Strategic Finance
Free cash flow theory Enormous conflicts of interest between Stakeholders and shareholders Firms
leverages
Earning per share

Book value
Board of Directors
Fully paid up
Fully paid up
Trust receipt
Floating lien
Chattel mortgage
PpH =
SPE =
RR =
U%=
P/H (C+B)/P
R / H (C + B ) / R
(C + B ) / R
P/H
R/(C+B)
R/(C+B)
Question 1
match data across
Correct Answer
Question 2
Correct Answer
Absorption
Question 4
For M & As, the acquiring firm needs industry data on :-
Strategic Finance
Correct Answer
Question 5
Question 6
Correct Answer
118 Bn
Question 7
under review.
Correct Answer
True
Question 8
Correct Answer
Question 9
countries
Termination pay
Question 11 The offer price by the acquiring company should be an average of the weekly high & low
for :Correct Answer
The last 26 months
Correct Answer
Exchange ratio
Correct Answer
True
Equity Shares
Correct Answer
Correct Answer
True
________.
Correct Answer
Internet
High share prices
Strategic Finance
Correct Answer
True
Correct Answer
False
purpose
Stimulates sales
Correct Answer
Correct Answer
False
Correct Answer
True
Correct Answer
assets.
Correct Answer
Intangible
Correct Answer
True
Strategic Finance
knowledge.
Correct Answer
False
Correct Answer
Direct
changes.
Correct Answer
Rental equipment
Correct Answer
Mechanisms
Correct Answer
True
Question 1
Question 2
Worth
Question 3
Correct Answer
True
Question 4
Non trading assets
Question 5
basis of ________
Correct Answer
Replacement cost
Question 6
Correct Answer
True
Question 7
Question 8
Question 9
Question 11
A good accounting system does NOT have the characteristics such as :-
Strategic Finance
Correct Answer
Correct Answer
Correct Answer
True
Question 18 The main characteristics of CAPM are :Correct Answer
Correct Answer
True
Correct Answer
True
________ Assets.
Correct Answer
Specific
Correct Answer
Earn out plan
depreciation.
Correct Answer
True
Correct Answer
acquiring firm
Strategic Finance
structural layer.
Correct Answer
Lowest possible
co-ordinated plan.
Correct Answer
True
Correct Answer
Correct Answer
True
Greenfield
Correct Answer
Correct Answer
True
Correct Answer
Accounting numbers
Correct Answer
True
________
Correct Answer
than Rs. ________.
Correct Answer
25 lacs
Question 46 Tender offers are used primarily for :-
Strategic Finance
Correct Answer
People
Question 1
Correct Answer
True
Question 2
Correct Answer
Firm Managers
Question 3
Correct Answer
True
Question 4
Question 5
Question 6
Correct Answer
True
Question 7
Retained earnings
Question 8
________.
Correct Answer
Management & board
Correct Answer
True
Correct Answer
True
Correct Answer
True
firm.
Correct Answer
True
Strategic Finance
Correct Answer
True
Correct Answer
the :Correct Answer
Values
Correct Answer
Correct Answer
Banks
Correct Answer
Goodwill
Correct Answer
Realizable value
from the investment
fluctuate.
Correct Answer
False
Correct Answer
Traceable cost
Correct Answer
Depreciation
Question 36 usually the `controlling block' tends to be between :-
Strategic Finance
Correct Answer
20 & 40 percent

Correct Answer
basis to a segment
incremental costs.
Correct Answer
Equals
a company.
Correct Answer
False
Question 41 The employer in offering the job contract assumes a range of legal obligations such as
Correct Answer
Retained earnings
Cost of capital
Correct Answer
Growth
to a segment
Correct Answer True
Question Share repurchase a form of restructuring comes under :-
Strategic Finance
Correct Answer Changes in ownership structure
Correct Answer True
acquiring firm
Segment liabilities Enterprise liabilities Enterprise liabilities
Segment revenue Enterprise revenue Enterprise revenue
Segment result Enterprise net profit or loss Enterprise net profit or loss
Segment assets Enterprise assets Enterprise assets
Correct Answer True
Strategic Finance
building.
Correct Answer 30
relevance
are eliminated
of ________
Question A good accounting system does NOT have the characteristics such as :Correct Answer Does not cover decisions over the life cycle
success.
Correct Answer True
company.
sales
Question open account credit appears on the buyer's balance sheet as :-
Strategic Finance
Correct Answer Accounts payable
Correct Answer True
of acquisition
Correct Answer True
Correct Answer True
Correct Answer True
capital
Correct Answer True
Correct Answer True
Strategic Finance
Correct Answer True
Correct Answer True
Question Investment decisions are mainly concerned with :Correct Answer Assets
Strategic Finance
Correct Answer True
Correct Answer True
________.
Correct Answer True
review.
Correct Answer True
Strategic Finance
decisions
Question
Prompt & adequate
Question
Correct Answer
False
Question
Question
financial leverage.
Correct Answer
Constant
Question
________
Correct Answer
Question
Firms
leverages
Question
Correct Answer
Process analysis
Question
The following is not a method of payment to the acquired firm:-
Strategic Finance
Correct Answer
Question
Correct Answer
Mechanisms
Question
Correct Answer
True
Question
Realizable value
Question
Correct Answer
Earning per share
Book value
Question
analysis
Question
Correct Answer
True
Question
Correct Answer
False
Question
Question
Correct Answer
True
Question
On large shipments
Question
Correct Answer
False
Question
resources
Question
Strategic Finance
Question
Non trading assets
Question
Correct Answer
False
Question
Question
Question
Correct Answer
Profitability
Question
Question
Correct Answer
3 to 5 years
Question
book building.
Correct Answer
30
Question
Historical cost
Question
Question
White knight
Question
Correct Answer
Customer advances
Question
Correct Answer
True
Question
20 & 40 percent
Question
Correct Answer
True
Question
Correct Answer
01.04.2002
Question
Strategic Finance
Question
Question
Question
Stimulates sales
Question
Correct Answer
True
Question
by the bill issuer.
Correct Answer
Bill discounting
Question
Question
Correct Answer
True
Question
Termination pay
Question
Question
acquiring firm
Question
Question
Correct Answer
True
Question
assets.
Correct Answer
Intangible
Question
Correct Answer
Exchange ratio
Question
Correct Answer
Increased risk
Question
Correct Answer
False
Question
Strategic Finance
Correct Answer
Vertical Mergers
Question
Segment assets are determined after :Correct Answer
Deducting related allowances / provisions reported as direct offsets
Question
Question
firm?
Correct Answer
Question
co-ordinated plan.
Correct Answer
True
Question
Correct Answer
False
Question
Question
Correct Answer
True
Question
Question
Correct Answer
Board of Directors
Fully paid up
Fully paid up
Question
Question
of :Correct Answer
8 - 10 %
Question
Trust receipt
Floating lien
Chattel mortgage
Strategic Finance
Question
________.
Correct Answer
Internet
Question
Shares
Question
Question
Correct Answer
True
Question
Correct Answer
1 year
Question
Question
________.
Correct Answer
Question
Question
Question
Question
1960`s
Question
Correct Answer
Question
Correct Answer
True
Question
structural layer.
Correct Answer
Lowest possible
Question
Worth
Question
Examples of accounting methods used by firm are :Correct Answer
Question
Question
Strategic Finance
Question
Correct Answer
False
Question
The earning power of the company approach includes :Correct Answer
Question
Correct Answer
Question
Correct Answer
Question
Question
Correct Answer
False
Question
Question
Accounts payable is also known as :Correct Answer
Question
Correct Answer
Cost of
debt & equity do not change with a change in leverage ratio
leverages
weighted average cost of capital does not
change with a change in the proportion of debt to equity in the capital structure
Question
Question
Correct Answer
Exchange ratio
Question
Correct Answer
basis to a segment
Question
Question
Strategic Finance
Correct Answer
True
Question
Question
Correct Answer
True
Question
Question
Net working capital
Question
Correct Answer
Increases
Question
Correct Answer
Question
Question
Correct Answer
True
Question
Equity
Question
Current Liabilities
Question
Correct Answer
True
Question
Correct Answer
6 months
Question
Correct Answer
Prestige or power
Question
Question
Question
Correct Answer
False
Question
Strategic Finance
Correct Answer
Growth
Question
Cost of capital
Question
Correct Answer
118 Bn
Question
basis
Question
Question
The shareholder
Question
Question
Correct Answer
Foreign Promoters
Question
Question
Correct Answer
True
Question
Correct Answer
True
Question
Question
Question
Correct Answer
True
Question
Question
Question
operating supplies.
Correct Answer
Natural
Strategic Finance
Mechanisms
activity
Inputs Information or material used to produce the output of an activity Information or material used to
Controls
Information or material that constrains an activity Information or material that constrains
an activity
Outputs Information or material produced by an activity Information or material produced by an activity
Question
Question
Correct Answer
True
Question
Question
Realizable value
Question
Question
Segment liabilities do not include :Correct Answer
purpose
Question
Equity Shares
Question
Correct Answer
Bank finance
Question
Question
Correct Answer
False
Question
Correct Answer
True
Question
Current Liabilities
Question
Assets
Question
Question
The main theories behind share repurchases are :-
Strategic Finance
Correct Answer
Question
Correct Answer
Depreciation
Question
Question
Question
If a firm opts for restrictive policy then the investments in current assets is :Correct Answer
Low
Question
Correct Answer
True
Question
Correct Answer
Free cash flow theory Enormous conflicts of interest between Stakeholders and shareholders Many
groups of non - investor stakeholders have an interest in the firm
leverages
Firms have preferences by choosing a way to finance their projects
Question
Correct Answer
Process analysis
Question
Question
20 & 40 percent
Question
Question
resources
Question
Cost of capital
Question
Correct Answer
involved
Different costs are
Strategic Finance
Flexibility
Time Takes less time to take an overdraft from the bank
from the bank
Creditworthiness of the issuer If a company has a good creditworthiness it is not difficult to raise short
term funds
If a company has a good creditworthiness it is not difficult to raise short term funds
Question
Question
reconciling item.
Correct Answer
Reportable segment
Question
Correct Answer
Segment expense
Question
Correct Answer
True
Question
Question
Debt is often issued at :Correct Answer
Question
Correct Answer
True
Question
Correct Answer
Question
Question
firm?
Correct Answer
Question
________ Assets.
Correct Answer
Specific
Question
Correct Answer
True
Question
Correct Answer
True
Question
Correct Answer
True
Question
One of the selective developments that has taken place in recent times is companies are
Strategic Finance
Question
Question
segments.
Correct Answer
75 percent
Question
co-ordinated plan.
Correct Answer
True
Question
Correct Answer
True
Question
On large shipments
Question
from the investment
Question
Question
Correct Answer
False
Question
Question
Correct Answer
Payables
Question
Correct Answer
Vertical Mergers
Question
Question
& monetary.
Correct Answer
True
Question
Correct Answer
Question
Question
Strategic Finance
Question
Earn out plan
Question
Correct Answer
False
Question
market.
Correct Answer
Listed
Question
Question
Tender offers can be afforded by firms with :Correct Answer
Question
Question
between ________
Correct Answer
12.1 % & 16.7 %
Question
Flexible policy
Question
Yield or earning approach method of valuation uses :Correct Answer
Question
Question
Correct Answer
Direct
Question
Question
Equity
No fundamental basis. No effect on valuation
Unlisted shares on stock exchange
Manipulation of stock markets Invalid valuation of shares
Valuation by various people on information available
Valuation by various
people on information available
Question
Correct Answer
True
Question
Correct Answer
Question
Strategic Finance
Question
Correct Answer
True
Question
Correct Answer
True
Question
Correct Answer
Question
Correct Answer
True
Question
Correct Answer
Question
Net period - no cash discount means :Correct Answer
The seller only specifies the time period allowed for the payment
Question
Correct Answer
True
Question
commencing :Correct Answer
On or after 01.04.2001
Question
Correct Answer
True
Question
Question
assets.
Correct Answer
Intangible
Question
Question
PpH =
SPE =
RR =
U%=
P/H (C+B)/P
R / H (C + B ) / R
(C + B ) / R
P/H
R/(C+B)
R/(C+B)
Question
Question
________.
Correct Answer
Internet
Question
It is often not possible to directly attribute, or reasonably allocate :-
Strategic Finance
Correct Answer
The interest bearing liabilities to segments
Question
Correct Answer
False
Question 1
match data across :Correct Answer
Your Answer Codes , Time periods , Systems
Select The Blank
Question 2
Correct Answer
Absorption
Your Answer Absorption
Question 4
Your Answer Market growth , Nature of competition , Degree of regulation
Question 5
Your Answer More current dividends , Less retained earnings
Select The Blank
Question 6
Correct Answer
118 Bn
Your Answer 118 Bn
True/False
Question 7
under review.
Correct Answer
True
Your Answer True
Select The Blank
Question 8
Correct Answer
Your Answer Total cost of activity
Question 9
countries
Your Answer Develop a consistent framework which can be operational across sectors and countries
Question 10 Exit costs are classified into 3 categories namely :-
Strategic Finance
Correct Answer
Termination pay
Your Answer Lost efficiency prior to separation , Job vacancy cost during the new search , Recruiting
for :Correct Answer
The last 26 months
Your Answer Last 180 days
Your Answer Negotiate formally , Have to sign a note , Adhere to strict payment schedule
Your Answer Good market reputation , Lowest cost of capital , High value of firm
Your Answer 35 % of the voting capital of the target company
Correct Answer
Exchange ratio
Your Answer Exchange ratio
True/False
Correct Answer
True
Your Answer True
Equity Shares
Your Answer Secured debt
Select The Blank
Correct Answer
Your Answer Transaction costs
True/False
Correct Answer
True
Strategic Finance
Your Answer
True
Select The Blank

________.
Correct Answer
Internet
High share prices
Your Answer High share prices
True/False
Correct Answer
True
Your Answer True
Your Answer Lease agreements to explore for or use natural resources , Licensing agreements for
True/False
Correct Answer
False
Your Answer True
purpose
Your Answer Borrowings & other liabilities that are incurred for financing rather than operating purpose
Your Answer Different projected costs of the suggested process
Stimulates sales
ROI
Select The Blank
Strategic Finance
Correct Answer
Your Answer Industrial products
True/False
Correct Answer
False
Your Answer True
True/False
Correct Answer
True
Your Answer True
Select The Blank
Correct Answer
Your Answer Conservative policy regarding payouts
Your Answer Shares , Debentures , Other securities held as stock in trade
Your Answer Dividend policy , Time span of money , Firm's solvency
Select The Blank
assets.
Correct Answer
Intangible
Your Answer Intangible
Your Answer Acquisition of necessary skills essential for a job
True/False
Correct Answer
True
Your Answer True
situations :-
Strategic Finance
Correct Answer
Your Answer The company shall complete the verification of acceptances within 15 days of the
True/False
knowledge.
Correct Answer
False
Your Answer False
Select The Blank
Correct Answer
Direct
Select The Blank
changes.
Correct Answer
Rental equipment
Your Answer Facilities
Your Answer Inequality & degree of concentration
Select The Blank
Correct Answer
Mechanisms
Your Answer Activity
True/False
Correct Answer
True
Your Answer True
Your Answer Financing is totally independent of long term sources
Strategic Finance
Your Answer Regenerative natural resources
Question 1
Your Answer Market value of debt
Question 2
Worth
Your Answer Appreciation
True/False
Question 3
Correct Answer
True
Your Answer False
Question 4
Non trading assets
Your Answer Trading assets
Select The Blank
Question 5
basis of ________
Correct Answer
Replacement cost
Your Answer Replacement cost
True/False
Question 6
Correct Answer
True
Your Answer True
Question 7
Your Answer The organizational structure of an enterprise
Question 8
Your Answer Shares , Debentures , Bonds
Question 9
Strategic Finance

Your Answer Have a multi dimensional focus
Your Answer Support costs , Supplies
Select The Blank
Correct Answer
Your Answer Total risks of a company
retained in the firm , To dispatch the dividend warrants in time
Your Answer Through any subsidiary company , Through any investment company , Suppliers dues
are pending for a very long time
Your Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Wealth transfer among
employees and managers
True/False
Correct Answer
True
Your Answer True
Your Answer It is an equilibrium Model , Expected security return = Riskless return + beta x (expected
market risk premium) , It is easy to implement in practice
Strategic Finance
True/False
Correct Answer
True
Your Answer True
True/False
Correct Answer
True
Your Answer True
Select The Blank
________ Assets.
Correct Answer
Specific
Your Answer Specific
Select The Blank
Correct Answer
Your Answer Revenue from transactions with other segments of the enterprise
Earn out plan
Your Answer Cash payment plan
True/False
depreciation.
Correct Answer
True
Your Answer True
Select The Blank
Correct Answer
Your Answer The resolutions passed in the board of directors meeting
acquiring firm
Your Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of
acquiring firm
Your Answer Financing is independent of short term sources
Strategic Finance
Select The Blank
structural layer.
Correct Answer
Lowest possible
Your Answer Middle
True/False
co-ordinated plan.
Correct Answer
True
Your Answer True
Select The Blank
Correct Answer
True/False
Correct Answer
True
Your Answer True
Your Answer Personnel services head count , Profit per head , Recovery rate
Greenfield
Your Answer Forward Contracts
Your Answer Activity based costing and management
Select The Blank
Correct Answer
Your Answer Improve risk return ration
Strategic Finance
Your Answer Not intended to be occupied substantially for use by investing enterprise , Not intended to
be in the operations of the investing enterprise , Intended to be occupied immediately
True/False
Correct Answer
True
Your Answer True
Select The Blank
Correct Answer
Accounting numbers
Your Answer Company's cash credit Account
Your Answer The market is efficient , There is perfect competition in the securities market , Investors
are not very keen to maximize the value of their investment
True/False
Correct Answer
True
Your Answer False
Select The Blank
________
Correct Answer
Your Answer Future generation of profits & services
Select The Blank
than Rs. ________.
Correct Answer
25 lacs
Your Answer 25 lacs
Your Answer Large Equity repurchases
Strategic Finance
People
Your Answer People
True/False
Question 1
Correct Answer
True
Your Answer True
Select The Blank
Question 2
Correct Answer
Firm Managers
Your Answer Debt financiers
True/False
Question 3
Correct Answer
True
Your Answer True
Question 4
Your Answer Consultation with shareholders , Planning , Financial evaluation
Question 5
Your Answer The green accounting method in Denmark
True/False
Question 6
Correct Answer
True
Your Answer True
Question 7
Retained earnings
Your Answer Retained earnings
Select The Blank
Question 8
________.
Correct Answer
Management & board
Your Answer Management & board
Question 10 Long term financing strategy is used by a firm to meet :-
Strategic Finance
Correct Answer
Your Answer Fixed assets requirements , Investment in current assets , Portion of fluctuating working
capital requirement
True/False
Correct Answer
True
Your Answer True
Accounting for investments in the financial statements of an enterprise , Operating or finance leases
Your Answer Permanent working capital
True/False
Correct Answer
True
Your Answer True
True/False
Correct Answer
True
Your Answer True
Your Answer Corporate Control
True/False
firm.
Correct Answer
True
Your Answer True
True/False
Correct Answer
True
Your Answer True
Question 19 Investment are the assets held for earning income by way of :-
Strategic Finance
Correct Answer
Your Answer Cost of facilities , Training & development budgets , Organization size
Select The Blank
Correct Answer
the :Correct Answer
Values
Your Answer Accurate costs
Correct Answer
Your Answer From financial Institutions
Select The Blank
Correct Answer
Banks
Your Answer Financial institutions
Select The Blank
Correct Answer
Goodwill
Your Answer Goodwill
Your Answer Income tax , Property tax , Investments
Select The Blank
Correct Answer
Realizable value
Your Answer Net replacement value of the assets
from the investment
Your Answer Reference to its market value , The expected cash flows from the investment , Current
Strategic Finance

Your Answer Articles of association should authorize buyback of shares , After the buy back the ratio of
debt to total capital and free reserves should not be more than 2 : 1 , The amount involved in the buyback
should not exceed 50 % of the total paid up capital & free reserves of the company
True/False
fluctuate.
Correct Answer
False
Your Answer True
Select The Blank
Correct Answer
Traceable cost
Your Answer Non traceable cost
Your Answer Temporary staff , Part time personnel , Casual workers
Select The Blank
Correct Answer
Depreciation
Your Answer Outstanding preference shares
20 & 40 percent
Your Answer 20 & 40 percent
Select The Blank
Strategic Finance
Correct Answer
basis to a segment
a segment
Select The Blank
incremental costs.
Correct Answer
Equals
Your Answer Is more than
True/False
a company.
Correct Answer
False
Your Answer True
Question 41 The employer in offering the job contract assumes a range of legal obligations such as :Correct Answer
Your Answer Health & safety policies , Pensions & contributions to social security payments , Issue
shares necessarily to employees on joining an organisation
Retained earnings
Your Answer Surplus is debited to the P & L Account
Cost of capital
Your Answer Earning per share
Strategic Finance
Your Answer No unique optimum payout ratio , Market value per share unaffected by the payout ratio ,
All dividend policies are similar
Select The Blank
Correct Answer
Growth
Your Answer Payout of dividends even if the funds are unavailable
There is a relationship between the number of employees & the use of operating supplies.
Debt suppliers main concern is :a)

b)
c)
d)
Remuneration
High dividend ratio
Higher share prices
In presenting the reconciliation segment result should be reconciled to . Enterprise revenue
1. SPE =
1. R / H
2. RR =
2. (C + B ) / R
3. U % =
3. ( C + B ) / P
4. PpH =
4. PSE / E
5. R / ( C + B )
Strategic Finance
6. P / H
. Net income approach

