McqMate
401. |
Which of the following is not a part of the money market? |
A. | Call money market |
B. | Treasury bill market |
C. | Commercial paper market |
D. | Stock market |
Answer» D. Stock market |
402. |
The objective of financial management is to |
A. | Maximize the revenue |
B. | Minimize the expenses |
C. | Maximize the return on investment |
D. | Maximize the wealth of the owners by increasing the value of the firm |
Answer» D. Maximize the wealth