1. The overall capitalization rate remains constant for all levels of financial leverages
2. Net operating income approach
2. Many groups of non - investor stakeholders have an interest in the firm
3. Modigliani - Miller Theory
3. Enormous conflicts of interest between Stakeholders and shareholders
4. Free cash flow theory
4. weighted average cost of capital does not change with a change in the proportion of debt to equity in
the capital structure
5. Cost of debt & equity do not change with a change in leverage ratio
6. Firms have preferences by choosing a way to finance their projects
1. Fiscal advantage, the interest of financing with debt

1. Is deductible from the profit
2. Financing with a high percentage of debt
2. Shows the illusion of financial problems
3. Firms must repay debts
3. Not necessary to have discussions regarding the sell out of assets
4. A highly leveraged firm
4. Prevents firms from investing too much
5. Discussions about the sell out of assets must be made
6. Employees & trade unions increase their demands
1. Date of announcement of new dividend

1. Transfer date
2. Dividend payment made to members on a particular date
2. Registration date
3. Date from which stocks begin to trade without the right to receive the dividend declared
3. Record date
4. Date company mails the dividend warrants
4. Ex - dividend date
5. Payment date
6. Declaration date
Strategic Finance
1. Dividend or Personal Taxation Hypothesis
1. Cash dividends are taxable at ordinary tax rates
2. Leverage hypothesis
2. The largest portion of wealth effect goes to the non - tendering shareholders
3. Wealth transfer among shareholders
3. Management believes that the common stock of the company is undervalued
4. Information or signalling hypothesis
4. Stock repurchases increases the debt / equity ratio
5. Capital gains are taxed at same rate as cash dividend
6. Puts the market on notice to make a takeover bid a success
1. Articles of Association
1. Fully paid up
2. Board of Directors
2. Shares should not be fully paid up
3. Shares to be bought back
3. Not to exceed 25 % of the total paid up capital
4. Amount involved in buy back
4. Resolution permitting the buy back of shares
5. Authorize buy back of securities
6. The ratio of debt to total capital & free reserves should be 1 : 1
1. Transparency
1. Take over code to ensure that shareholders do not suffer disadvantage
2. Interest of small shareholders
2. Detriment of customers & others
3. Realization of economic gains
3. Do not prevent concentration of market power
4. No undue concentration of market powers
4. Constituents regard take over as a legitimate device
5. Improve efficiency of operations
6. Enable competent persons to participate in financial exercise
Question
Correct Answer
Your Answer The promoters or persons in control of the company
Strategic Finance
Question
Your Answer Vertical , Conglomerate , Horizontal
Question
Equity
Your Answer Market Capitalization
Select The Blank
Question
Correct Answer
Your Answer Preferentially lower rate
Select The Blank
Question
Correct Answer
Vertical Mergers
Your Answer Vertical Mergers
True/False
Question
Correct Answer
True
Your Answer True
Question
Your Answer Managerial , Support , Operational
Question
Prompt & adequate
Question
Accounting standard 19 for leases statement is applied in accounting for all leases other
Question
Equity includes :Correct Answer
Your Answer Deferred Payment Liabilities
Select The Blank
Question
Correct Answer
Customer advances
Strategic Finance
Your Answer
Customer advances

Question
analysis
Your Answer It cannot be used as a starting point to be compared & complimented by other analysis
Question
Equity Shares
Question
Many companies claim their main assets are their :Correct Answer
People
Your Answer People
Question
True/False
Question
Correct Answer
True
Your Answer True
True/False
Question
Correct Answer
True
Your Answer True
Question
Select The Blank
Question
Correct Answer
Realizable value
True/False
Question
Correct Answer
False
Your Answer False
Strategic Finance

Question
Your Answer Right to provide service to customers , Job security for the employees , Commitment to
Select The Blank
Question
between ________
Correct Answer
12.1 % & 16.7 %
Your Answer 5 % & 15 %
Question
Your Answer Lowest cost of capital , High value of firm , Good market reputation
Select The Blank
Question
Correct Answer
Price of a product
Your Answer Price of a product
Question
Your Answer It is achieved through horizontal, vertical and conglomerate mergers , It occurs due to
Question
within the activity model or process flow to ensure that they are being done the same best way :Correct Answer
Your Answer Comparative analysis
Question
True/False
Question
Correct Answer
False
Your Answer False
Question
Cash available
Your Answer Cash available
Strategic Finance

Question
Your Answer Determining the earnings , Areas of risk , Best way to finance a merger
True/False
Question
co-ordinated plan.
Correct Answer
True
Your Answer True
True/False
Question
The objective of a dividend policy should be to maximize shareholder's return so that the
Correct Answer
False
Your Answer True
Select The Blank
Question
Correct Answer
0.516
Your Answer 0.5
Question
In a matching approach policy, :Correct Answer
Your Answer There is a small risk if shortage of funds
Select The Blank
Question
Correct Answer
Select The Blank
Question
Correct Answer
Question
Controlling block is usually acquired from:Correct Answer
A single seller
Your Answer A single seller
Question
Stimulates sales
sales
Strategic Finance
True/False
Question
Correct Answer
True
Your Answer True
Question
Changes in the investee`s equity includes those :Correct Answer
Your Answer Arising from the revaluation of fixed assets , From foreign exchange translation
True/False
Question
& monetary.
Correct Answer
True
Your Answer True
Question
Depreciation includes amortization of assets whose useful life is :Correct Answer
Predetermined
Your Answer Predetermined
True/False
Question
Correct Answer
True
Your Answer True
Question
Worth
Your Answer Worth
Question
Your Answer Fixed assets requirements , Permanent working capital requirements , Portion of
Organisations have various records and reports from past actions such as :a)
Strategic Finance
b)
c)
d)
Logs to record workflow
Specific costs
General studies and processes
External and internal audit reports
which cannot be changed by minor organisational changes may not have a significant role in the activity
model.(cost)
True
False
The processes to be identified & focused should to be on the basis of not adhering to benchmarks,
bottlenecks, quality not met, time problems etc. This is called as .
According to Merton Miller & Franco Modigliani, the only important determinant of a company's market
value is :a)
b)
c)
d)
Decision regarding firm's payout of dividend
Retention of dividend for internal financing
Its investment policy
Investment opportunities available
1. Organisational accounting
1. Indirect costs cannot be identified separately
2. Budgetary accounting
Strategic Finance
2. Direct costs associated with organisational elements
3. Cost accounting
3. Yields an abundance of usable data
4. Budgetary records
4. Does not ensure that costs are not lost or over allocated
5. Useful to validate accounting costs
6. Have obligations similar to direct costs
. Book value
1. Evaluate the impact of the merger on EPS & price - earning ratio
2. Appraisal value
2. Provides a list of the reasonableness of results obtained through methods base upon the going
concern concept
3. Market value
3. Divide net worth by the number of equity shares outstanding
4. Earning per share
4. Acquisition is considered to be a function of the impact of the merger on the EPS
5. Decide if the acquisition is attractive on the basis if NPV
6. Indicate the consensus of the investors
1. Performance measures
1. Highlights the cost structure & gives better clarity
2. Output measures
2. Need for proper management and control
3. Cost objects
3. Do not add anything to a customer
4. Bill of activities
4. Have both qualitative and quantitative measures
5. Does not help to analyse the activities more carefully
6. Mostly product, but at times, services or customers
1. Analyze activity output performance
1. Define activity output & time to produce the output
2. Select the output measures
2. Uneconomical and unpragmatic
3. Determine the activity output costs per unit of output
3. Inconsistent behavior not to be considered at all
4. Document the output measures
Strategic Finance
4. Consistent behavior to be included in each step of the functional reengineering project
5. Easy to understand relatively simple to objectively measure
6. A mathematical calculation
1. Floating lien
1. Loose arrangement as the lender may find it difficult to police
2. Chattel mortgage
2. Affords a higher degree of control over the collateral
3. Trust receipt
3. Specifically identified by serial number or other means
4. Terminal warehouse receipt
4. Inventory is stored with a public or terminal warehousing company
5. Well suited for financial good inventories of capital goods
6. Inventory is located in borrower's premises
True/False
Question
Correct Answer
False
Your Answer False
Question
Your Answer More than 50 % of the total assets
Question
Your Answer Full time equivalents , Temporary staff , Part time personnel
Select The Blank
Question
Correct Answer
Accounting numbers
Question
basis
Your Answer It is continually required for a going concern , Quantum of working capital fluctuates
depending on the level of activity , It is impacted by numerous transactions on a continuous basis
Strategic Finance
Question
Cost of capital
Your Answer Cost of capital
Question
Your Answer Improved profitability , Growth of the firm
Select The Blank
Question
Correct Answer
Concentric mergers
Your Answer Concentric mergers
True/False
Question
Correct Answer
True
Your Answer True
True/False
Question
Correct Answer
True
Your Answer True
True/False
Question
Correct Answer
True
Your Answer True
Question
Tender offers are used primarily for :Correct Answer
Question
Question
Which of the following is NOT A Characteristic of declining firm :Correct Answer
Your Answer The optimum payout ratio for a declining firm is not 100 %
Question
ratio :Correct Answer
Increases
Strategic Finance
Your Answer
Increases

Question
Your Answer Personnel salaries , Cost of facilities , Training & development budgets
Question
Select The Blank
Question
Correct Answer
Your Answer A high proportion of earnings
Question
Your Answer Net of financing profit or loss
Question
Bench marking
Your Answer Bench marking
True/False
Question
Correct Answer
True
Your Answer True
True/False
Question
Correct Answer
False
Your Answer False
Question
Assets
Your Answer Assets
Question
Strategic Finance
Select The Blank
Question
Correct Answer
Your Answer An electronically linked transparent facility
Question
Your Answer Sales per employee , Recovery rate , Utilization %
Question
Your Answer Organisational accounting , Budgetary accounting , Cost accounting
Select The Blank
Question
Correct Answer
Segment expense
Your Answer Segment expense
Select The Blank
Question
Correct Answer
Seven
Your Answer Seven
Question
Correct Answer
Your Answer Organization element accounting
Question
Current Liabilities
True/False
Question
Correct Answer
True
Your Answer True
Select The Blank
Question
Correct Answer
Your Answer Directly attributable to the segment
Strategic Finance
True/False
Question
a company.
Correct Answer
False
Your Answer False
Question
Question
If competition is weak, a firm :Correct Answer
Your Answer Can manage with a smaller inventory of finished goods
Select The Blank
Question
________
Correct Answer
Select The Blank
Question
Correct Answer
Your Answer That operate & compete in a similar kind of business
Question
The following of total cost of assets over its useful life is called depreciation :Correct Answer
Distribution
Your Answer Distribution
Question
The different types of floats are :Correct Answer
Your Answer Postal float , Deposit float , Bank float
Select The Blank
Question
Correct Answer
basis to a segment
a segment
Question
Your Answer Job security , Better opportunities within the firm , Higher compensation
Strategic Finance
True/False
Question
Correct Answer
True
Your Answer True
Question
Earn out plan
Your Answer Earn out plan
Question
Estimation for determining the useful life of an asset is required :Correct Answer
Your Answer On some reasonable basis
1. Line of credit
1. Form of debt not backed by the pledge of specific assets
2. Revolving credit agreements
2. Does not constitute any legal commitments on the part of the bank
3. Transaction loan
3. The cash flow ability of the borrower to pay the loan is usually of paramount importance
4. Unsecured loans
4. While the commitment is in force the bank must extend credit whenever the borrower wishes to
borrow
5. Borrower does not have to pay a commitment fees
6. The clean up period is more than 6 months
1. AS 19
1. Accounting for fixed assets
2. AS 6
2. Extra ordinary items
3. AS 10
3. Revenue recognition
4. AS 17
4. Leases
5. Depreciation accounting
6. Segment reporting
Strategic Finance
In the shareholding pattern of a company, the promoter's holding includes .
1. AS 13
1. Accounting for investments in associates in consolidated financial statements
2. AS 23
2. Accounting for investments
3. AS 21
3. Consolidated financial statements
4. AS 4
4. Lease accounting
5. Contingencies & events occurring after the balance sheet date
6. Depreciation accounting
1. Segment revenue
1. Do not include borrowings that are incurred for financing purposes
2. Segment expenses
2. Does not include extra ordinary items
3. Segment assets
3. Do not include income tax assets
4. Segment liabilities
4. Does not include income tax expenses
5. The qualitative characteristics include the relevance
6. Determined after intra - enterprise balances are eliminated
1. Historical costs
1. An asset value when they are the target of an alternative use.
2. Substitution cost
2. Lost efficiency prior to separation, Job vacancy cost during the new search & termination pay.
3. Opportunity cost
3. Increase, if employees get to know their job better
4. Exit cost
4. Easy to determine this cost
5. Sacrifice necessary to hire & train people
6. Exit costs of the leaving employee & recruiting & training of the replacement
1. Unlisted shares on stock exchange
1. No fundamental basis.
2. Manipulation of stock markets
2. Easy to estimate the price
Strategic Finance
3. Selective information
3. Valuation by various people on information available
4. Sentiments and rumours
4. Invalid valuation of shares
5. No effect on valuation
6. Difficult to estimate the price
1. Segment revenue
1. Enterprise assets
2. Segment result
2. Enterprise net profit or loss
3. Segment assets
3. Liquidity
4. Cash flows
5. Enterprise revenue
6. Enterprise liabilities
Question
Accounting , Automatic data processing , Payroll
Question
The value of the asset does not include:Correct Answer
Price per share
Your Answer Price per share
Question
Question
True/False
Question
Articles of association should authorise buy back of securities as per the Company's Act.
Correct Answer
True
Your Answer True
Question
During Share repurchase, it is necessary to transfer certain sum to :Correct Answer
Strategic Finance
Your Answer

Question
Comparative analysis is :Correct Answer
Your Answer A review to ensure consistency within the activity model & process flow
Question
Termination pay
Your Answer Lost efficiency prior to separation , Job vacancy cost during the new search , Termination
pay
Question
Your Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments ,
Select The Blank
Question
Correct Answer
Your Answer Resource consumption
Select The Blank
Question
incremental costs.
Correct Answer
Equals
Your Answer Equals
True/False
Question
Correct Answer
False
Your Answer False
True/False
Question
Correct Answer
True
Your Answer True
Question
The acquiring firm for any M & A will require data about the target firm which will include :Correct Answer
Your Answer Production capabilities , Capital & labour intensity , Profitability
Select The Blank
Question
Correct Answer
Goodwill
Strategic Finance
Your Answer
Goodwill

Question
The value based approach of HRA Tracking suggests that the value of human resources
depends upon :Correct Answer
Your Answer Opportunity cost
Select The Blank
Question
Correct Answer
Dividends
Your Answer Dividends
Question
Your Answer Capital gains , Dividend
Question
In the book building method, the company makes an offer to buy back :Correct Answer
Your Answer Its specified number of shares at a specified offer price range
Question
Question
1960`s
Your Answer 1960`s
Select The Blank
Question
productive .
Correct Answer
Your Answer Latest & updated techniques
True/False
Question
Correct Answer
True
Your Answer True
Strategic Finance
Question
Your Answer To define the costs , To document the costs , Support the costing of the activities
Question
decisions
Select The Blank
Question
Correct Answer
Increases
Select The Blank
Question
segments.
Correct Answer
75 percent
Your Answer 75 percent
Question
Select The Blank
Question
Correct Answer
Payables
Your Answer Related receivables
Question
Correct Answer
0.25
Your Answer 0.25
Select The Blank
Question
Correct Answer
Your Answer Reduction in the cost of production
Question
Strategic Finance
Your Answer

Question
True/False
Question
Correct Answer
True
Your Answer True
True/False
Question
Correct Answer
True
Your Answer True
Question
When the seller asks for the payment before making the delivery in order to avoid all risks
it is known as :Correct Answer
Your Answer Cash before delivery
True/False
Question
worth.
Correct Answer
True
Your Answer True
Question
Select The Blank
Question
Correct Answer
Loss of value
Your Answer Loss of value
Question
20 & 40 percent
True/False
Question
Correct Answer
True
Strategic Finance
Your Answer
False
True/False
Question
Correct Answer
True
Your Answer True
Question
Your Answer Overall cost of capital
Question
The limitations of value of assets approach include :Correct Answer
Book value of the assets is directly dependent on the accounting policies
followed by the company , There are no standard procedures for valuation of intangible assets , No
Your Answer Book value of the assets is directly dependent on the accounting policies followed by the
company , There are no standard procedures for valuation of intangible assets , No importance to the
True/False
Question
Correct Answer
True
Your Answer False
True/False
Question
Correct Answer
True
Your Answer True
Question
Correct Answer
6 months
Question
Select The Blank
Question
Correct Answer
Payables
Your Answer Payables
Question
Strategic Finance
Correct Answer
Question
Equity Shares
Question
Your Answer Fixed assets requirements , Permanent working capital requirements , Portion of
True/False
Question
Correct Answer
False
Your Answer False
Question
Select The Blank
Question
assets.
Correct Answer
Intangible
True/False
Question
Correct Answer
True
Your Answer True
Question
Your Answer Full time equivalent staff , Revenues , Expenses
Question
Your Answer Operating profit or loss
Strategic Finance
Question
Your Answer To refine the costs , To document the costs , To define the costs
Question
Depreciation includes amortization of assets whose useful life is :Correct Answer
Predetermined
Your Answer Predetermined
True/False
Question
Correct Answer
True
Your Answer True
Question
AS 17 is mandatory for all commercial, industrial & business reporting enterprises whose
turnover for the accounting period :Correct Answer
Exceeds 50 crores
Your Answer Exceeds 50 crores
Question
Equity
Your Answer Equity
Question
Your Answer Articles of association should authorize buyback of shares , The shares which are sought
to be bought back should be fully paid up , After the buy back the ratio of debt to total capital and free
reserves should not be more than 2 : 1
Question
Current Liabilities
Question
Your Answer Payroll , Accounting , Automatic data processing
Question
Your Answer Development Rebate Reserve
Strategic Finance
Question
Select The Blank
Question
structural layer.
Correct Answer
Lowest possible
Your Answer Lowest possible
True/False
Question
The object of every business is to earn profits.
Correct Answer
True
Your Answer True
Select The Blank
Question
Correct Answer
Seven
Your Answer Seven
Question
Your Answer Sales per employee , Recovery rate , Utilization %
True/False
Question
Current accounting system is able to provide actual value of employee capabilities &
knowledge.
Correct Answer
False
Your Answer False
True/False
Question
Correct Answer
True
Your Answer True
Select The Blank
Question
________
Correct Answer
Select The Blank
Question
________ is a variable expense that can be readily eliminated with organisational
changes.
Correct Answer
Rental equipment
Your Answer Rental equipment
Strategic Finance
Question
The main assumption in comparative analysis is the possibility of :Correct Answer
Question
Firms which have marked seasonality in their operations usually have :Correct Answer
Highly fluctuating working capital requirement
Your Answer Highly fluctuating working capital requirement
True/False
Question
Correct Answer
True
Your Answer True
Question
Your Answer Not intended to be occupied substantially for use by investing enterprise
Question
Your Answer Dividend , Capital gains
Question
Correct Answer
0.28
Your Answer 0.28
True/False
Question
Correct Answer
False
Your Answer False
Question
According to Merton Miller & Franco Modigliani, the only important determinant of a
company's market value is :Correct Answer
Your Answer Its investment policy
Select The Blank
Question
Correct Answer
Increased risk
Your Answer Increased risk
Select The Blank
Strategic Finance
Question
Correct Answer
Depreciation
Your Answer Depreciation
Select The Blank
Question
In presenting the reconciliation segment result should be reconciled to ________.
Correct Answer
Your Answer Enterprise net profit or loss
Question
Question
Your Answer Market value approach
True/False
Question
Correct Answer
False
Your Answer False
Fiscal advantage, the interest of financing with debt
1. Discussions about the sell out of assets must be made
In the disclosures in financial statements, there are significant restrictions on :a)
b)
c)
d)
Strategic Finance
The right of ownership

Realisability of investments
The remittance of income & proceeds of disposal
Other disclosures
True/False
Question
co-ordinated plan.
Correct Answer
True
Your Answer True
Question
Question
Your Answer To the person , To the firm , To the Consultant
True/False
Question
Correct Answer
True
Your Answer True
Select The Blank
Question
Correct Answer
Banks
Your Answer Banks
True/False
Question
Correct Answer
True
Your Answer True
Question
retention
Your Answer Internal financing , Constant return and cost of capital , 100 Per cent payout or retention
Select The Blank
Question
Correct Answer
0.516
Your Answer 0.516
True/False
Strategic Finance
Question
Correct Answer
True
Your Answer True
Question
Question
Question
The traditional balance sheet of a company does not show the valuation of:Correct Answer
Human Capital
Your Answer Human Capital
Question
Cost of capital
Your Answer Cost of capital
True/False
Question
Correct Answer
True
Your Answer True
Question
Your Answer Only on the basis of the consolidated financial statements
Question
Your Answer Notes payable , Trade acceptances , Open accounts
Select The Blank
Question
Correct Answer
Absorption
Question
like :-
Strategic Finance
Correct Answer
Your Answer Monitoring the investment in inventories , Negotiating favourable credit terms ,
Select The Blank
Question
Correct Answer
Your Answer Market related risks
True/False
Question
Correct Answer
False
Your Answer False
True/False
Question
depreciation.
Correct Answer
True
Your Answer True
Question
Correct Answer
Exchange ratio
Select The Blank
Question
Correct Answer
Question
Question
Segment reporting comes under :Correct Answer
AS 17
Your Answer AS 17
Question
Your Answer No study of market demand for a product / service
Question
related asset is included in :-
Strategic Finance
Correct Answer
Segment assets
Question
Select The Blank
Question
Correct Answer
Question
Your Answer Free reserves of the company , Securities premium account , Proceeds of any shares or
other specified securities
Question
Accounting numbers are not influenced by :Correct Answer
Your Answer Dividend policy , Time span of money , Financial and business risk
Question
Activity cost analysis plays a major role :Correct Answer
In prioritizing the application of reduced resources
Your Answer To array activities or elements of costs in various displays
True/False
Question
Correct Answer
True
Your Answer True
Select The Blank
Question
Correct Answer
Danish (Denmark)
Your Answer Danish (Denmark)
True/False
Question
Correct Answer
True
Your Answer True
Select The Blank
Strategic Finance
Question
Correct Answer
Vertical Mergers
Question
Assets
Your Answer Assets
Question
Your Answer Capacity to generate revenue
True/False
Question
Correct Answer
True
Your Answer True
Question
To calculate depreciable amount the following is subtracted from its historical cost :Correct Answer
Estimated residual value
Your Answer Estimated residual value
Select The Blank
Question
Correct Answer
Select The Blank
Question
Correct Answer
Question
Often a company borrows loans / debts by giving the following as a security :Correct Answer
Shares
Your Answer Shares
Question
In value of assets approach the value of which of the following should be deducted to
Question
Your Answer Lowest cost of capital , High value of firm , Good market reputation
Strategic Finance
Question 1
Select The Blank
Question 2
Correct Answer
Absorption
Question 4
Question 5
Select The Blank
Question 6
Correct Answer
118 Bn
True/False
Question 7
under review.
Correct Answer
True
Select The Blank
Question 8
Correct Answer
Question 9
countries
Termination pay
for :Correct Answer
The last 26 months
Strategic Finance
Your Answer Negotiate formally ,
Correct Answer
Exchange ratio
True/False
Correct Answer
True
Equity Shares
Select The Blank
Correct Answer
True/False
Correct Answer
True
Select The Blank
________.
Correct Answer
Internet
High share prices
True/False
Correct Answer
True
Strategic Finance
True/False
Correct Answer
False
purpose
Stimulates sales
Your Answer
, Increases the ROI
Select The Blank
Correct Answer
True/False
Correct Answer
False
True/False
Correct Answer
True
Select The Blank
Correct Answer
Strategic Finance
Your Answer
, Firm's solvency
Select The Blank
assets.
Correct Answer
Intangible
True/False
Correct Answer
True
True/False
knowledge.
Correct Answer
False
Select The Blank
Correct Answer
Direct
Select The Blank
changes.
Correct Answer
Rental equipment
Strategic Finance
Select The Blank
Correct Answer
Mechanisms
True/False
Correct Answer
True
There is a small risk of shortage of funds
Question 1
Question 2
Worth
True/False
Question 3
Correct Answer
True
Question 4
Non trading assets
Select The Blank
Question 5
basis of ________
Correct Answer
Replacement cost
True/False
Question 6
Correct Answer
True
Question 7
Normally the basis for identifying an enterprise segments are :-
Strategic Finance
Correct Answer

Question 8
Question 9
Select The Blank
Correct Answer
Your Answer
, To dispatch the dividend warrants in time
Your Answer
, Suppliers dues are pending for a very long time
Your Answer
Wealth transfer among employees and managers
True/False
Correct Answer
True
Strategic Finance
Your Answer
, It is easy to implement in practice
True/False
Correct Answer
True
True/False
Correct Answer
True
Select The Blank
________ Assets.
Correct Answer
Specific
Select The Blank
Correct Answer
Earn out plan
True/False
depreciation.
Correct Answer
True
Select The Blank
Correct Answer
acquiring firm
Strategic Finance
Select The Blank
structural layer.
Correct Answer
Lowest possible
Your Answer Middle
True/False
co-ordinated plan.
Correct Answer
True
Select The Blank
Correct Answer
True/False
Correct Answer
True
Your Answer
, Recovery rate
Greenfield
Select The Blank
Correct Answer
Strategic Finance
True/False
Correct Answer
True
Select The Blank
Correct Answer
Accounting numbers
Your Answer
, Investors are not very keen to maximize the value of their investment
True/False
Correct Answer
True
Select The Blank
________
Correct Answer
Select The Blank
than Rs. ________.
Correct Answer
25 lacs
People
True/False
Question 1
Correct Answer
True
Select The Blank
Question 2
Correct Answer
Firm Managers
Strategic Finance
True/False
Question 3
Correct Answer
True
Question 4
Your Answer Consultation with shareholders ,
Question 5
True/False
Question 6
Correct Answer
True
Question 7
Retained earnings
Select The Blank
Question 8
________.
Correct Answer
Management & board
Your Answer , Investment in current assets ,
True/False
Correct Answer
True
Your Answer
, Accounting for investments in the financial statements of an enterprise ,
Strategic Finance
True/False
Correct Answer
True
True/False
Correct Answer
True
True/False
firm.
Correct Answer
True
True/False
Correct Answer
True
Your Answer , Organization size
Select The Blank
Correct Answer
the :Correct Answer
Values
Correct Answer
Select The Blank
Correct Answer
Banks
Strategic Finance
Your Answer
Select The Blank

Correct Answer
Goodwill
Select The Blank
Correct Answer
Realizable value
from the investment
Your Answer
, Current investment valuation
Your Answer
, The amount involved in the buyback should not exceed 50 % of the total paid up
capital & free reserves of the company
True/False
fluctuate.
Correct Answer
False
Select The Blank
Correct Answer
Traceable cost
Your Answer
, Casual workers
Select The Blank
Correct Answer
Depreciation
Strategic Finance
Your Answer
Overheads

20 & 40 percent
Select The Blank
Correct Answer
basis to a segment
Select The Blank
incremental costs.
Correct Answer
Equals
True/False
a company.
Correct Answer
False
Your Answer
, Issue shares necessarily to employees on joining an organisation
Retained earnings
Question 44 Shortcomings of accounting numbers consist of the following :-
Strategic Finance
Correct Answer
Cost of capital
Select The Blank
Correct Answer
Growth
Kk sf-1
Kk sf-1
Unsolved
1. Fiscal advantage, the interest of financing with debt
1. Discussions about the sell out of assets
must be made
Select The Blank
Question
by the bill issuer.
Correct Answer
Bill discounting
Your Answer Letter of credits
Select The Blank
Question
Correct Answer
Segment expense
Question
Strategic Finance
True/False
Question
In today's world, knowledge has become the key determinant for economic & business
success.
Correct Answer
True
Your Answer True
Question
When a change in the method of depreciation is made :Correct Answer
Your Answer Depreciation is recalculated in accordance with the new method
Question
Your Answer Logs to record workflow , General studies and processes , External and internal audit
reports
Question
The FEA Tools encompass a vast array of information & policy into :Correct Answer
One evaluation
Your Answer One evaluation
True/False
Question
Correct Answer
True
Your Answer True
Question
If the residual value of an asset is likely to be significant :Correct Answer
It is estimated at the time of acquisition / installation
Your Answer It cannot be subsequently revalued
Question
Your Answer Interest , Dividend
Question
hypothesis
Question
80 % of the total cost is normally generated by 20 % of the activity is a characteristic of :Correct Answer
Pareto analysis
Your Answer Pareto analysis
Strategic Finance
Select The Blank
Question
Correct Answer
Direct
Your Answer Direct
Question
basis
Your Answer It is impacted by numerous transactions on a continuous basis , It is continually required
for a going concern , Quantum of working capital fluctuates depending on the level of activity
Select The Blank
Question
Correct Answer
Payables
Select The Blank
Question
reconciling item.
Correct Answer
Reportable segment
Your Answer Reportable segment
True/False
Question
Correct Answer
True
Your Answer True
Question
Termination pay
Your Answer Lost efficiency prior to separation , Job vacancy cost during the new search , Termination
pay
Select The Blank
Question
incremental costs.
Correct Answer
Equals
Question
The traditional balance sheet of a company does not show the valuation of:Correct Answer
Human Capital
Your Answer Human Capital
Question
Strategic Finance
Correct Answer
Question
Shares
Your Answer Shares
Question
acquiring firm
acquiring firm
True/False
Question
Correct Answer
True
Your Answer True
Select The Blank
Question
basis of ________
Correct Answer
Replacement cost
Question
Your Answer Utilities , Maintenance , Security
Question
The following Act contains the provisions permitting the companies to buy back their
shares :Correct Answer
Companies (Amendment) Act, 1999
Your Answer Companies (Amendment) Act, 1999
Question
Your Answer Essential to maintain a larger inventory of finished goods
True/False
Question
Correct Answer
True
Your Answer True
True/False
Strategic Finance
Question
Correct Answer
True
Your Answer True
Select The Blank
Question
Correct Answer
Traceable cost
Your Answer Direct traceable cost
True/False
Question
depreciation.
Correct Answer
True
Your Answer False
Select The Blank
Question
Correct Answer
Your Answer The purpose for which valuation is being done.
Question
Generally Èmployees as balance sheet assets', show the following characteristics:Correct Answer
Take work home , Strive to generate high quality , Come to work when they are
unwell and stressed
Your Answer Take work home , Strive to generate high quality , Come to work when they are unwell
and stressed
True/False
Question
Correct Answer
True
Your Answer True
True/False
Question
Correct Answer
True
Your Answer True
True/False
Question
Correct Answer
True
Your Answer True
Question
analysis
Your Answer It cannot be used as a starting point to be compared & complimented by other analysis
Strategic Finance
Question
In the past, costing mainly focused on :Correct Answer
Manufacturing costs
Your Answer Manufacturing costs
Question
Your Answer Less retained earnings
Question
Your Answer Production capabilities , Capital & labour intensity , Profitability
Question
Question
If the segment result of a segment includes interest expense its segment liabilities include
:Correct Answer
The related interest bearing liabilities
Your Answer The related interest bearing liabilities
Select The Blank
Question
Correct Answer
Your Answer An electronically linked transparent facility
Select The Blank
Question
Correct Answer
basis to a segment
a segment
Question
True/False
Question
Correct Answer
False
Your Answer True
Question
Strategic Finance
Question
Your Answer Trade credit from suppliers
Select The Blank
Question
Correct Answer
Your Answer Current value of the assets
Question
Question
Correct Answer
Exchange ratio
Your Answer Post merger price
Select The Blank
Question
Correct Answer
basis to a segment
Your Answer General administrative expenses
Question
Your Answer During more than 1 accounting period
True/False
Question
Correct Answer
True
Your Answer True
Question
True/False
Question
Correct Answer
True
Your Answer True
Question
Question
Net working capital
Your Answer Net working capital
Strategic Finance
Select The Blank
Question
Correct Answer
Increases
Question
Correct Answer
Question
Your Answer After the buy back the ratio of debt to total capital and free reserves should not be more
than 2 : 1 , Articles of association should authorize buyback of shares , The shares which are sought to be
bought back should be fully paid up
True/False
Question
Correct Answer
True
Your Answer True
Question
Equity
Your Answer Equity
Question
Current Liabilities
Your Answer Capital
True/False
Question
Correct Answer
True
Your Answer True
Question
Correct Answer
6 months
Select The Blank
Question
Correct Answer
Prestige or power
Your Answer Value
Question
Strategic Finance
Question
True/False
Question
Correct Answer
False
Your Answer True
Select The Blank
Question
Correct Answer
Growth
Question
Cost of capital
Select The Blank
Question
Correct Answer
118 Bn
Your Answer 1000 crores
Question
basis
Question
Question
The shareholder
Your Answer The shareholder
Question
Select The Blank
Question
Correct Answer
Foreign Promoters
Your Answer Foreign Promoters
Question
A current investment is an investment that is by nature :-
Strategic Finance
Correct Answer
investment is made
True/False
Question
Correct Answer
True
Your Answer True
True/False
Question
Correct Answer
True
Your Answer True
Question
Question
Your Answer Monitoring the investment in inventories , Negotiating favourable credit terms , Defining a
proper strategy for product promotion
True/False
Question
Correct Answer
True
Your Answer True
Question
Your Answer Full time equivalents , Temporary staff , Casual workers
Question
Select The Blank
Question
operating supplies.
Correct Answer
Natural
Your Answer Natural
Question
Your Answer Does not assist the planners & project teams
True/False
Question
Correct Answer
True
Your Answer True
Strategic Finance
Question
analysis
Your Answer It is used as a starting point
True/False
Question
Correct Answer
True
Question
Your Answer Location of its customers
Question
True/False
Question
Correct Answer
True
Select The Blank
Question
Correct Answer
True/False
Question
Retained earnings are the most important internal sources of financing the growth of the
firm.
Correct Answer
True
Question
Your Answer
, Control over the policies
Question
Cash available
Select The Blank
Question
Correct Answer
Your Answer Income / profit from the assets
Strategic Finance
Question
Your Answer Land , Debentures
Question
Your Answer
, Financial
True/False
Question
Correct Answer
False
Select The Blank
Question
Correct Answer
Growth
True/False
Question
a company.
Correct Answer
False
Question
Question
Select The Blank
Question
Correct Answer
True/False
Question
Correct Answer
True
Question
Your Answer As separate financial statements
Select The Blank
Question
Correct Answer
Non traceable cost
Strategic Finance
Question
Question
Select The Blank
Question
Correct Answer
Vertical Mergers
Your Answer Conglomerate mergers
True/False
Question
Correct Answer
False
Question
Your Answer
, Better facilities and work conditions
Question
Bench marking
Your Answer Value added analysis
Question
True/False
Question
Correct Answer
False
True/False
Question
under review.
Correct Answer
True
Select The Blank
Question
Correct Answer
Direct
Select The Blank
Strategic Finance
Question
Correct Answer
Increases
Select The Blank
Question
________ Assets.
Correct Answer
Specific
Your Answer General
Select The Blank
Question
Correct Answer
Goodwill
Your Answer Product warranty provision
Select The Blank
Question
reconciling item.
Correct Answer
Reportable segment
Your Answer Business segment
Question
Question
Net working capital
Your Answer Working capital cycle
Question
Question
Correct Answer
0.28
True/False
Question
& monetary.
Correct Answer
True
True/False
Question
Correct Answer
False
Question
Strategic Finance
Your Answer
Select The Blank

Question
Correct Answer
Depreciation
Your Answer Fringe benefits
Question
Question
Your Answer Full time equivalent staff , Expenses , Good will
True/False
Question
Correct Answer
True
Question
Flexible policy
Your Answer Aggressive policy
True/False
Question
fluctuate.
Correct Answer
False
Question
Accounts payable
Your Answer Accounts receivables
Select The Blank
Question
between ________
Correct Answer
12.1 % & 16.7 %
Your Answer less than 10 %
Question
Correct Answer
0.28
Strategic Finance
Question
Your Answer Notes payable , Trade acceptances , Commercial paper
True/False
Question
depreciation.
Correct Answer
True
Select The Blank
Question
Correct Answer
1 to 2 months
Question
Question
True/False
Question
Correct Answer
True
Question
Select The Blank
Question
Correct Answer
Your Answer The voluntary market based method
Question
retention
Your Answer , Perfect markets
Question
Your Answer Sells largely on cash basis
Strategic Finance
True/False
Question
Correct Answer
True
Select The Blank
Question
Correct Answer
Loss of value
Question
Select The Blank
Question
Correct Answer
Segment expense
Your Answer Segment revenue
Question
Question
Your Answer Value added & non value added activities
Question
Select The Blank
Question
incremental costs.
Correct Answer
Equals
Your Answer Have no correlation with
Question
True/False
Question
Correct Answer
True
Strategic Finance
True/False
Question
worth.
Correct Answer
True
Question
Select The Blank
Question
Correct Answer
Goodwill
Your Answer Accrued liabilities
Select The Blank
Question
Correct Answer
Mechanisms
True/False
Question
Correct Answer
True
Question
Correct Answer
Question
Question
firm?
Correct Answer
Question
Equity
Question
Select The Blank
Question
Total risk reduces if operations of combining firms are ________.
Correct Answer
Negatively correlated
Strategic Finance

Question
Your Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments ,
An Indemnity
Question
Question
Which of the following is not a characteristic of convertible security?
Correct Answer
It does not combine the protection of fixed security with the growth potential of
ordinary shares
Your Answer It appears more attractive to the acquired firm
Question
Select The Blank
Question
Correct Answer
Question
Your Answer With risks & returns which are totally unrelated to each other
Question
Select The Blank
Question
To make commercial sense, transaction size in forfeiting process needs to be in excess
of ________.
Correct Answer
250000
Your Answer 250000
Question
Historical cost
Your Answer Estimated residual value
Question
As per Dorsman (1995) - financing with a high percentage of debt prevents firms from :-
Strategic Finance
Correct Answer
Investing too much
True/False
Question
Correct Answer
False

Question
Question 1
Select The Blank
Question 2
Correct Answer
Absorption
Question 4
Your Answer Market growth , Nature of competition , Degree of regulation
Question 5
Your Answer More current dividends , Less retained earnings
Select The Blank
Question 6
Correct Answer
118 Bn
Your Answer 118 Bn
True/False
Question 7
under review.
Correct Answer
True
Your Answer True
Select The Blank
Question 8
Correct Answer
Strategic Finance
Question 9
countries
Your Answer Develop a consistent framework which can be operational across sectors and countries
Termination pay
Your Answer Lost efficiency prior to separation , Job vacancy cost during the new search , Recruiting
for :Correct Answer
The last 26 months
Your Answer Negotiate formally , Have to sign a note , Adhere to strict payment schedule
Your Answer Good market reputation , Lowest cost of capital , High value of firm
Correct Answer
Exchange ratio
True/False
Correct Answer
True
Your Answer True
Equity Shares
Your Answer Secured debt
Strategic Finance
Select The Blank
Correct Answer
True/False
Correct Answer
True
Your Answer True
Select The Blank
________.
Correct Answer
Internet
High share prices
True/False
Correct Answer
True
Your Answer True
True/False
Correct Answer
False
Your Answer True
purpose
Your Answer Borrowings & other liabilities that are incurred for financing rather than operating purpose
Strategic Finance
Stimulates sales
ROI
Select The Blank
Correct Answer
True/False
Correct Answer
False
Your Answer True
True/False
Correct Answer
True
Your Answer True
Select The Blank
Correct Answer
Your Answer Conservative policy regarding payouts
Your Answer Shares , Debentures , Other securities held as stock in trade
Your Answer Dividend policy , Time span of money , Firm's solvency
Select The Blank
assets.
Correct Answer
Intangible
True/False
Strategic Finance
Correct Answer
True
Your Answer True
True/False
knowledge.
Correct Answer
False
Your Answer False
Select The Blank
Correct Answer
Direct
Select The Blank
changes.
Correct Answer
Rental equipment
Your Answer Inequality & degree of concentration
Select The Blank
Correct Answer
Mechanisms
True/False
Correct Answer
True
Your Answer True
Strategic Finance
Question 1
Question 2
Worth
True/False
Question 3
Correct Answer
True
Your Answer False
Question 4
Non trading assets
Select The Blank
Question 5
basis of ________
Correct Answer
Replacement cost
True/False
Question 6
Correct Answer
True
Your Answer True
Question 7
Question 8
Investments having no physical existence includes :-
Strategic Finance
Correct Answer
Question 9
Select The Blank
Correct Answer
retained in the firm , To dispatch the dividend warrants in time
Your Answer Through any subsidiary company , Through any investment company , Suppliers dues
are pending for a very long time
Your Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Wealth transfer among
employees and managers
True/False
Correct Answer
True
Your Answer True
Strategic Finance
Your Answer It is an equilibrium Model , Expected security return = Riskless return + beta x (expected
market risk premium) , It is easy to implement in practice
True/False
Correct Answer
True
Your Answer True
True/False
Correct Answer
True
Your Answer True
Select The Blank
________ Assets.
Correct Answer
Specific
Your Answer Specific
Select The Blank
Correct Answer
Your Answer Revenue from transactions with other segments of the enterprise
Earn out plan
True/False
depreciation.
Correct Answer
True
Your Answer True
Select The Blank
Correct Answer
acquiring firm
acquiring firm
Strategic Finance

Select The Blank
structural layer.
Correct Answer
Lowest possible
Your Answer Middle
True/False
co-ordinated plan.
Correct Answer
True
Your Answer True
Select The Blank
Correct Answer
True/False
Correct Answer
True
Your Answer True
Your Answer Personnel services head count , Profit per head , Recovery rate
Greenfield
Your Answer Activity based costing and management
Strategic Finance
Select The Blank

Correct Answer
True/False
Correct Answer
True
Your Answer True
Select The Blank
Correct Answer
Accounting numbers
Your Answer Company's cash credit Account
Your Answer The market is efficient , There is perfect competition in the securities market , Investors
are not very keen to maximize the value of their investment
True/False
Correct Answer
True
Your Answer False
Select The Blank
________
Correct Answer
Select The Blank
than Rs. ________.
Correct Answer
25 lacs
Your Answer 25 lacs
Strategic Finance

People
Your Answer People
True/False
Question 1
Correct Answer
True
Your Answer True
Select The Blank
Question 2
Correct Answer
Firm Managers
True/False
Question 3
Correct Answer
True
Your Answer True
Question 4
Your Answer Consultation with shareholders , Planning , Financial evaluation
Question 5
True/False
Question 6
Correct Answer
True
Your Answer True
Question 7
Retained earnings
Select The Blank
Question 8
________.
Strategic Finance
Correct Answer
Management & board
Your Answer Management & board
Your Answer Fixed assets requirements , Investment in current assets , Portion of fluctuating working
capital requirement
True/False
Correct Answer
True
Your Answer True
Accounting for investments in the financial statements of an enterprise , Operating or finance leases
Your Answer Permanent working capital
True/False
Correct Answer
True
Your Answer True
True/False
Correct Answer
True
Your Answer True
True/False
firm.
Correct Answer
True
Your Answer True
True/False
Strategic Finance
Correct Answer
Your Answer True
True

Your Answer Cost of facilities , Training & development budgets , Organization size
Select The Blank
Correct Answer
the :Correct Answer
Values
Correct Answer
Select The Blank
Correct Answer
Banks
Your Answer Financial institutions
Select The Blank
Correct Answer
Goodwill
Your Answer Goodwill
Select The Blank
Correct Answer
Realizable value
Strategic Finance
from the investment
Your Answer Reference to its market value , The expected cash flows from the investment , Current
Your Answer Articles of association should authorize buyback of shares , After the buy back the ratio of
debt to total capital and free reserves should not be more than 2 : 1 , The amount involved in the buyback
should not exceed 50 % of the total paid up capital & free reserves of the company
True/False
fluctuate.
Correct Answer
False
Your Answer True
Select The Blank
Correct Answer
Traceable cost
Your Answer Temporary staff , Part time personnel , Casual workers
Select The Blank
Correct Answer
Depreciation
20 & 40 percent
Strategic Finance
Select The Blank
Correct Answer
basis to a segment
a segment
Select The Blank
incremental costs.
Correct Answer
Equals
True/False
a company.
Correct Answer
False
Your Answer True
Your Answer Health & safety policies , Pensions & contributions to social security payments , Issue
shares necessarily to employees on joining an organisation
Retained earnings
Your Answer Surplus is debited to the P & L Account
Cost of capital
Strategic Finance

Select The Blank
Correct Answer
Growth
True/False
Question
Correct Answer
True
Your Answer True
True/False
Question
Correct Answer
True
Your Answer True
Select The Blank
Question
Correct Answer
Segment expense
True/False
Question
Correct Answer
True
Your Answer True
Question
Question
Segment reporting comes under :Correct Answer
AS 17
Your Answer AS 13
Question
Equity includes :-
Strategic Finance
Correct Answer
Select The Blank
Question
Correct Answer
1 year
Question
Accounting standard 19 for leases statement is applied in accounting for all leases other
Question
The financial framework of a merger decision covers 3 interrelated aspects i.e. :Correct Answer
Determining the firm's value , Financing techniques in mergers , Analysis of
merger as a capital budgeting decision
Your Answer Analysis of firm specific information , Determining the firm's value , Financing techniques
in mergers
Question
Question
Operating characteristics of acquiring firm , Financial characteristics of acquiring
firm , Earnings
acquiring firm
True/False
Question
under review.
Correct Answer
True
Your Answer True
True/False
Question
Correct Answer
False
Your Answer False
Question
Your Answer Quality of management , Production capabilities , Profitability
Strategic Finance
Question
One way to make the firm unattractive to raiders is :Correct Answer
Sell the crown jewels
Your Answer Show a long list of current assets which cannot be easily liquidated
Question
Select The Blank
Question
Correct Answer
Declaration date
Your Answer Declaration date
Question
A firm should consider acquisition as a :Correct Answer
Capital budget decision
Your Answer Development decision
Question
Question
Segment expenses include :Correct Answer
Expense relating to transactions with other segments of the enterprise
Your Answer Expense relating to transactions with other segments of the enterprise
Question
Question
20 & 40 percent
Select The Blank
Question
segments.
Correct Answer
75 percent
Your Answer 75 percent
True/False
Strategic Finance
Question
Correct Answer
True
Your Answer True
True/False
Question
Correct Answer
True
Your Answer True
Select The Blank
Question
Correct Answer
Profitability
Your Answer Profitability
Question
Select The Blank
Question
Correct Answer
Your Answer The purpose for which valuation is being done.
Select The Blank
Question
Correct Answer
Foreign Promoters
Your Answer Mutual Funds
True/False
Question
Correct Answer
True
Your Answer True
Select The Blank
Question
Correct Answer
Payables
Select The Blank
Question
Correct Answer
Banks
Your Answer Banks
Question
Strategic Finance
Your Answer

Question
Correct Answer
0.28
Your Answer 0.39
True/False
Question
Correct Answer
False
Your Answer False
Select The Blank
Question
Correct Answer
Question
Investment are the assets held for earning income by way of :Correct Answer
True/False
Question
Correct Answer
True
Your Answer True
Question
Question
As per Dorsman (1995) - financing with a high percentage of debt prevents firms from :Correct Answer
Investing too much
Your Answer Diversifying into other businesses
Select The Blank
Question
Correct Answer
Traceable cost
Your Answer Traceable cost
Question
Benchmarking is :Correct Answer
For gathering ideas without the stress of original creative thinking
Your Answer The review of a best process in the industry
Strategic Finance

Question
Equity Shares
True/False
Question Change in company's strategy gives rise to problems necessitating a new structure to be
made
Correct Answer True
Your Answer True
Select The Blank
Question In a ________ a decentralized structure is achieved & harmonized at the plant & area levels.
Correct Answer Delegation
Your Answer Delegation
Select The Blank
Question ________ identifies the impact of any change on performance
Correct Answer Statistical quality control
Your Answer Statistical quality control
True/False
Question Companies have strenghts in a number of areas but their key strength are few in number
Correct Answer True
Your Answer True
Question The decisions which are applied to structured or routine problems are
Correct Answer programmed decisions
Your Answer programmed decisions
Question Three important managerial qualities required for the effective strategic management
Correct Answer Conceptual, human & intellectual skills , Decision making ability , Vision
Your Answer Conceptual, human & intellectual skills , Decision making ability , Vision , communication
skills
True/False
Question The environment of any organization is "the aggregate of all conditions, events and influences
that surround and affect it."
Correct Answer True
Your Answer True
Select The Blank
Question ________ support managers by keeping track of the elementary activities & transactions of
the organization such as sales, receipts, raw materials etc.
Correct Answer Operational level systems
Your Answer Operational level systems
Question Mass media includes
Correct Answer radio, TV, internet etc.
Your Answer radio, TV, internet etc.
Select The Blank
Question Value chain analysis is an effective tool for ________.
Correct Answer internal analysis
Strategic Finance
Your Answer internal analysis
Question Magnitude of the decision outcome and scope of their impact on the decision maker's domain
of activity is
Correct Answer significance
Your Answer rationality
Question supplier & technological environment is concerned with
Correct Answer quality & no. of suppliers , logistics , raw material , trends and rate of change of
technology
Your Answer quality & no. of suppliers , logistics , raw material , trends and rate of change of
technology
Question Strategic management deals with
Correct Answer Business process
Your Answer Business process
Question The reasons for acquisition are
Correct Answer Increased market power , Increased diversification , Increased speed to market
Your Answer Increased market power , Increased diversification , Increased speed to market
True/False
Question The actual performance matches the budgeted performance. This is a realistic situation.
Your Answer False
Question Strategic management is concerned with
Correct Answer long- range planning
Your Answer long- range planning
True/False
Question Macro environment has got immediate impact on business.
Your Answer False
Question The various models of social responsibility are
Correct Answer Austere Model , Vendors Model , Civic Model
Your Answer Austere Model , Vendors Model , Civic Model
True/False
Question Budgets are plans expressed in numerical terms usually in financial terms
Correct Answer True
Your Answer True
Select The Blank
Question ETOP stands for ________.
Correct Answer environmental threat & opportunity profile
Your Answer environmental threat & opportunity profile
Select The Blank
Question Japan's major productivity gains are the results of social changes brought about by ________
Correct Answer Statistical quality control
Your Answer Michael Porter's model for Industry Analysis
Strategic Finance
Question Factors to be considered in political- legal environmental scanning are
Correct Answer govt. policies, stability, philosophy of govt. , legal system, implementation,
infrastructure , import-export
Your Answer govt. policies, stability, philosophy of govt. , legal system, implementation, infrastructure
Question The traditional approach towards uncertainity is
Correct Answer Binary
Your Answer Tertiary
Question Merger takes place
Correct Answer between a buyer and a seller , to avail tax concessions , to increase growth rates
Your Answer between a buyer and a seller , to avail tax concessions , to increase growth rates
Question Measures to take corrective action
Correct Answer Checking performance , Reformulate strategies , Standard check
Your Answer Checking performance , Reformulate strategies , Standard check
Question The cornerstone of financial planning process of all organizations because of the cost, control
and risk considerations which influence overall value of the firm is
Correct Answer Capital structure planning
Your Answer Capital structure planning
Question It concentrates on organisation design and work flow
Correct Answer Flotilla
Your Answer Flotilla
Question Factors determining HRP (Human Resource Planning )
Correct Answer Type & Strategy of organisation , Environmental uncertainties , Type & quality of
information
Your Answer Type & Strategy of organisation , Environmental uncertainties , Type & quality of
information
Select The Blank
Question ________ and greater accountability replace formal control.
Correct Answer Self-discipline
Your Answer Self-discipline
Select The Blank
Question A cycling accessory firm strive to become 'the nike of the cycling industry' is
________category of goal.
Correct Answer role model
Your Answer role model
Select The Blank
Question Strategic evaluation determines the effectiveness of ________
Correct Answer Strategy
Your Answer Strategy
True/False
Question The key principle of moral management is "Can we make money with this action decision or
behaviour"?
Strategic Finance
Your Answer False
Question Mass media includes
Correct Answer radio, TV, internet etc.
Your Answer radio, TV, internet etc.
Question The culture of a company is conveyed through
Correct Answer Rites , Myths , Rituals
Your Answer Rites , Rituals , Style
True/False
Question Timing of measurement before hand serves the purpose of evaluation.
Your Answer False
Question Expansion strategy means
Correct Answer growth
Your Answer growth
Question General Electric Matrix is divided into how many cells
Correct Answer 9
Your Answer 9
True/False
Question Macro environment has got immediate impact on business.
Your Answer False
True/False
Question Numerator may bring short-term results, but there may be serious long-term sacrifices.
Your Answer True
Select The Blank
Question ________ should have the ability to develop a visionto see patterns into the future.
Correct Answer Leaders
Your Answer Leaders
Question The various areas covered by social responsibility are
Correct Answer Inner Circle , Intermediate circle , Outer Circle
Your Answer Inner Circle , Intermediate circle , Outer Circle
Select The Blank
Question Economics of scale requires ________.
Correct Answer high market share
Your Answer focus
Question The decisions which are relate to daily decisions like leave records etc. which are mundane in
nature & highly routined & can be done at a junior level are
Correct Answer operational decisions
Your Answer operational decisions
Strategic Finance
Question Different kinds of information systems are
Correct Answer Operational level system , Knowledge level system , Management level system
Your Answer Operational level system , Knowledge level system , Management level system
Question A Company's strategy
Correct Answer Vital ingredient in determinig it's future , Yields growth, profits etc , may result in
disaster if inappropriate
Your Answer Vital ingredient in determinig it's future , Yields growth, profits etc , may result in disaster if
inappropriate
Question
What is Statistical Quality Control(SQC)
Correct Answer
Identifies quality and productivity from a production process , Identifies impact of any change on
performance , Instantly spots malfunctions and show where they occur
Your Answer
Identifies quality and productivity from a production process , Identifies impact of any change on
performance , Instantly spots malfunctions and show where they occur

Question
Criteria for making an evaluation are
Correct Answer
Consistency with goals , Consistency with environment , Money
Your Answer
Consistency with goals , Consistency with environment , Money

Question
Strategic Finance
Money is invested by way of

Correct Answer
Debt , Equity
Your Answer
Debt , Risk , Equity

Question
Strategic management is mainly the responsibility of
Correct Answer
Top Management
Your Answer
Top Management

Question
Mission
Correct Answer
philosophy, public image
Your Answer
philosophy, public image
Strategic Finance
Question
Factors to be considered in political- legal environmental scanning are
Correct Answer
govt. policies, stability, philosophy of govt. , legal system, implementation, infrastructure , import-export
Your Answer
govt. policies, stability, philosophy of govt. , legal system, implementation, infrastructure , import-export

Question
The reasons for acquisition are
Correct Answer
Increased market power , Increased diversification , Increased speed to market
Your Answer
Increased market power , Increased diversification , Increased speed to market
Select The Blank

Question
________ is the company's most critical and scarest resource.
Correct Answer
Capital
Your Answer
Capital
Strategic Finance
True/False
Question
The environment of any organization is "the aggregate of all conditions, events and influences that
surround and affect it."
Correct Answer
True
Your Answer
True
Select The Blank

Question
Strategic evaluation determines the effectiveness of ________
Correct Answer
Strategy
Your Answer
Strategy

Question
Strategic management deals with
Correct Answer
Business process
Strategic Finance
Your Answer
Business process

Question
Measures to take corrective action
Correct Answer
Checking performance , Reformulate strategies , Standard check
Your Answer
Checking performance , Reformulate strategies , Standard check
Select The Blank

Question
ETOP stands for ________.
Correct Answer
environmental threat & opportunity profile
Your Answer
environmental threat & opportunity profile

Question
market research is conducted by
Strategic Finance
Correct Answer
by employees , by research agencies , by consultants
Your Answer
by research agencies , by rivals , by consultants

Question
General Electric Matrix is divided into how many cells
Correct Answer
9
Your Answer
9

Question
Strategic management is concerned with
Correct Answer
long- range planning
Your Answer
long- range planning
True/False
Question
Strategic Finance
The environment of any organization is "the aggregate of all conditions, events and influences that
surround and affect it."
Correct Answer
True
Your Answer
True

Question
At this strategic level, the effort is directed at assessing how well the organisation is pursuing a given
strategy
Correct Answer
Operational evaluation
Your Answer
Operational evaluation

Question
Core purpose
Correct Answer
mission
Your Answer
mission
Strategic Finance

Question
It is the process of selecting people for company positions and developing skills and abilities for
assignments in the company
Correct Answer
Staffing
Your Answer
Staffing

Question
Three important managerial qualities required for the effective strategic management
Correct Answer
Conceptual, human & intellectual skills , Decision making ability , Vision
Your Answer
Conceptual, human & intellectual skills , Decision making ability , Vision
True/False
Question
Arranging training program on productivity is a strategic decision.
Correct Answer
False
Your Answer
Strategic Finance
False
True/False
Question
Environmental competitiveness tends to encourage ethical behaviour.
Correct Answer
False
Your Answer
True

Question
Associated external agencies means
Correct Answer
channel members, customers, suppliers etc.
Your Answer
channel members, customers, suppliers etc.
True/False
Question
Focused company is generally protected from competition.
Correct Answer
Strategic Finance
True
Your Answer
False
True/False
Question
The super structure indicates ways in which company's tasks are integrated or coordinated
Correct Answer
True
Your Answer
True

Question
Techniques used in environmental appraisal are
Correct Answer
single-variable extrapolation/multivariable interaction analysis , structured/ unstructured expert/inexpert
opinion , Dynamic modes and mapping
Your Answer
single-variable extrapolation/multivariable interaction analysis , structured/ unstructured expert/inexpert
opinion , Dynamic modes and mapping

Question
Strategic Finance
How does 'structure' reduce internal uncertainity arising out of human behaviour
Correct Answer
Control mechanism , Departmentalisation
Your Answer
Control mechanism , Departmentalisation , Specialisation

Question
The tool used for decision making in 'A range of futures' scenario is
Correct Answer
Technology forecasting
Your Answer
Latent demand research
True/False
Question
Counterfeiter copy but with a difference that can be seen.
Correct Answer
False
Your Answer
False
Strategic Finance
Question
Expansion strategy means
Correct Answer
growth
Your Answer
growth
True/False
Question
Scheduling is a part of strategic management.
Correct Answer
False
Your Answer
True
Select The Blank

Question
________ is a modern plant consisting of modules centered around a stage in the production process
Correct Answer
Flotilla concept
Your Answer
Flotilla concept
Strategic Finance
Select The Blank

Question
Module of Flotilla strikes an optimum balance of ________ and flexibility
Correct Answer
Standardisation
Your Answer
Standardisation
True/False
Question
Business ethics is how personal norms do not apply to activities & goals of a commercial firm.
Correct Answer
False
Your Answer
False
True/False
Question
Acquisitions which are friendly are termed as "take-overs".
Correct Answer
False
Strategic Finance
Your Answer
False
Question
Harveststrategy is used for
Correct Answer
Dogs , Question marks
Your Answer
Cash cowsCash cowsc

Question
The tool used for future decision making in 'True Ambiguity' scenario is
Correct Answer
Non-linear dynamic model
Your Answer
Non-linear dynamic model

Question
It enables the strategists to take corrective action at the right time
Correct Answer
Premise control
Strategic Finance
Your Answer
Premise control
Select The Blank

Question
GATT stands for ________.
Correct Answer
general agreement on trade & tariff
Your Answer
general agreement on trade & tariff
True/False
Question
Standards of performance act as the benchmark against which the actual performance is compared.
Correct Answer
True
Your Answer
True

Question
The aim in stability strategies isCorrect Answer
Strategic Finance
move slowly & surely

Your Answer
no change
Select The Blank

Question
In a ________ a decentralized structure is achieved & harmonized at the plant & area levels.
Correct Answer
Delegation
Your Answer
Delegation

Question
At this level , the effort is directed at assessing the consistency of strategy with the environment
Correct Answer
Strategic evaluation
Your Answer
Premise evaluation
Select The Blank

Question
Strategic Finance
A cycling accessory firm strive to become 'the nike of the cycling industry' is ________category of goal.
Correct Answer
role model
Your Answer
role model
6.
The FEA Tools encompass a vast array of information & policy into :-
a)
b)
c)
d)
Many evaluations
One evaluation
One procedure
Many procedures
7.
optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to fluctuate.
True
False
Select The Blank
Question
operating supplies.
Correct Answer
Natural
Your Answer Natural
Strategic Finance
True/False
Question
Correct Answer
True
Your Answer True
Select The Blank
Question
Correct Answer
To analyse the activities more carefully
Your Answer To take a better decision
True/False
Question
Correct Answer
False
Your Answer False
Select The Blank
Question
basis of ________
Correct Answer
Replacement cost
Question
Question
The Public announcement of share buy back has to be made at least :Correct Answer
Your Answer 7 Days prior to the commencement of buy back
Select The Blank
Question
Correct Answer
Absorption
Select The Blank
Question
Correct Answer
Goodwill
17.
According to Merton Miller & Franco Modigliani, the only important determinant of a company's
market value is :a)
Strategic Finance
b)
c)
d)
Decision regarding firm's payout of dividend
Retention of dividend for internal financing
Investment opportunities available
24.
Fixed price tender offers are accompanied by an abnormal announcement period return of :-
a)
b)
c)
d)
2-3%
6-8%
8 - 10 %
10 - 15 %
30.
True
False
43.
HLL is % of subsidiary of Unilever PLC.
.75,0.5,0.25,0.516
47.
The statute governing an enterprise may provide the basis for computation of the depreciation.
True
Strategic Finance
False
51.
A single organisation model serves to keep all individual initiatives to be targeted into a coordinated plan.
True
False
Select The Blank
Question
operating supplies.
Correct Answer
Natural
Your Answer Natural
Question
Question
Stimulates sales
sales
Question
Equity Shares
Question
Equity
Your Answer Equity
Select The Blank
Question
activities.
Correct Answer
Segment assets
Question
Your Answer Utilities , Maintenance , Security
Strategic Finance
Question
Examples of accrued expenses are :Correct Answer
Your Answer Wages , Income tax , Property tax
Question
Realizable value
Your Answer Realizable value
Select The Blank
Question
book building.
Correct Answer
30
Your Answer 30
Question
Flexible policy
Your Answer Flexible policy
True/False
Question
a company.
Correct Answer
False
Your Answer False
Question
20 & 40 percent
Question
Net working capital
Select The Blank
Question
Correct Answer
Concentric mergers
Your Answer Concentric mergers
Question
hypothesis
Strategic Finance
Question
Non trading assets
Your Answer Non trading assets
Question
True/False
Question
under review.
Correct Answer
True
Your Answer True
Question
Assets
Your Answer Assets
Question
Current Liabilities
Your Answer Reserves
Question
Cost of capital
True/False
Question
Correct Answer
False
Your Answer False
Question
Your Answer Dividend policy has lot of influence on accounting numbers , Business risk and financial
Question
decisions
Strategic Finance
True/False
Question
Correct Answer
True
Your Answer True
Select The Blank
Question
Correct Answer
To analyse the activities more carefully
Your Answer To take a better decision
True/False
Question
Correct Answer
False
Your Answer False
Select The Blank
Question
basis of ________
Correct Answer
Replacement cost
Question
Question
The Public announcement of share buy back has to be made at least :Correct Answer
Your Answer 7 Days prior to the commencement of buy back
Select The Blank
Question
Correct Answer
Absorption
Select The Blank
Question
Correct Answer
Goodwill
Question
basis
Strategic Finance
True/False
Question
Correct Answer
True
Your Answer True
Select The Blank
Question
Correct Answer
01.04.2002
Your Answer 01.04.2002
True/False
Question
Correct Answer
False
Your Answer False
True/False
Question
Correct Answer
True
Your Answer True
Question
Select The Blank
Question
Correct Answer
Your Answer Countries in different zones
Question
Greenfield
Your Answer Greenfield
Question
Question
Your Answer Participate in the financial decisions , Participate in the operating policy decisions
Strategic Finance

Question
Question
within the activity model or process flow to ensure that they are being done the same best way :Correct Answer
Your Answer Comparative analysis
Strategic Finance
10.
a)
b)
The HHI index reflects :-
Strategic Finance
c)
d)
Transparency
Disclosure through public announcement
Interest of small shareholders
11.
In case of direct placement of commercial papers it may be issued for maturities from the date of
issue.
Bw one to two yrs,More than 2 yrs,less than 6 months,bw 15 days to one year.
18.
Changes in the investee`s equity includes those :-
Arising from the
a) revaluation of fixed assets
b) From foreign exchange translation differences

c) From the adjustment of differences arising on amalgamation
d) Investor's proportionate interest
24.
True
False
40.
In the disclosures in financial statements, there are significant restrictions on :-
Strategic Finance
The right of ownership

Realisability of investments
The remittance of income & proceeds of disposal
Other disclosures
44.
Quantitative variables
Qualitative factors
Qualitative variables
1. Segment revenue
1. Enterprise assets
2. Segment result
2. Enterprise revenue
3. Segment assets
3. Enterprise liabilities
4. Cash flows
5. Enterprise net profit or loss
6. Liquidity
50.
When the working capital is less than its peak level :-
Strategic Finance
52.
Liquidation value is also known as
True/False
Question
Correct Answer
False
Your Answer False
Select The Blank
Question
financial leverage.
Correct Answer
Constant
Your Answer Constant
Question
Your Answer Market value approach
Question
The main assumption in comparative analysis is the possibility of :Correct Answer
Question
Your Answer Validating accounting costs , Providing a rationale for division of costs , Replacing
missing data
Select The Blank
Question
Correct Answer
1 year
Your Answer 1 year
Question
Your Answer More than 50 % of the total assets
Select The Blank
Question
Correct Answer
Bank finance
Your Answer Bank finance
Question
in case of temporary working capital, the investment in current assets varies with :Correct Answer
Strategic Finance
Your Answer

Question
Your Answer Logs to record workflow , Specific costs , External and internal audit reports
True/False
Question
Correct Answer
True
Your Answer True
Question
Your Answer Through any subsidiary company , Through any investment company , If a company
True/False
Question
Correct Answer
True
Your Answer True
Select The Blank
Question
Correct Answer
Vertical Mergers
Question
As per Dorsman (1995) - financing with a high percentage of debt prevents firms from :Correct Answer
Investing too much
Your Answer Investing too much
Question
Estimation for determining the useful life of an asset is required :Correct Answer
Your Answer On some reasonable basis
True/False
Question
Correct Answer
False
Your Answer False
Question
Correct Answer
Infosys
Your Answer BHEL
Strategic Finance
Question
Question
Suppliers of equity are interested in :Correct Answer
High share prices
Select The Blank
Question
Correct Answer
Declaration date
Your Answer Ex - dividend date
Question
Question
Your Answer With significantly differing risks & returns
True/False
Question
Correct Answer
True
Your Answer True
Question
Question
Value added analysis is a method to determine, if elements within a process flow provide
the :Correct Answer
Values
Your Answer Values
Select The Blank
Question
________.
Correct Answer
Your Answer Shares of a large number of companies
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Question
Question
appropriate :Correct Answer
Profits & losses on disposal of current investments , The amounts included in P & L Statement
Your Answer The accounting policies for the determination of carrying amount of investments , Profits
& losses on disposal of current investments , The amounts included in P & L Statement
Select The Blank
Question
Correct Answer
Foreign Promoters
Question
Your Answer Market growth , Marketing capabilities , Nature of competition
Question
The financial framework of a merger decision covers 3 interrelated aspects i.e. :Correct Answer
Determining the firm's value , Financing techniques in mergers , Analysis of
merger as a capital budgeting decision
Your Answer Determining the firm's value , Financing techniques in mergers , Analysis of merger as a
capital budgeting decision
Question
ratio :Correct Answer
Increases
True/False
Question
Correct Answer
True
Your Answer True
True/False
Question
Correct Answer
True
Your Answer True
Question
Your Answer Cost of facilities , Training & development budgets
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Question
Select The Blank
Question
Correct Answer
5 lakhs
Your Answer 5 lakhs
Question
Select The Blank
Question
Correct Answer
Question
AS 13 Does not deal with :Correct Answer
True/False
Question
Correct Answer
True
Your Answer False
Question
Your Answer The payout ratio is never 100 %
Question
Arbitrage means :Correct Answer
Your Answer Securities cannot sell at different prices
True/False
Question
Correct Answer
True
Your Answer True
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Question
Stimulates sales
ROI
Question
hypothesis
Question
allocated :Correct Answer
Fully in the accounting period for which they are acquired
Your Answer Over the residual value
Question
Correct Answer
0.25
Your Answer 0.25
True/False
Question
Correct Answer
True
Your Answer True
Question
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Question
For ABC Analysis the available cost data :Correct Answer
Question
Today knowledge has become a key determinant for :Correct Answer
Economic & business success
Your Answer For determining a firm's value
Select The Blank
Question
Correct Answer
Question
Prompt & adequate
Question
Your Answer People , Equipment , Overheads
Select The Blank
Question
productive .
Correct Answer
Your Answer Solid human resource team
Question
Equity
Your Answer Equity
True/False
Question
Correct Answer
False
Your Answer True
True/False
Question
Correct Answer
True
Your Answer True
Question
Financial statements classify the following into separate categories :-
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Correct Answer
Your Answer Fixed assets , Current assets
Question
Your Answer Brokerage , Advertisements , Fees , Duties
Question
Question
Current Liabilities
Select The Blank
Question
Correct Answer
118 Bn
Your Answer 118 Bn
True/False
Question
Correct Answer
True
Your Answer True
True/False
Question
Correct Answer
False
Your Answer True
Select The Blank
Question
Correct Answer
1 to 2 months
Your Answer 1 to 2 months
Question
Select The Blank
Question
reconciling item.
Correct Answer
Reportable segment
Your Answer Operating segment
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Question
related asset is included in :Correct Answer
Segment assets
True/False
Question
Correct Answer
True
Your Answer True
True/False
Question
Correct Answer
True
Your Answer True
Question
True/False
Question
Correct Answer
True
Your Answer True
Question
Your Answer Daily wages , Maintenance , Security
True/False
Question
Correct Answer
True
Your Answer True
True/False
Question
Correct Answer
True
Your Answer True
Select The Blank
Question
Correct Answer
Firm Managers
Your Answer Firm Managers
Question
The FEA Tools encompass a vast array of information & policy into :-
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Correct Answer
One evaluation
Your Answer Many evaluations
Question
Select The Blank
Question
Correct Answer
Accounting numbers
Question
Question
Question
Select The Blank
Question
Correct Answer
Select The Blank
Question
Correct Answer
Select The Blank
Question
Correct Answer
Danish (Denmark)
Your Answer Japanese
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Select The Blank
Question
activities.
Correct Answer
Segment assets
Your Answer Current assets
Question

Question
True/False
Question
Correct Answer
False
Your Answer True
Question
Question
Select The Blank
Question
Correct Answer
Question
Question
Correct Answer
Exchange ratio
Select The Blank
Question
Correct Answer
basis to a segment
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Question
True/False
Question
Correct Answer
True
Your Answer True
Question
True/False
Question
Correct Answer
True
Your Answer True
Question
Question
Net working capital
Select The Blank
Question
Correct Answer
Increases
Question
Correct Answer
Question
True/False
Question
Correct Answer
True
Your Answer True
Question
Free Reserves is a component of :-
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Correct Answer
Equity
Your Answer Equity
Question
Current Liabilities
Your Answer Capital
True/False
Question
Correct Answer
True
Your Answer True
Question
Correct Answer
6 months
Select The Blank
Question
Correct Answer
Prestige or power
Your Answer Value
Question
Question
True/False
Question
Correct Answer
False
Your Answer True
Select The Blank
Question
Correct Answer
Growth
Question
Cost of capital
Select The Blank
Question
Correct Answer
118 Bn
Question
The characteristics of working capital are :-
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Correct Answer
basis
Question
Question
The shareholder
Question
Select The Blank
Question
Correct Answer
Foreign Promoters
Question
investment is made
True/False
Question
Correct Answer
True
Your Answer True
True/False
Question
Correct Answer
True
Your Answer True
Question
Question
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True/False
Question
Correct Answer
True
Your Answer True
Question
Question
Select The Blank
Question
operating supplies.
Correct Answer
Natural
Your Answer Natural
Question
True/False
Question
Correct Answer
True
Your Answer True
Question
True/False
Question
Correct Answer
False
Your Answer True
Question
Question
Select The Blank
Question
Correct Answer
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Question
Question
Correct Answer
Exchange ratio
Select The Blank
Question
Correct Answer
basis to a segment
Question
True/False
Question
Correct Answer
True
Your Answer True
Question
True/False
Question
Correct Answer
True
Your Answer True
Question
Question
Net working capital
Select The Blank
Question
Correct Answer
Increases
Question
Correct Answer
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Question
True/False
Question
Correct Answer
True
Your Answer True
Question
Equity
Your Answer Equity
Question
Current Liabilities
Your Answer Capital
True/False
Question
Correct Answer
True
Your Answer True
Question
Correct Answer
6 months
Select The Blank
Question
Correct Answer
Prestige or power
Your Answer Value
Question
Question
True/False
Question
Correct Answer
False
Your Answer True
Select The Blank
Strategic Finance
Question
Correct Answer
Growth
Question
Cost of capital
Select The Blank
Question
Correct Answer
118 Bn
Question
basis
Question
Question
The shareholder
Question
Select The Blank
Question
Correct Answer
Foreign Promoters
Question
investment is made
True/False
Question
Correct Answer
True
Your Answer True
True/False
Question
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Correct Answer
Your Answer True
True

Question
Question
True/False
Question
Correct Answer
True
Your Answer True
Question
Question
Select The Blank
Question
operating supplies.
Correct Answer
Natural
Your Answer Natural
Question
True/False
Question
Correct Answer
True
Your Answer True
Question
True/False
Question
Correct Answer
False
Your Answer True
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Question
Question
Select The Blank
Question
Correct Answer
Question
Question
Correct Answer
Exchange ratio
Select The Blank
Question
Correct Answer
basis to a segment
Question
True/False
Question
Correct Answer
True
Your Answer True
Question
True/False
Question
Correct Answer
True
Your Answer True
Question
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Question
Net working capital
Select The Blank
Question
Correct Answer
Increases
Question
Correct Answer
Question
True/False
Question
Correct Answer
True
Your Answer True
Question
Equity
Your Answer Equity
Question
Current Liabilities
Your Answer Capital
True/False
Question
Correct Answer
True
Your Answer True
Question
Correct Answer
6 months
Select The Blank
Question
Correct Answer
Prestige or power
Your Answer Value
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Question
Question
True/False
Question
Correct Answer
False
Your Answer True
Select The Blank
Question
Correct Answer
Growth
Question
Cost of capital
Select The Blank
Question
Correct Answer
118 Bn
Question
basis
Question
Question
The shareholder
Question
Select The Blank
Question
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Correct Answer
Foreign Promoters
Question
investment is made
True/False
Question
Correct Answer
True
Your Answer True
True/False
Question
Correct Answer
True
Your Answer True
Question
Question
True/False
Question
Correct Answer
True
Your Answer True
Question
Question
Select The Blank
Question
operating supplies.
Correct Answer
Natural
Your Answer Natural
Question
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True/False
Question
Correct Answer
True
Your Answer True
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Q.3
With the help of models explain inventory control for working capital
management.
Ans
INVENTORY MANAGEMENT
Introduction: Inventories are stock of the product a company is manufacturing for sale and
components that make up the product.
Nature of Inventories: The various forms in which inventories exists in manufacturing company
are
Raw Materials: are basic inputs that are converted into finished product through the
manufacturing process.
Work-in-Progress: inventories are semi-manufactured products.

Finished Goods: inventories are those completely manufactured products, which are
ready for sale.
Need to hold Inventories:
Transactions motive: emphasizes the need to maintain inventories to facilitate smooth

production & sales operation.
Precautionary motive: necessitates holding of inventories to guard against the risk of

unpredictable changes in demand & supply forces & other factors.
Speculative motive; influences the decision to increase or reduce inventory levels to take
advantage of price fluctuations.
Objective of Inventory Management
To maintain a large size of inventory for efficient and smooth production & sales
operations.
To maintain a minimum investment in inventories to maximise profitability.
The firm should always avoid a situation of over investment or under investment in inventories.
The major dangers of over investment are:
a) Unnecessary tie up of the firms funds and loss of profit,
b) Excessive carrying costs,
c) Risk of liquidity.
The major dangers of under investments are:
a) Production hold-ups.
b) Failure to meet delivery commitments.
An effective inventory management should:
Ensure a continuous supply of raw materials to facilitate uninterrupted

production.
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Maintain sufficient stocks of raw materials in periods of short supply and

anticipate price changes,
Maintain sufficient finished goods inventory for smooth sales operation, and
efficient customer service,
Minimize the carrying cost and time, and
Control investment in inventories and keep it at an optimum level.
Q.4.
Ans
With the help of models explain cash control for working capital management.
CASH MANGEMENT
Cash is the most important current asset in any business operations. The term cash includes
coins, currency and cheques held by the firm, and balances in its bank account.
Cash management is concerned with managing of
1. cash flow into and out of the firm
2. cash flows within the firm
3. cash balances held by the firm by financing deficit or investments of surplus cash
All these activities are to be done at minimum cost.
Facets of Cash management:
Cash planning:
Cash inflows and outflows should be planned to project cash surplus or deficit for each period of
planning period. Cash budget is prepared for this purpose.
Managing cash flows:
Cash flow should be properly managed. Inflow of cash should accelerate while outflow should
decelerate as far as possible.
Optimum cash level:
The firm should determine optimum cash level considering the cost of excess cash and danger
of cash deficiency.
Investing surplus cash:

Surplus cash should be properly invested in short term opportunities like deposits, corporate
lending, marketable securities to earn profits.
Motives of Holding Cash
Transaction motive
The transaction motive requires a firm to hold cash to conduct its business in ordinary course to
make payments for purchases, wages, other operating expenses, taxes etc. Transaction motive
mainly refers to holding cash to meet anticipated payments whose timing is not perfectly
matched with cash receipts.
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Precautionary motive
It is needed to hold cash for contingencies in future. It gives cushion to withstand the
unexpected emergency. Less cash is required to be maintained for emergency if cash flows are
fairly accurate. The precautionary balance is kept in cash form or marketable securities.
Speculative motive
It is holding cash for investing it in profit making opportunities as and when they arise.
Cash forecasting.
Short-term forecasting.
Short-term forecasting is done for the following reasons.
To determine operating cash requirements.
To anticipate short-term financing: which is generally obtained from bank.
To manage investment of surplus cash : which help managers to study the market and invest in
better yield investments.
Short-term forecasting methods

1. Receipts and disbursement method
This sources of cash inflow like operating, non operating and

financial inflows etc. are considered on receipt side. Whereas on
disbursement side cash outflows like operating expenses, capital
expenditure, contractual payments, taxes and likes are considered to
come to work out cash requirements.
Receipt and disbursement method is sound tool as it gives clear picture of all items.
2. Adjusted net income method
This method involves tracing of working capital flows. Its objectives are to project companys
need for cash at a future date and to show whether the company can generate it internally or
borrow from market.
Long term cash forecasting:
It is generally for the period of 3 to 5 years. It is not as detail as short term forecast.
It helps company to find future financial needs and improves corporate planning.
Determining the optimum cash balance:
Organisation should keep enough liquidity so that operations do not suffer and should not loose
profit due to high liquidity. Then how one should decide on optimum cash balance? There are
two situations, which are explained below.
Optimum Cash balance
Graphical approach :
Holding Cost
Cost
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Transaction Cost
Cash Balance
Q.7 What are the reasons for restructuring through share buybacks? Explain Indian
context and regulations.
Ans.
The provisions regulating buy back of shares are contained in Section 77A, 77AA
and 77B of the Companies Act,1956. These were inserted by the Companies (Amendment)
Act,1999. The Securities and Exchange Board of India (SEBI) framed the SEBI(Buy Back of
Securities) Regulations,1998 and the Department of Company Affairs framed the Private Limited
Company and Unlisted Public company (Buy Back of Securities) Regulations,1998 pursuant to
Section 77A(2)(f) and (g) respectively.
Objectives of Buy Back:
Shares may be bought back by the company on account of one or more of the following reasons
i. To increase promoters holding
ii. Increase earning per share
iii. Rationalize the capital structure by writing off capital not represented by available
assets.
iv. Support share value
v. To thwart takeover bid
vi. To pay surplus cash not required by business
Infact the best strategy to maintain the share price in a bear run is to buy back the shares from
the open market at a premium over the prevailing market price.
Resources of Buy Back
A Company can purchase its own shares from
(i) free reserves; Where a company purchases its own shares out of free reserves, then a sum
equal to the nominal value of the share so purchased shall be transferred to the capital
redemption reserve and details of such transfer shall be disclosed in the balance-sheet or
(ii) securities premium account; or
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(iii) proceeds of any shares or other specified securities. A Company cannot buyback its shares
or other specified securities out of the proceeds of an earlier issue of the same kind of shares or
specified securities.
Conditions of Buy Back
(a) The buy-back is authorised by the Articles of association of the Company;
(b) A special resolution has been passed in the general meeting of the company authorising the
buy-back. In the case of a listed company, this approval is required by means of a postal ballot.
Also, the shares for buy back should be free from lock in period/non transferability.The buy back
can be made by a Board resolution If the quantity of buyback is or less than ten percent of the
paid up capital and free reserves;
(c) The buy-back is of less than twenty-five per cent of the total paid-up capital and fee reserves
of the company and that the buy-back of equity shares in any financial year shall not exceed
twenty-five per cent of its total paid-up equity capital in that financial year;
(d) The ratio of the debt owed by the company is not more than twice the capital and its free
reserves after such buy-back;
(e) There has been no default in any of the following
i. in repayment of deposit or interest payable thereon,
ii. redemption of debentures, or preference shares or
iii. payment of dividend, if declared, to all shareholders within the stipulated time of 30
days from the date of declaration of dividend or
iv. repayment of any term loan or interest payable thereon to any financial institution or
bank;
(f) There has been no default in complying with the provisions of filing of Annual Return,
Payment of Dividend, and form and contents of Annual Accounts;
(g) All the shares or other specified securities for buy-back are fully paid-up;
(h) The buy-back of the shares or other specified securities listed on any recognised stock
exchange shall be in accordance with the regulations made by the Securities and Exchange
Board of India in this behalf; and
(i) The buy-back in respect of shares or other specified securities of private and closely held
companies is in accordance with the guidelines as may be prescribed.
Disclosures in the explanatory statement
The notice of the meeting at which special resolution is proposed to be passed shall be
accompanied by an explanatory statement stating (a) a full and complete disclosure of all material facts;
(b) the necessity for the buy-back;
(c) the class of security intended to be purchased under the buy-back;
(d) the amount to be invested under the buy-back; and
(e) the time-limit for completion of buy-back
Sources from where the shares will be purchased
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The securities can be bought back from
(a) existing security-holders on a proportionate basis;
Buyback of shares may be made by a tender offer through a letter of offer from the holders of
shares of the company or
(b) the open market through
(i). book building process;
(ii) stock exchanges or
(c) odd lots, that is to say, where the lot of securities of a public company, whose shares are
listed on a recognized stock exchange, is smaller than such marketable lot, as may be specified
by the stock exchange; or
(d) purchasing the securities issued to employees of the company pursuant to a scheme of
stock option or sweat equity.
Filing of Declaration of solvency
After the passing of resolution but before making buy-back, file with the Registrar and the
Securities and Exchange Board of India a declaration of solvency in form 4A. The declaration
must be verified by an affidavit to the effect that the Board has made a full inquiry into the affairs
of the company as a result of which they have formed an opinion that it is capable of meeting its
liabilities and will not be rendered insolvent within a period of one year of the date of declaration
adopted by the Board, and signed by at least two directors of the company, one of whom shall
be
the
managing
director,
if
any:
No declaration of solvency shall be filed with the Securities and Exchange Board of India by a
company whose shares are not listed on any recognized stock exchange.
Register of securities bought back
After completion of buyback, a company shall maintain a register of the securities/shares so
bought and enter therein the following particulars
a. the consideration paid for the securities bought-back,
b. the date of cancellation of securities,
c. the date of extinguishing and physically destroying of securities and
d. such other particulars as may be prescribed
Where a company buys-back its own securities, it shall extinguish and physically destroy the
securities so bought-back within seven days of the last date of completion of buy-back.
Issue of further shares after Buy back
Every buy-back shall be completed within twelve months from the date of passing the special
resolution or Board resolution as the case may be.
A company which has bought back any security cannot make any issue of the same kind of
securities in any manner whether by way of public issue, rights issue up to six months from the
date of completion of buy back.
Filing of return with the Regulator
A Company shall, after the completion of the buy-back file with the Registrar and the Securities
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and Exchange Board of India, a return in form 4 C containing such particulars relating to the
buy-back within thirty days of such completion. No return shall be filed with the Securities and
Exchange Board of India by an unlisted company.
Prohibition of Buy Back
A company shall not directly or indirectly purchase its own shares or other specified securities (a) through any subsidiary company including its own subsidiary companies; or
(b) through any investment company or group of investment companies; or
Procedure for buy back
a) Where a company proposes to buy back its shares, it shall, after passing of the
special/Board resolution make a public announcement at least one English National Daily,
one Hindi National daily and Regional Language Daily at the place where the registered
office of the company is situated.
b) The public announcement shall specify a date, which shall be "specified date" for the
purpose of determining the names of shareholders to whom the letter of offer has to be sent.
c) A public notice shall be given containing disclosures as specified in Schedule I of the SEBI
regulations.
d) A draft letter of offer shall be filed with SEBI through a merchant Banker. The letter of offer
shall then be dispatched to the members of the company.
e) A copy of the Board resolution authorising the buy back shall be filed with the SEBI and
stock exchanges.
f) The date of opening of the offer shall not be earlier than seven days or later than 30 days
after the specified date
g) The buy back offer shall remain open for a period of not less than 15 days and not more
than 30 days.
h) A company opting for buy back through the public offer or tender offer shall open an escrow
Account.
Penalty
If a company makes default in complying with the provisions the company or any officer of the
company who is in default shall be punishable with imprisonment for a term which may extend
to two years, or with fine which may extend to fifty thousand rupees, or with both. The offences
are, of course compoundable under Section 621A of the Companies Act,1956.
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Q.8.
Ans
How is CAPM model helpful? Detail out the model and its theory.
Capital Asset Pricing Model (CAPM)
Introduction: The capital Asset Pricing Model (CAPM) is an equilibrium model, which
describes the pricing of assets, as well as derivatives. The model concludes that the expected
return of an asset(or derivative) equals the riskless return plus a measure of the assets nondiversifiable risk (beta) times the market-wide risk premium (excess expected return of the
market portfolio over the riskless return). That is:
It concludes that only the risk, which cannot be diversified away by holding a well-diversified
portfolio (e.g. the market portfolio) will affect the market price of the asset. This risk is called
systematic risk, while risk that can be diversified away is called diversifiable risk.
The CAPM asks what is the value of an asset (or derivative) relative to the return of the market
portfolio. Because of this, the option models are often referred to as relative valuation models,
while the CAPM is considered an absolute valuation model. However the model is only valid
within a special set of assumptions.
Assumptions of CAPM
Investors are risk averse individuals who maximize the expected utility of their end of period
wealth.
Implication: The model is a one period model.
Investors have homogenous expectations (belief) about asset returns. Implication : all
investors perceive identical opportunity sets. This is, everyone have the same information at
the same time.
Asset returns are distributed by the normal distribution.
There exists a risk free asset and investors may borrow or lend unlimited amounts of the
asset at a constant rate: the risk free rate (k).
There is a definite number of assets and their quantities are fixed within the one period
world.
All assets are perfectly divisible and priced in a perfectly competitive marked.
Implication: e.g. human capital is non-existing.
Asset markets are frictionless and information is costless and simultaneously available
to all investors.
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There are no market imperfections such as taxes, regulations or restrictions on short

selling.
Rationale of CAPM:
This method of valuing assets and calculating the cost of capital for an alternative i.e. the capital
asset price model (CAPM) has come to dominate modern finance. The rationale of the CAPM
can be simplified as follows.
Investors can eliminate some sorts of risk known as Residual risk or alpha, by holding a
diversified portfolio of assets. These alpha risks are specific to an individual asset, for example,
the risk that a companys managers will turn out to be no good. Some risks, such as that of a
global recession cannot be eliminated through diversification.
So even a basket of all the shares in a stock market will still be risky. People must be rewarded
for investing in such a risky basket by earning returns on average above those that they can get
on safer assets, such as treasury bills. Assuming investors diversify away alpha risks, how an
investor values any particular asset should depend crucially on how much the assets price is
affected by the risk of the market as a whole.
The markets risk contribution is captured by a measure of relative volatility. BETA, which
indicates how much an assets price is expected to change when the overall market changes.
Safe investments have a beta close to zero: economists call these assets risk free. Riskier
investments, such as a share, should earn a premium over the risk free rate. How much is
calculated by the average premium for all assets of that type, multiplied by the particular assets
beta.
Pronounced as though it were spelled cap-m, this model was originally developed in 1952 by
Harry markowitz and fine tuned over a decade later by others, including William Sharpe. CAPM
describes the relationship between risk and expected return, and it serves as a model for the
pricing of risky securities. CAPM says that the expected return of a security or a portfolio equals
the rate on a risk free security plus a risk premium. If this expected return does not meet or beat
our required return, the investment should not be undertaken.
The commonly used formula to describe CAPM relationship is as follows:
Required (expected return)= RF rate + (Market return RF rate)* Beta
Implications of CAPM
Investors will always combine a risk free asset with a market portfolio of risky assets.
They will invest in risky assets in proportion to their market value.
Investors will be compensated only for that risk which they cant diversify. This is the
market related risk.
Investor can expect returns from their investment according to the risk.
The concept of risk and return as developed under CAPM have intuitive appeal and they are
quite simple to understand. Financial managers use these concepts in a number of financial
decision making such as valuation of securities, cost of capital measurement, investment risk
analysis etc.
Limitations of CAPM:
Unrealistic assumptions: CAPM is based on a number of assumptions that are far

from the reality. For e.g. its very difficult to find a risk free security.
A short term, highly liquid govt. security is considered as a risk free security. Its unlikely that
govt. will default but inflation causes uncertainty about the real rate of return.
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The assumption of the equality of the lending and borrowings is also not correct. In practice
these rates differ. Further, investors may not hold highly diversified portfolios or the market
indices may not be well diversified. Under these circumstances, CAPM may not accurately
explain the investment behavior of investors and beta may fail to capture the risk of
investment.
Testing CAPM Most of the assumptions of CAPM may not be very critical for its
practical validity. What we need to know therefore, is the empirical validity of CAPM. We
need to establish that beta is able to measure the risk of security and that there is a
significant correlation between beta and the expected return.
Stability of BETA : Beta is a measure of a securitys future risk. But investors dont have
the future data to estimate beta. What they have are past data about the share prices and
the market portfolio. Thus, they can only estimate beta based on historical data. Investors
can use historical beta as the measure of future risk only if its stable over time. This implies
that historical betas are poor indicators of the future risk of securities.
CAPM is a useful device for understanding the risk return relationship inspite of its limitations. It
provides a logical and quantitative approach for estimating risk. Its better than many alternative
subjective methods of determining risk and risk premium. One major problem in the use of
CAPM is that many times the risk of an asset is not captured by beta alone.
Q.9
What are the different dividend theories? Explain their application with the Indian
context.
Ans Different Dividend theories:
Bird in Hand Theory:
The conclusions of Miller and Modigliani- that, dividend policy does

not matter presented a strong challenge to the conventional wisdom
of that time. Finance theorists and corporate mangers believed that
investors preferred dividends to capital gains and that a firm could
increase (or at least support) the market value of its shares by
choosing a generous dividend policy.
At that time, the most popular argument for dividend was the Bird in the hand- Theory. It
holds that dividends (a bird in the hand) are preferred to retained earnings (a bird in the
bush) because the latter never materialize as future dividends (it can fly away). This is
obvious as the risk of having money today is definitely less than risking your money for
returns in the future.
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At first glance, this theory seems to be reasonable, especially in the light of the fact that a
higher dividend stocks tend to be lower on the risk spectrum of common stocks. And other
things being equal, less risky stocks are more expensive than higher risk stocks with the
same expected future cash flow.
This theory from Myron Gordon is rather an argument about investment policy than about
dividends.
Smoothing Theory
One of the first papers on the subject dividend policy, was published by John Lintner in
1956. He conducted a series of interviews with mangers about their thinking on the
determination of dividend policy. His results can be summarized in four stylized facts:
1. Firms have long-run target dividend payout ratios. Mature companies with stable
earnings generally pay out a high proportion of earnings; growth companies have low
payouts.
2. Managers focus more on dividend changes than on absolute levels. Thus, paying a Rs.
2.0 dividends is an important financial decision if last years dividend was Re. 1.00, but
no big deal if last years dividend was Rs. 2.00.
3. Dividend changes follow shifts in long run, sustainable earnings. Managers smooth
dividends. Transitory earnings changes are unlikely to affect dividend payouts. This
also helps to keep investors happy.
4. Managers are reluctant to make dividend changes that might have to be reversed. They
are particularly worried about having to rescind a dividend increase.
Tax Differential Theory

According to this theory, since dividends are effectively taxed at higher rates than capital
gains in most countries, investors require higher rates of return on stocks with high
dividend yields.
The theory says, a firm should pay a low (or zero) dividend in order to minimize its cost of
capital and maximise its value. The tax system may tend to favour retention of profit and
limit dividend. Thus low dividend yield shares have been likely to be in great demand by
high rate taxpayers, who prefer a low dividend payout and a high rate of earnings retention
in the hope of an appreciation in the capital value of the company.
Small shareholders may prefer relatively high dividend pay out rate. The dividend policy of
such a firm may be a compromise between a low and a high payout.
Residual Theory
According to residual theory of dividends, the firm should follow its investment policy of
accepting all positive NPV projects and paying out dividends if and only if funds are
available. The focus is on growth. The discounting factor in the calculation of NPV would
be equal to greater than the cost of capital K.
If the firm treats dividend as a residual, then the dividend can vary highly from period to
period depending upon the opportunities available and the investment plan and operating
results of the firm. If a firm attracts investors falling into a particular dividend clientele, it
suggests that the firm should maintain fairly stable dividend policy. The residual dividend
policy is used by most firms to set a long run target payout.
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Span of Control Theory:
Managers in an organization look at the cash flows generated from the operations as an
important and convenient source of new capital. The professional managers prefer to have a
large span of control as measured by the number of employees, sales, market value, total
assets or total expenditure. In pursuit of managerial objective of increasing the span of
control, directors are expected to prefer retention of profits to distributions.
Retention increases status, remuneration and security of mangers. Also increases in the
firms investment schedule should result in growth in the value of shares to the extent that
retained cash flows are reinvested in profitable projects.
Investor Rationality Theory

Shefrin and Statman (1984) supported their argument based on the psychological
preferences of individual investor. Their argument is that an investor who wishes to
conserve his/her long run wealth could stipulate that portfolio capital should not be
consumed, only dividends.
The investor can select dividend payout ratio that conforms to his/her desired consumption
level. Thus even though taxes and transaction costs may favor capital gains, an investor
may find cash dividends attractive and hence be willing to pay the appropriate premium.
The investor then would invest in a portfolio of shares to meet h\this need. Some of the
investments would be in shares with high payout ration for consumption needs and others
with low payout ratio for capital appreciation.
Q.10 Explain the importance of working capital management and the different
approaches/strategies.
Ans.
Working capital management is management for the short-term. This is of critical
importance to a firm. As pointed out in the text, managers spend about 70% managing for the
short-term. This makes sense. Every day companies take in money, write receipts, balance
checkbooks, record receivable records, manage inventory and the like. Also, short-term
management should not be discounted. As the old saying goes, "If you can make it in the shortterm long enough, you don't need to worry about the long-term.Cash Budgets may be utilized
in managing working capital.
Working capital has to do with the short-term accounts of a firm current assets and current
liabilities. Net Working capital is defined as current assets less current liabilities. The secret to
good working capital management is simple "use someone else's money every chance you get
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and don't let anyone else use yours." Within reason, of course. To do that, the following strategies
might be employed; again within reason. A company wouldn't want to stretch out its payables for
so long a period that it's forced out of business.
Stretch out accounts payable as long as possible. If a bill is due on the 13th, don't pay it
on the 10th. If a company has enough clout, they can negotiate longer terms with
vendors.
Turn receivables as quickly as possible. Make it easy for customers to pay. Lockboxes,
prepaid envelopes, discounts, etc. may be utilized.
Turn inventories as quickly as possible. Inventories may be a big investment for a firm and they
earn no interest. Just-in-time inventory methods and some other strategies are used to hold
down a firm's investment in inventories.
Factors Influencing Working Capital Requirements:
Nature of Business: A service firm, like an electrical undertaking or a transport
corporation, which has a short operating cycle and sells predominantly on cash basis,
has a modest working capital requirement. On the other hand, a manufacturing concern
like a machine tools unit which has a long operating cycle and which sells largely on
credit, has a very substantial working capital requirement.
Seasonality of Operations: Firms which have marked Seasonality in their operations
usually have highly fluctuating working capital requirements. For example, the sale of
ceiling fans reaches a peak during the summer months and decrease significantly during
the winter period. Therefore, working capital needs of such a firm are likely to increase
considerably during the summer months and decrease significantly during the winter
period.
Production policy: A firm marked by pronounced seasonal fluctuation in its sales may
pursue a production policy, which may reduce the sharp variations in the working capital
requirements.
Market Conditions: The degree of competition prevailing in the market place has an
important bearing on the working capital needs. When competition is high, a larger
inventory of finished goods may be required to be maintained to serve the customers
promptly and for extending the generous credit terms.
Conditions of Supply: The stock of inventory of raw materials, spares and store which
is required to be maintained depends on their conditions of supply. If the supply is
prompt and adequate, the firm can manage with small inventory.
Importance Of Working Capital Management

The management of working capital is very important. Excessive levels of current assets can
easily result in a firm realizing a substandard return on investment. However, firms with too few
current assets may incur shortages and difficulties in maintaining smooth operations. Thus, it is
important to ensure proper management of working capital because of the following reasons:
Investment in current assets represents a substantial portion of total investment.
Investment in current assets and the level of current liabilities have to be quickly
adjusted to changes in sales.
Fixed assets cannot generate income unless they are used with the help of working
capital. Therefore, working capital is considered as lifeblood of an enterprise.
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The following are the different approaches:

1.
CONSERVATIVE APPROACH
Short-term Funds
Permanent current assets
Long Term
Funds
Fixed assets
Financing is more dependent on long term sources in financing short assets. There is less risk of
shortage of funds. As the addition to the current assets in the form of extra cash, stock,
receivables will raise the denominator and there will not be any significant rise in the numerator
the ROI will be low in this case.
2. AGGRESSIVE APPROACH
Short
Term
Funds
Fixed assets
Long Term
Funds
Financing is more dependent on short-term sources for some long-term needs and short-term
financing is dominant. There is a very large risk of shortage of funds, leading to liquidity
problems.
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3.
Restrictive or Aggressive Policy: Investments in current assets is low in this case. This
may cause frequent production stoppages, delayed deliveries to customers, and loss of sales.
But ROI will be relatively high in this case.
The optimal level of current assets involves a trade off between costs that rise with
current assets and the costs that fall with current assets. The former is referred to as carrying
costs and the latter as shortage costs. The carrying costs are mainly in nature of the cost of
financing a higher level of current assets. Shortage costs are mainly in the form of disruption
in production schedule, loss of sales, and loss of customer goodwill.
The minimum cost points towards the optimum level of current assets.
Minimum cost
Cost
Cost of Liquidity
Cost of Liquidity
Level of current assets
Optimum level of current assets
The Figure shows the behaviour of the two costs in relation to the level of current assets. CA
denotes the optimal level of current assets as the total costs of carrying and shortage are
minimized at that level. Often the total cost curve is flat around the optimal level.
4. MATCHING APPROACH
Short
Term
Funds
Fixed assets
Long Term
Funds
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Financing is more dependent on long term sources for long term needs and short term for
financing short term needs. There is a small risk of shortage of funds, as exact matching is
difficult in practice.
STRATERGIES:
Several Strategies are available to a firm for financing its capital requirements.
Strategy A: Long term financing is used to meet fixed asset requirement as well as peak working
capital requirement. When the working capital is less than its peak level, the surplus is invested
in liquid assets like cash and marketable securities.
Strategy B: Long term financing is used to meet fixed asset requirements, permanent working
capital requirement, and a portion of fluctuating working capital requirement. During seasonal
upswings, short-term financing is used: during seasonal downswings, surplus is invested in liquid
assets.
Strategy C: Long term financing is used to meet fixed asset requirement and permanent working
capital requirement. Short-term financing is used to meet fluctuating working capital
requirement.
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Q.12
Explain the accounting standards for investments in brief.
Ans
Introduction:
1.
This Statement deals with accounting for investments in the financial statements of
enterprises and related disclosure requirements.
Shares, debentures and other securities held as stock-in-trade (i.e., for sale in the ordinary
course of business) are not investments as defined in this Statement. However, the manner
in which they are accounted for and disclosed in the financial statements is quite similar to
that applicable in respect of current investments. Accordingly, the provisions of this
Statement, to the extent that they relate to current investments, are also applicable to
shares, debentures and other securities held as stock-in-trade, with suitable modifications
as specified in this Statement.
2.
This Statement does not deal with:
a)
the bases for recognition of interest, dividends and rentals earned on
investments which are covered by Accounting Standard 9 on Revenue Recognition;
b)
operating or finance leases;
c)
investments of retirement benefit plans and life insurance enterprises; and
d)
mutual funds and/or the related asset management companies, banks and public
financial institutions formed under a Central or State Government Act or so declared
under the Companies Act, 1956.
Definitions
The following terms are used in this Statement with the meanings assigned:
Investments are assets held by an enterprise for earning income by way of dividends, interest,
and rentals, for capital appreciation, or for other benefits to the investing enterprise. Assets held
as stock-in-trade are not investments.
A current investment is an investment that is by its nature readily realisable and is intended to
be held for not more than one year from the date on which such investment is made.
A long-term investment is an investment other than a current investment.
An investment property is an investment in land or buildings that are not intended to be
occupied substantially for use by, or in the operations of, the investing enterprise.
Fair value is the amount for which an asset could be exchanged between a knowledgeable,
willing buyer and a knowledgeable, willing seller in an arms length transaction. Under
appropriate circumstances, market value or net realisable value provides an evidence of fair
value.
Market value is the amount obtainable from the sale of an investment in an open market, net of
expenses necessarily to be incurred on or before disposal.
Explanation
Forms of Investments
3.
Enterprises hold investments for diverse reasons. For some enterprises, investment
activity is a significant element of operations, and assessment of the performance of the
enterprise may largely, or solely, depend on the reported results of this activity.
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4.
Some investments have no physical existence and are represented merely by

certificates or similar documents (e.g., shares) while others exist in a physical form (e.g.,
buildings). The nature of an investment may be that of a debt, other than a short or long
term loan or a trade debt, representing a monetary amount owing to the holder and usually
bearing interest; alternatively, it may be a stake in the results and net assets of an enterprise
such as an equity share. Most investments represent financial rights, but some are tangible,
such as certain investments in land or buildings.
5.
For some investments, an active market exists from which a market value can be
established. For such investments, market value generally provides the best evidence of fair
value. For other investments, an active market does not exist and other means are used to
determine fair value.
Explanation
Classification of Investments
6.
Enterprises present financial statements that classify fixed assets, investments and
current assets into separate categories. Investments are classified as long term investments
and current investments. Current investments are in the nature of current assets, although
the common practice may be to include them in investments.
7.
Investments other than current investments are classified as long term investments,
even though they may be readily marketable.
Explanation
Cost of Investments
8.
The cost of an investment includes acquisition charges such as brokerage, fees and
duties.
9.
If an investment is acquired, or partly acquired, by the issue of shares or other securities,
the acquisition cost is the fair value of the securities issued (which, in appropriate cases,
may be indicated by the issue price as determined by statutory authorities). The fair value
may not necessarily be equal to the nominal or par value of the securities issued.
10.
If an investment is acquired in exchange, or part exchange, for another asset, the
acquisition cost of the investment is determined by reference to the fair value of the asset
given up. It may be appropriate to consider the fair value of the investment acquired if it is
more clearly evident.
11.
Interest, dividends and rentals receivables in connection with an investment are
generally regarded as income, being the return on the investment. However, in some
circumstances, such inflows represent a recovery of cost and do not form part of income.
For example, when unpaid interest has accrued before the acquisition of an interest-bearing
investment and is therefore included in the price paid for the investment, the subsequent
receipt of interest is allocated between pre-acquisition and post-acquisition periods; the preacquisition portion is deducted from cost. When dividends on equity are declared from preacquisition profits, a similar treatment may apply. If it is difficult to make such an allocation
except on an arbitrary basis, the cost of investment is normally reduced by dividends
receivable only if they clearly represent a recovery of a part of the cost.
12.
When right shares offered are subscribed for, the cost of the right shares is added to the
carrying amount of the original holding. If rights are not subscribed for but are sold in the
market, the sale proceeds are taken to the profit and loss statement. However, where the
investments are acquired on cum-right basis and the market value of investments
immediately after their becoming ex-right is lower than the cost for which they were
acquired, it may be appropriate to apply the sale proceeds of rights to reduce the carrying
amount of such investments to the market value.
Carrying Amount of Investments
Current Investments
13.
The carrying amount for current investments is the lower of cost and fair value. In
respect of investments for which an active market exists, market value generally provides
the best evidence of fair value. The valuation of current investments at lower of cost and fair
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value provides a prudent method of determining the carrying amount to be stated in the
balance sheet.
14.
Valuation of current investments on overall (or global) basis is not considered
appropriate. Sometimes, the concern of an enterprise may be with the value of a category of
related current investments and not with each individual investment, and accordingly the
investments may be carried at the lower of cost and fair value computed categorywise (i.e.
equity shares, preference shares, convertible debentures, etc.). However, the more prudent
and appropriate method is to carry investments individually at the lower of cost and fair
value.
15.
For current investments, any reduction to fair value and any reversals of such reductions
are included in the profit and loss statement.
Carrying Amount of Investments
Long-term Investments
16.
Long-term investments are usually carried at cost. However, when there is a decline,
other than temporary, in the value of a long term investment, the carrying amount is reduced
to recognise the decline. Indicators of the value of an investment are obtained by reference
to its market value, the investees assets and results and the expected cash flows from the
investment. The type and extent of the investors stake in the investee are also taken into
account. Restrictions on distributions by the investee or on disposal by the investor may
affect the value attributed to the investment.
17.
Long-term investments are usually of individual importance to the investing enterprise.
The carrying amount of long-term investments is therefore determined on an individual
investment basis.
18.
Where there is a decline, other than temporary, in the carrying amounts of long term
investments, the resultant reduction in the carrying amount is charged to the profit and loss
statement. The reduction in carrying amount is reversed when there is a rise in the value of
the investment, or if the reasons for the reduction no longer exist.
Investment Properties
19.
The cost of any shares in a co-operative society or a company, the holding of which is
directly related to the right to hold the investment property, is added to the carrying amount
of the investment property.
Disposal of Investments
20.
On disposal of an investment, the difference between the carrying amount and the
disposal proceeds, net of expenses, is recognised in the profit and loss statement.
21.
When disposing of a part of the holding of an individual investment, the carrying amount
to be allocated to that part is to be determined on the basis of the average carrying amount
of the total holding of the investment.
Reclassification of Investments
22.
Where long-term investments are reclassified as current investments, transfers are
made at the lower of cost and carrying amount at the date of transfer.
23.
Where investments are reclassified from current to long-term, transfers are made at the
lower of cost and fair value at the date of transfer.
Disclosure
24. The following disclosures in financial statements in relation to investments are appropriate:
a) the accounting policies for the determination of carrying amount of investments;

b) the amounts included in profit and loss statement for:
i)
interest, dividends (showing separately dividends from subsidiary
companies), and rentals on investments showing separately such income from long term
and current investments. Gross income should be stated, the amount of income tax
deducted at source being included under Advance Taxes Paid;
ii)
profits and losses on disposal of current investments and changes in carrying
amount of such investments;
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iii)
profits and losses on disposal of long term investments and changes in the
carrying amount of such investments;
c) significant restrictions on the right of ownership, realisability of investments or the remittance
of income and proceeds of disposal;
d) the aggregate amount of quoted and unquoted investments, giving the aggregate market
value of quoted investments;
e) other disclosures as specifically required by the relevant statute governing the enterprise .
Q.13
Explain the accounting standards for inventories in brief.
Objective
A primary issue in accounting for inventories is the determination of the
Ans
value at which inventories are carried in the financial statements until

the related revenues are recognised. This Statement deals with the
determination of such value, including the ascertainment of cost of
inventories and any write-down thereof to net realisable value.
Scope
1. This Statement should be applied in accounting for inventories other than:
a)
work in progress arising under construction contracts, including directly related
service contracts (see Accounting Standard (AS) 7, Accounting for Construction Contracts);
b)
work in progress arising in the ordinary course of business of service providers;
c)
shares, debentures and other financial instruments held as stock-in-trade; and
d)
producers inventories of livestock, agricultural and forest products, and mineral
oils, ores and gases to the extent that they are measured at net realisable value in
accordance with well established practices in those industries.
2. The inventories referred to in paragraph 1 (d) are measured at net realisable value at certain
stages of production. This occurs, for example, when agricultural crops have been harvested or
mineral oils, ores and gases have been extracted and sale is assured under a forward contract
or a government guarantee, or when a homogenous market exists and there is a negligible risk
of failure to sell. These inventories are excluded from the scope of this Statement.
Definitions
3. The following terms are used in this Statement with the meanings specified:
Inventories are assets:
a. held for sale in the ordinary course of business;
b. in the process of production for such sale; or
c. in the form of materials or supplies to be consumed in the production process or in the
rendering of services.
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Net realisable value is the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make the sale.
4. Inventories encompass goods purchased and held for resale, for example, merchandise
purchased by a retailer and held for resale, computer software held for resale, or land and
other property held for resale. Inventories also encompass finished goods produced, or work
in progress being produced, by the enterprise and include materials, maintenance supplies,
consumables and loose tools awaiting use in the production process. Inventories do not
include machinery spares which can be used only in connection with an item of fixed asset
and whose use is expected to be irregular; such machinery spares are accounted for in
accordance with Accounting Standard (AS) 10, Accounting for Fixed Assets.
Measurement of Inventories
5. Inventories should be valued at the lower of cost and net realisable value.
Cost of Inventories
6. The cost of inventories should comprise all costs of purchase, costs of conversion and other
costs incurred in bringing the inventories to their present location and condition.
Costs of Purchase
7. The costs of purchase consist of the purchase price including duties and taxes (other than
those subsequently recoverable by the enterprise from the taxing authorities), freight
inwards and other expenditure directly attributable to the acquisition. Trade discounts,
rebates, duty drawbacks and other similar items are deducted in determining the costs of
purchase.
Costs of Conversion
8. The costs of conversion of inventories include costs directly related to the units of
production, such as direct labour. They also include a systematic allocation of fixed and
variable production overheads that are incurred in converting materials into finished goods.
Fixed production overheads are those indirect costs of production that remain relatively
constant regardless of the volume of production, such as depreciation and maintenance of
factory buildings and the cost of factory management and administration. Variable
production overheads are those indirect costs of production that vary directly, or nearly
directly, with the volume of production, such as indirect materials and indirect labour.
9. The allocation of fixed production overheads for the purpose of their inclusion in the costs of
conversion is based on the normal capacity of the production facilities. Normal capacity is
the production expected to be achieved on an average over a number of periods or seasons
under normal circumstances, taking into account the loss of capacity resulting from planned
maintenance. The actual level of production may be used if it approximates normal capacity.
The amount of fixed production overheads allocated to each unit of production is not
increased as a consequence of low production or idle plant. Unallocated overheads are
recognised as an expense in the period in which they are incurred. In periods of abnormally
high production, the amount of fixed production overheads allocated to each unit of
production is decreased so that inventories are not measured above cost. Variable
production overheads are assigned to each unit of production on the basis of the actual use
of the production facilities.
10. A production process may result in more than one product being produced simultaneously.
This is the case, for example, when joint products are produced or when there is a main
product and a by-product. When the costs of conversion of each product are not separately
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identifiable, they are allocated between the products on a rational and consistent basis. The
allocation may be based, for example, on the relative sales value of each product either at
the stage in the production process when the products become separately identifiable, or at
the completion of production. Most by-products as well as scrap or waste materials, by their
nature, are immaterial. When this is the case, they are often measured at net realisable
value and this value is deducted from the cost of the main product. As a result, the carrying
amount of the main product is not materially different from its cost.
Other Costs
11. Other costs are included in the cost of inventories only to the extent that they are incurred in
bringing the inventories to their present location and condition. For example, it may be
appropriate to include overheads other than production overheads or the costs of designing
products for specific customers in the cost of inventories.
12. Interest and other borrowing costs are usually considered as not relating to bringing the
inventories to their present location and condition and are, therefore, usually not included in
the cost of inventories.
Exclusions from the Cost of Inventories

13. In determining the cost of inventories in accordance with paragraph 6, it is appropriate to
exclude certain costs and recognise them as expenses in the period in which they are
incurred. Examples of such costs are:
a. abnormal amounts of wasted materials, labour, or other production costs;
b. storage costs, unless those costs are necessary in the production process prior to a
further production stage;
c. administrative overheads that do not contribute to bringing the inventories to their
present location and condition; and
d. selling and distribution costs.
Cost Formulas
14.
The cost of inventories of items that are not ordinarily interchangeable and goods
or services produced and segregated for specific projects should be assigned by specific
identification of their individual costs.
15.
Specific identification of cost means that specific costs are attributed to identified
items of inventory. This is an appropriate treatment for items that are segregated for a
specific project, regardless of whether they have been purchased or produced. However,
when there are large numbers of items of inventory which are ordinarily interchangeable,
specific identification of costs is inappropriate since, in such circumstances, an enterprise
could obtain predetermined effects on the net profit or loss for the period by selecting a
particular method of ascertaining the items that remain in inventories.
16.
The cost of inventories, other than those dealt with in paragraph 14, should be
assigned by using the first-in, first-out (FIFO), or weighted average cost formula. The
formula used should reflect the fairest possible approximation to the cost incurred in bringing
the items of inventory to their present location and condition.
17.
A variety of cost formulas is used to determine the cost of inventories other than
those for which specific identification of individual costs is appropriate. The formula used in
determining the cost of an item of inventory needs to be selected with a view to providing
the fairest possible approximation to the cost incurred in bringing the item to its present
location and condition. The FIFO formula assumes that the items of inventory which were
purchased or produced first are consumed or sold first, and consequently the items
remaining in inventory at the end of the period are those most recently purchased or
produced. Under the weighted average cost formula, the cost of each item is determined
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from the weighted average of the cost of similar items at the beginning of a period and the
cost of similar items purchased or produced during the period. The average may be
calculated on a periodic basis, or as each additional shipment is received, depending upon
the circumstances of the enterprise.
Techniques for the Measurement of Cost

18.
Techniques for the measurement of the cost of inventories, such as the standard
cost method or the retail method, may be used for convenience if the results approximate
the actual cost. Standard costs take into account normal levels of consumption of materials
and supplies, labour, efficiency and capacity utilisation. They are regularly reviewed and, if
necessary, revised in the light of current conditions.
19.
The retail method is often used in the retail trade for measuring inventories of
large numbers of rapidly changing items that have similar margins and for which it is
impracticable to use other costing methods. The cost of the inventory is determined by
reducing from the sales value of the inventory the appropriate percentage gross margin. The
percentage used takes into consideration inventory which has been marked down to below
its original selling price. An average percentage for each retail department is often used.
Net Realisable Value

20.
The cost of inventories may not be recoverable if those inventories are damaged,
if they have become wholly or partially obsolete, or if their selling prices have declined. The
cost of inventories may also not be recoverable if the estimated costs of completion or the
estimated costs necessary to make the sale have increased. The practice of writing down
inventories below cost to net realisable value is consistent with the view that assets should
not be carried in excess of amounts expected to be realised from their sale or use.
21.
Inventories are usually written down to net realisable value on an item-by-item
basis. In some circumstances, however, it may be appropriate to group similar or related
items. This may be the case with items of inventory relating to the same product line that
have similar purposes or end uses and are produced and marketed in the same
geographical area and cannot be practicably evaluated separately from other items in that
product line. It is not appropriate to write down inventories based on a classification of
inventory, for example, finished goods, or all the inventories in a particular business
segment.
22.
Estimates of net realisable value are based on the most reliable evidence
available at the time the estimates are made as to the amount the inventories are expected
to realise. These estimates take into consideration fluctuations of price or cost directly
relating to events occurring after the balance sheet date to the extent that such events
confirm the conditions existing at the balance sheet date.
23.
Estimates of net realisable value also take into consideration the purpose for
which the inventory is held. For example, the net realisable value of the quantity of inventory
held to satisfy firm sales or service contracts is based on the contract price. If the sales
contracts are for less than the inventory quantities held, the net realisable value of the
excess inventory is based on general selling prices. Contingent losses on firm sales
contracts in excess of inventory quantities held and contingent losses on firm purchase
contracts are dealt with in accordance with the principles enunciated in Accounting Standard
(AS) 4, Contingencies and Events Occurring After the Balance Sheet Date.
24.
Materials and other supplies held for use in the production of inventories are not
written down below cost if the finished products in which they will be incorporated are
expected to be sold at or above cost. However, when there has been a decline in the price
of materials and it is estimated that the cost of the finished products will exceed net
realisable value, the materials are written down to net realisable value. In such
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circumstances, the replacement cost of the materials may be the best available measure of
their net realisable value.
25.
An assessment is made of net realisable value as at each balance sheet date.
Disclosure
26.
The financial statements should disclose:

a. the accounting policies adopted in measuring inventories, including the cost formula
used; and
b. he total carrying amount of inventories and its classification appropriate to the enterprise.
27.
Information about the carrying amounts held in different classifications of

inventories and the extent of the changes in these assets is useful to financial statement
users. Common classifications of inventories are raw materials and components , work in
progress, finished goods, stores and spares, and loose tools.
Q.14 Explain the concept of Human Resources Accounting.

Ans Human Resource Accounting (HRA):
HRA as an approach was originally defined as the process of identifying, measuring and
communicating information about human resources in order to facilitate effective management
within an organisation. It is an extension of the accounting principles of matching costs and
revenues and of organizing data to communicate relevant information in financial terms.
The accounting of human resources can be seen as just as much a question of philosophy as of
technique. This is one of the reasons behind the variety of approaches. It is further underlined
by the broad range of purposes for which accounting human resources can be used. For
example, it can be used as an information tool for internal and/or external use (employees,
customers, investors, etc.) and as a decision-making tool for human resource management.
The reasons for developing HRA methods can be summarized in the following six points:
Inadequacy of traditional balance sheets in providing sufficient information on

enterprise performance,
Measuring problems deriving from the valuation of human resources,
Redistribution of social responsibilities between the public and private sectors,
Security versus flexibility in employment,
Improved human resource management,
Formal learning versus in-firm competency acquirement.
Strategic Finance
The Policy Dimension
The focus on HRA in enterprises has lead to a growing interest by stakeholders who have started
to identify and formulate their positions. The main stakeholders, such as the enterprises,
investors, employees, trade unions and governments, are therefore gradually becoming aware of
the potential of HRA, albeit from different perspectives.
The basic questions in this perspective are:
Should HRA be mandatory for enterprises alongside financial statements, i.e. should law
and/or social partner agreements regulate HRA?
If mandatory, what kind of information should be included in such statements?
If voluntary, how to secure the interests of, say the employees, at enterprise level?
If, and this is still a big if, the public sector, nationally or internationally, decides to promote HRA,
three ways forward can be identified:
The voluntary market-based method i.e. develop a consistent framework which can be
operational across sectors and countries and promote this through a rewarding and image
campaign,
The voluntary rewarding method, i.e. develop a consistent framework supported by

rewarding mechanisms once it is introduced and approved at enterprise level,
The compulsory method i.e. identify disclosure of human resources as a societal

concern and prepare international regulations.
HRA is not a new issue in economics. Economists consider human capital as a production
factor, and they explore different ways of measuring its investment in education, health and
other areas. Accountants have recognized the value of human assets for at least 70 years.
Research into true human resource accounting began in the 1960s.
Performance Ratios/Indicators for HRM

What data might we use when accounting for human assets?
FTEs Full time equivalent staff

Headcount (H) e.g. total FTEs at month end
Revenues(R) total operating income (total sales)
Expenses (E)- Operating expenditure exac. Tax, interest and extraordinary items
Profit-R Less E
Cash Like rewards (C)- emoluments: salaries, wages, overtime, bonuses, commissions,
including NI contributions.
Benefits (B) other rewards which may or may not be taxed as benefit in kind cars,
pensions, company loans etc.
Staffing Performance Indicators

Internal:
1.
Sales per employee indicates general employee productivity. Compare SPE this year
over last year and with SPEs of rival organisations. Their turnover may be smaller but they
may have a better SPE.
SPE = R/H
H may increase if the business expands. Was the growth was worth it
(SPE)?
2.
Recover Rate Aggregate compensation and benefits then divide by revenue. LRR
compares staffing costs with revenues delivered. Are we obtaining better or worse returns
on each RR of staff expenditure? A decreasing RR is desirable.
Strategic Finance
RR = (C+B)/R
Unravelling influences on RR can be difficult e.g. is it the staff

turnover or a new marketing approach or manufacturing plant? The
impact on additional investment should show through in RR later
revenue increases whilst staffing costs fall.
3.
Utilisation % - can be applied e.g. to a consultancy company or school whose main

business is allocating or selling the time of its staff. We assume that an increase in U% is
desirable is this always the case?
U%= R/(C+B)
R (revenue) can be substituted by another measurable output e.g. wagons delivered, dustbins
emptied, examination results (points). Calculation must include staff costs of the whole
business unit direct and support staff.
External:
4.
Profit per Head like RoCE, shareholders and business analysts may use profit per head
or profit before tax per head to focus on employee related costs and returns.
PpH= P/H
A firms PpH rating may highlight under-achievement and profit

potential when compared to industry competitors. Corporate preditors
may be attracted.
5.
Compensation per Re. Profit. This evaluates profit against cost/employee rather than
headcount. Interpretation can be difficult. CpP can swing with profits e.g. where there are
close links between profits and staff compensation (profit related bonuses).
CpP= (C+B)/P
CpP is negative where a firm is making a loss. What if CpP is a small positive number and
CpP a small negative number? CpP may indicate that better management could improve
cost-effectiveness or controls.
6.
Personnel services expenses (PSE). What are the total operating expenses of the
personnel/HRM section.
7.
Personal Services Headcount (PSH) total FTE for the personal/HR section in the
calculation period.
8.
Personal Service Cost %. (PSC) Divide PSE by total operating expenses (E) to identify
rends and to influence budgeting processes.
PSC =PSE/E
Q.15 What are the various models and theories for valuation of shares and goodwill?
Ans Theories for valuation of Shares:
a) Value of assets: In this approach the focus for the valuation of the shares will be on the
assets. The net value of the assets, i.e. the value of the assets less the liabilities will be
used. For computation of valuation of shares, the total value of all the assets will be divided
by the total number of shares.
But in this approach,
i)
Non trading assets should be included
ii)
If the company is having outstanding preference shares, their value should be
deducted to calculate the net asset available to the equity shareholders.
iii)
There may a lot of intangible assets in the balance sheet like preliminary
expenses, deferred revenue expenditure, discount on issue of shares/debenture etc.
These should normally be excluded from the value of total assets.
Strategic Finance
This approach has certain limitations.
Firstly the book value of the assets is directly dependent on the accounting policies followed by
the company. This is more so in the area of booking depreciation, methods of provisioning
adopted by the company, and valuation of inventory.
Second, in the valuation of intangible assets, there are no standard procedures. This is for
intangible assets like goodwill, patents etc.
b) Realizable or liquidation of value:
To overcome some of the limitations in the book value approach, here

the value of assets is taken to be the market value. Thus the value
chosen is the one which can be had by selling the assets. It is also
known as the liquidation value. This may be estimated for the
company as whole, as it would be misleading or even irrelevant to
look at individual assets. The value would be equivalent to estimated
net amount that will be received by sale of assets less liabilities.
The method is as follows
Net Estimated value of assets = Estimated market value of assets Liabilities
Value of the share = Net Estimated value of assets/ Number of Equity shares
c) Replacement or reproduction value:
In this approach, we move away from both the book value as well as
the market value. Instead, we focus on the assumption that if the
assets were to be replaced or reproduced all over again, what will be
the value required. Thus the value of assets is taken to be on the basis
of replacement cost rather than historical cost and market value. This
replacement cost is estimated by competent authorities, like chartered
engineers, other competent authorities. Again, there is and most likely
a possibility that the replacement value may differ from authority to
authority depending on the process, competency in valuing all the
assets, person related factors and the assumptions that they make.
The method is as follows
Net Replacement value of assets = Estimated replacement value of assets Liabilities
Value of the share = Net replacement value of assets/Number of equity shares
Some of the limitations:
First- replacement value of certain assets that are no longer available, or of an older
technology may not be possible.
Second- estimating impact of depreciation on the replacement cost is difficult.
d) Yield/Earnings Approach: This approach assumes that the investors are interested in the
income an investment would generate in the future. Often past earnings and income also
have a bearing on the expected income in the future. Then the priced- i.e. the valuation of
the share that they are prepared to pay depends upon the dividends, which they are
expected to earn.
Strategic Finance
As such the value of share is calculated as:

Price = Rate of dividend x paid up value of share/ Normal rate of return
VALUATION OF GOODWILL
Goodwill is the value or the amount of reputation/standing/credibility of the business in respect
of additional profit expected in future over and above the normal level of profit earned by a
company normally in the same class of business.
i)
Super Profit Approach: In this approach, the future expected profits of the
company are compared with normal profits, had their not been goodwill. There would some
adjustments to be made for known factors affecting the profitability. Normal profit indicates
the profit, which would have been earned by an average firm without goodwill. Normal
profits can be calculated by multiplying the average capital employed by the average rate of
return. The difference between future expected profit and normal profit is in the form of
super profits, which is the measure of extra profits earned by the firm due to goodwill.
Goodwill is calculated by multiplying the super profit by the certain number of years. The
number of years to be taken into account would differ from investor to investor, from
company to company and also would differ from industry to industry. It is a highly
judgmental. Normally 3 to 5 years are considered.
ii)
Capitalisation Method: Total value of the business is calculated using the actual
average profits after taking into account all factors based on normal expectation. The value
of the goodwill is the difference between capitalized value and the net assets of the
business.
Strategic Finance
Match The Following
Question 3
Exit cost
Historical costs
Substitution cost
Opportunity cost
Match The Following

Question 18
Information or signalling
hypothesis
Dividend or Personal Taxation
Hypothesis
Leverage hypothesis
Wealth transfer among
shareholders
Match The Following

Question 10
Diversification
Horizontal mergers
Vertical mergers
Correct Answer
Your Answer
Lost efficiency prior to separation,

Job vacancy cost during the new
search & termination pay.
Sacrifice necessary to hire & train
people
Exit costs of the leaving employee
& recruiting & training of the
replacement
An asset value when they are the
target of an alternative use.
Sacrifice necessary to hire & train

people
Correct Answer
Your Answer
Management believes that the

common stock of the company is
undervalued
Cash dividends are taxable at
ordinary tax rates
Puts the market on notice to make

a takeover bid a success
Easy to determine this cost

Exit costs of the leaving employee
replacement
An asset value when they are the
The largest portion of wealth effect

goes to the non - tendering
shareholders
Stock repurchases increases the Capital gains are taxed at same
debt / equity ratio
rate as cash dividend
The largest portion of wealth
Stock repurchases increases the
effect goes to the non - tendering debt / equity ratio
shareholders
Correct Answer
Your Answer
Growth through the

Growth through the combination
combination of firms in
of firms in unrelated fields of
business
2 Firms operate & compete in a 2 Firms operate & compete in a
similar kind of business
Firms in different stages of
production
production
Different or unrelated business Different or unrelated business
activity
activity
Match The Following

Question 28
Correct Answer
Your Answer
Segment liabilities
Segment revenue
Enterprise revenue
Cash flows
Segment result
Liquidity
Segment assets
Enterprise assets
Enterprise assets
Strategic Finance
Match The Following
Question 9
Mechanisms
Inputs
Controls
Outputs
Match The Following

Question 23
Availability of funds in the
market
Flexibility
Time
Match The Following

Question 3
Exit cost
Historical costs
Substitution cost
Opportunity cost
Match The Following

Question 18
hypothesis
Hypothesis
Leverage hypothesis
Correct Answer
Your Answer
Performs or provides energy to

an activity
Information or material used to
produce the output of an
activity
Information or material that
constrains an activity
Information or material
produced by an activity

an activity
Correct Answer
Your Answer
Cannot be acted upon or altered

to produce the output
Cost of funds depends on this

factor
The extent & the ease with
which the funds can be raised
& paid back are very important
Takes less time to take an
overdraft from the bank

Raise the funds through the
source available at a particular
time
which the funds can be raised &
paid back are very important
If a company has a good
creditworthiness it is not difficult creditworthiness it is not difficult
to raise short term funds
Correct Answer
Your Answer
Lost efficiency prior to

separation, Job vacancy cost
during the new search &
termination pay.
Sacrifice necessary to hire &
train people
Exit costs of the leaving
employee & recruiting &
training of the replacement
An asset value when they are
the target of an alternative use.
Sacrifice necessary to hire &

train people
Correct Answer
Your Answer

common stock of the company
is undervalued
ordinary tax rates
Puts the market on notice to

make a takeover bid a success
Stock repurchases increases

the debt / equity ratio
Easy to determine this cost

Exit costs of the leaving
employee & recruiting & training
of the replacement
An asset value when they are
the target of an alternative use.

effect goes to the non tendering shareholders
Capital gains are taxed at same
rate as cash dividend
Strategic Finance
shareholders
Match The Following

Question 10
Diversification
Horizontal mergers
Vertical mergers

effect goes to the non tendering shareholders

debt / equity ratio
Correct Answer
Your Answer
Growth through the

combination of firms in
business
2 Firms operate & compete in a 2 Firms operate & compete in a
production
production
Different or unrelated business Different or unrelated business
activity
activity
Match The Following

Question 28
Correct Answer
Your Answer
Segment liabilities
Segment revenue
Enterprise revenue
Cash flows
Segment result
Liquidity
Segment assets
Enterprise assets
Enterprise assets
Match The Following

Question 9
Correct Answer
Your Answer

an activity
produce the output of an
activity
Information or material
produced by an activity

an activity
Correct Answer
Your Answer
Mechanisms
Inputs
Controls
Outputs
Match The Following

Question 23
Availability of funds in the
market
Flexibility
Time

factor
which the funds can be raised
& paid back are very important
Cannot be acted upon or altered

to produce the output

Raise the funds through the
source available at a particular
time
which the funds can be raised &
paid back are very important
creditworthiness it is not difficult creditworthiness it is not difficult
Strategic Finance
Match The Following

Question
Correct Answer
Your Answer
Free cash flow theory
Enormous conflicts of interest

between Stakeholders and
shareholders
Net income approach
Cost of debt & equity do not
change with a change in
leverage ratio
Net operating income approach The overall capitalization rate
remains constant for all levels
of financial leverages
weighted average cost of
capital does not change with a
change in the proportion of
debt to equity in the capital
structure
Match The Following
Question
Unsecured loans
Line of credit
Revolving credit agreements
Transaction loan
Match The Following

Question
Opportunity cost
Exit cost
Historical costs
Substitution cost
Match The Following

shareholders
change with a change in
leverage ratio
The overall capitalization rate
remains constant for all levels of
financial leverages
weighted average cost of capital
does not change with a change
in the proportion of debt to
Correct Answer
Your Answer
Form of debt not backed by the

pledge of specific assets
Does not constitute any legal
commitments on the part of the
bank
While the commitment is in
force the bank must extend
credit whenever the borrower
wishes to borrow
The cash flow ability of the
borrower to pay the loan is
usually of paramount
importance

bank
While the commitment is in force
the bank must extend credit
whenever the borrower wishes
to borrow
borrower to pay the loan is
usually of paramount importance
Correct Answer
Your Answer
An asset value when they are the Lost efficiency prior to separation,
Lost efficiency prior to separation, Exit costs of the leaving employee
Job vacancy cost during the new & recruiting & training of the
replacement
Sacrifice necessary to hire & train An asset value when they are the
people
Exit costs of the leaving employee Sacrifice necessary to hire & train
people
replacement
Strategic Finance
Question
Correct Answer
Your Answer
Earning per share
Acquisition is considered to be a
function of the impact of the
merger on the EPS
Divide net worth by the number of
equity shares outstanding

Book value
Appraisal value
Market value
Match The Following

Question
Articles of Association
Board of Directors
Provides a list of the

reasonableness of results
obtained through methods base
upon the going concern concept
Indicate the consensus of the
investors
Your Answer
Not to exceed 25 % of the total

paid up capital
Match The Following

Question
Correct Answer
Lien
Hypothecation
Pledge
Match The Following

Question
Date company mails the dividend
warrants
Date of announcement of new
dividend
Dividend payment made to
members on a particular date
Date from which stocks begin to
trade without the right to receive
the dividend declared
Match The Following
Decide if the acquisition is

attractive on the basis if NPV
Correct Answer
Resolution permitting the buy

back of shares
Fully paid up
Mortgage
function of the impact of the merger
on the EPS
Evaluate the impact of the merger
on EPS & price - earning ratio

paid up capital
The ratio of debt to total capital &
free reserves should be 1 : 1
Resolution permitting the buy back
of shares
Your Answer
Pertains to immovable properties Duty of the bank to take care of

movable goods
The bank has a right to retain the The bank has a right to retain the
goods belonging to the company goods belonging to the company
until the debts due to the bank are until the debts due to the bank are
paid
paid
A charge against property for an A lender does not keep track of
amount of debt
individual accounts
Duty of the bank to take care of
Have high costs of processing the
movable goods
collateral & risk of fraud
Correct Answer
Your Answer
Payment date
Payment date
Declaration date
Declaration date
Record date
Record date
Ex - dividend date
Ex - dividend date
Strategic Finance
Question
Correct Answer
Your Answer
Date company mails the dividend

warrants
Date of announcement of new
dividend
Dividend payment made to
members on a particular date
Date from which stocks begin to
trade without the right to receive
the dividend declared
Payment date
Record date
Declaration date
Declaration date
Record date
Payment date
Ex - dividend date
Ex - dividend date
Correct Answer
Your Answer
Match The Following

Question
Availability of funds in the market Cost of funds depends on this

factor
factor
Flexibility
The extent & the ease with which The extent & the ease with which
the funds can be raised & paid
back are very important
Time
from the bank
creditworthiness it is not difficult to creditworthiness it is not difficult to
Match The Following
Question
Correct Answer
Your Answer

Raise the funds through the source
factor
available at a particular time
Flexibility
Time
from the bank
creditworthiness it is not difficult to factor
Match The Following
Question
Bill of activities
Performance measures
Output measures
Cost objects
Match The Following

Question
Correct Answer
Your Answer
Highlights the cost structure &

gives better clarity
Have both qualitative and
quantitative measures
Need for proper management and
control
Mostly product, but at times,
services or customers
Highlights the cost structure &

gives better clarity
Have both qualitative and
quantitative measures
Mostly product, but at times,
services or customers
Need for proper management and
control
Correct Answer
Your Answer
Strategic Finance
Net income approach
Net operating income approach
Match The Following

Question
Mechanisms
Inputs
Controls
Outputs
Match The Following

Question
Net income approach

Match The Following

Question
Earning per share
Book value
Appraisal value

shareholders
change with a change in leverage
ratio
financial leverages
does not change with a change in
the proportion of debt to equity in

shareholders
ratio
financial leverages
Correct Answer
Your Answer

activity
Information or material produced
by an activity

activity
Information or material produced by
an activity
Correct Answer
Your Answer

shareholders
ratio
Firms have preferences by

choosing a way to finance their
projects
remains constant for all levels of remains constant for all levels of
financial leverages
financial leverages
weighted average cost of capital Cost of debt & equity do not
does not change with a change in change with a change in leverage
the proportion of debt to equity in ratio
Correct Answer
Your Answer
merger on the EPS

investors
Strategic Finance
Market value
Match The Following

Question
Board of Directors

investors

reasonableness of results obtained
through methods base upon the
going concern concept
Correct Answer
Your Answer

paid up capital

paid up capital
of shares

back of shares
Fully paid up
Match The Following

Question
Correct Answer
Trust receipt
Floating lien
Chattel mortgage
Match The Following

Question
Net income approach
Match The Following

Question
Mechanisms
Inputs
Fully paid up
Your Answer
Specifically identified by serial

Inventory is stored with a public or Inventory is stored with a public or
terminal warehousing company
Loose arrangement as the lender Well suited for financial good
may find it difficult to police
inventories of capital goods
Well suited for financial good
Affords a higher degree of control
over the collateral
Correct Answer
Your Answer

shareholders
ratio
financial leverages

shareholders
ratio
financial leverages
Correct Answer
Your Answer

activity

activity
Strategic Finance
Controls
Outputs
Match The Following

Question
Net income approach

Match The Following

Question
Earning per share
Book value
Appraisal value
Market value
Match The Following

Question
Board of Directors

by an activity

an activity
Correct Answer
Your Answer

shareholders
ratio

projects
remains constant for all levels of remains constant for all levels of
financial leverages
financial leverages
weighted average cost of capital Cost of debt & equity do not
does not change with a change in change with a change in leverage
the proportion of debt to equity in ratio
Correct Answer
Your Answer
merger on the EPS
investors

Correct Answer
Your Answer

paid up capital

paid up capital
of shares

back of shares
Fully paid up
Match The Following

Question
Correct Answer

investors
reasonableness of results obtained
through methods base upon the
going concern concept
Fully paid up
Your Answer
Strategic Finance
Trust receipt
Floating lien
Chattel mortgage
Match The Following

Question
Floating lien
Chattel mortgage
Trust receipt
Match The Following

Question

Loose arrangement as the lender Well suited for financial good
Affords a higher degree of control
over the collateral
Correct Answer
Your Answer

Loose arrangement as the lender Loose arrangement as the lender
Correct Answer
Your Answer

paid up capital
Fully paid up

back of shares
Fully paid up

of shares
paid up capital
Match The Following

Question
Correct Answer
Your Answer

business
2 Firms operate & compete in a
production
Different or unrelated business
activity

activity
Correct Answer
Your Answer

shareholders

shareholders

Board of Directors
Diversification
Horizontal mergers
Vertical mergers
Match The Following

Question
Net income approach

production
Growth through the combination of
firms in unrelated fields of business
Strategic Finance

Match The Following

Question
AS 4
AS 21

financial leverages

financial leverages
Correct Answer
Your Answer
Accounting for investments in

Accounting for investments in
associates in consolidated
associates in consolidated financial
financial statements
statements
Consolidated financial
Consolidated financial statements
statements
Match The Following

Question
Unsecured loans
Line of credit
Revolving credit agreements
Transaction loan
Match The Following

Question
Net income approach
ratio
Contingencies & events occurring Contingencies & events occurring

after the balance sheet date
after the balance sheet date
Accounting for investments
Accounting for investments
AS 13
AS 23
ratio
Correct Answer
Your Answer

bank
whenever the borrower wishes to
borrow
borrower to pay the loan is usually
of paramount importance

bank
whenever the borrower wishes to
borrow
The cash flow ability of the borrower
to pay the loan is usually of
paramount importance
Correct Answer
Your Answer

shareholders
ratio
financial leverages
Many groups of non - investor

stakeholders have an interest in the
firm
shareholders
projects
ratio
Strategic Finance
Match The Following

Question
Correct Answer
Your Answer

Different costs are involved
factor
Flexibility
Time
from the bank
Match The Following
Question
Correct Answer
Your Answer
No fundamental basis.
No effect on valuation
Unlisted shares on stock

exchange
Manipulation of stock markets
Valuation by various people on

information available
Valuation by various people on

information available
Match The Following

Question
Correct Answer
Your Answer
PpH =
P/H
(C+B)/P
SPE =
R/H
(C + B ) / R
RR =
(C + B ) / R
P/H
U%=
R/(C+B)
R/(C+B)
Match The Following

Question
Correct Answer
Your Answer
Opportunity cost
Exit cost
Historical costs
Substitution cost
Match The Following
An asset value when they are the Lost efficiency prior to separation,
Lost efficiency prior to separation, Exit costs of the leaving employee
Job vacancy cost during the new & recruiting & training of the
replacement
Sacrifice necessary to hire & train An asset value when they are the
people
Exit costs of the leaving employee Sacrifice necessary to hire & train
people
replacement
Strategic Finance
Question
Correct Answer
Your Answer
Earning per share
merger on the EPS

Book value
Appraisal value
Market value
Match The Following

Question
Board of Directors

investors
Your Answer

paid up capital
Match The Following

Question
Correct Answer
Lien
Hypothecation
Pledge
Match The Following

Question
Decide if the acquisition is

attractive on the basis if NPV
Correct Answer

back of shares
Fully paid up
Mortgage
function of the impact of the merger
on the EPS

paid up capital
of shares
Your Answer
Pertains to immovable properties Duty of the bank to take care of

movable goods
The bank has a right to retain the The bank has a right to retain the
goods belonging to the company goods belonging to the company
until the debts due to the bank are until the debts due to the bank are
paid
paid
A charge against property for an A lender does not keep track of
amount of debt
individual accounts
Have high costs of processing the
movable goods
collateral & risk of fraud
Correct Answer
Your Answer

factor
factor
Flexibility
Time
from the bank
Strategic Finance
Match The Following
Question
Diversification
Horizontal mergers
Vertical mergers
Match The Following

Question
Correct Answer
Your Answer

business
production
activity

Correct Answer
Your Answer
Combined firm is more valuable

than the sum of individual firms
production
activity

factor
factor
Flexibility
Time
from the bank
Match The Following
Question
Diversification
Horizontal mergers
Vertical mergers
Match The Following

Question
Mechanisms
Inputs
Controls
Outputs
Match The Following

Question
Correct Answer
Your Answer

business
production
activity

Correct Answer
Your Answer

activity
by an activity

activity
an activity
Correct Answer
Your Answer
Combined firm is more valuable

than the sum of individual firms
production
activity
Strategic Finance
Lien
Mortgage
The bank has a right to retain the

goods belonging to the company
until the debts due to the bank are
paid
A charge against property for an
amount of debt
movable goods
Pertains to immovable properties

paid
amount of debt
movable goods
Match The Following

Question
Correct Answer
Your Answer

activity
by an activity

activity
an activity
Correct Answer
Your Answer
Mortgage

paid
amount of debt
movable goods

paid
amount of debt
movable goods
Match The Following

Question
Correct Answer
Your Answer

undervalued
ordinary tax rates
debt / equity ratio
effect goes to the non - tendering
shareholders

undervalued
ordinary tax rates
debt / equity ratio
The largest portion of wealth effect
goes to the non - tendering
shareholders
Correct Answer
Your Answer
Hypothecation
Pledge
Mechanisms
Inputs
Controls
Outputs
Match The Following

Question
Lien
Hypothecation
Pledge
hypothesis
Hypothesis
Leverage hypothesis
shareholders
Match The Following

Question
Strategic Finance
Board of Directors

paid up capital

paid up capital

back of shares
Fully paid up
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Question
Correct Answer
Your Answer

business
production
activity

activity
Correct Answer
Your Answer

shareholders
ratio
financial leverages

shareholders
ratio
financial leverages
Diversification
Horizontal mergers
Vertical mergers
Match The Following

Question
Net income approach

of shares

production
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Question Correct Answer Your Answer
Comparative analysis is historical analysis historical analysis
Benchmarking is competitive analysis competitive analysis
Michael Hammer & James Chapy Reengineering Reengineering
GDP stands for gross domestic product gross domestic progress
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Question Correct Answer Your Answer
Ansoff S.M. is the systematic approach to position and relate firm to its environment. S.M. is the
systematic approach to position and relate firm to its environment.
Strategic Finance
Sharplin S.M. is the formulation & implementation of plans related to total organization. S.M. is the
formulation & implementation of plans related to total organization.
Glueck S.M. is a stream of decisions & actions S.M. is a stream of decisions & actions
Hofer S.M. is the process, which deals with organizational renewal & growth. S.M. is the process, which
deals with organizational renewal & growth.
Match The Following
Question
Correct Answer
Your Answer
Marketing a product
Mass segmentation
Mass segmentation
Environmental Analysis
Social, Political, legal & technology
Social, Political, legal & technology
Swot Analysis
Matching, converting, minimizing & avoiding strategies
Matching, converting, minimizing & avoiding strategies
Marketing strategy
Life cycle considerations
Product formulated
Match The Following
Question
Correct Answer
Sharplin
S.M. is the formulation & implementation of plans related to total organization.
Glueck
S.M. is a stream of decisions & actions
Hofer
S.M. is the process, which deals with organizational renewal & growth.
Ansoff
S.M. is the systematic approach to position and relate firm to its environment.
Strategic Finance
Strategic Finance
Strategic Finance
Strategic Finance
Strategic Finance
Strategic Finance
Strategic Finance
Strategic Finance
Strategic Finance

Strategic Finance Final

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Strategic Finance

the following groups of restructuring : Expansions, sell offs, corporate control

alternative form of organization

shareholders, would the price of the stock increase : Leverage hypothesis

customer relationship, advertising

same kind of securities within a period of 6 months

conveys to the market

an individual product or service or a group of related products or services : True

does not hold true

at which inventories are called out

appropriate discount rate for the firm keeps on changing : True

payments are determined

various important factors like Type of asset

based on various factors including experience with similar type of assets.

influence on accounting numbers, dividend policy has no influence on accounting numbers

decentralized collection centres : True

negotiated purchase, what is it referred as : Greenfield

leverage present in the firm : Arbitrage

judgment by management in the light of technical, accounting and Legal requirements

Accured liabilities, Customer advances

per head : Shareholders and business analysts

volatility in the dividends will match the volatility in earnings

changes follow shifts in the long run sustainable earnings

internal resources of a firm are fluctuating because of unpredictable fluctuations of profitability

Planning, Searching and screening, Financial evaluation

steps involved in costing of raw materials, products and services : True

Shares, Debentures, Bonds

a cheap source of raw material : Vertical merger

value in merger : Stock market quotations

operations at the same time, no different perceptions

the corporate taxes are

company can save tax : True

improve : Financial synergy theory

year, is called current investment

depreciation in respect of past years

not always so well appreciated : True

Revenues = total operating income

Expenses = operating expenditure excluding

Profit = R less E= Revenue less

Cash less rewards = emoluments, salaries

which of the following are the methods of share buyback? Repurchase

the tender offer is used primarily for large equity repurchases.

the management of a business selects the most appropriate method of

the portions of organisations not involved in the project have a little

according to the net income approach, capital structure is relevant to the

according to Modigliani- Miller Theorem, in asymmetric information costs,

in case of a company which has branches at different places, the company

if there is any suspicion or fear, the data becomes questionable.

some of the most difficult portions of cost are: to capture; to distribute;

the activity based accounting analysis provides a meaningful appraisal of

A reconciliation between total of minimum lease payments = balance sheet

Contingent rents = income statement of profit and

description of lessees leasing arrangements including but not limited to =

which of these costs are considered as overhead costs? Electricity; wages

business and geographical segments of an enterprise for external reporting

according to Walter model of dividend, in case of growth firms, internal rate is

sustainable level; firms may cut dividends in adverse situations;

mergers and acquisitions lead to diseconomies of scale and decrease income

which of the approaches is stated on a perfect market? Modigliani-Miller

according to Gordons dividend capitalization model, market value of a share

segment expense is the aggregate of which of the following? The expenses

according to Modigliani- Miller Theorem, transaction costs keep firm

contingent rents are recognised as income in the statement of profit and

which of these are traceable costs? Personnel costs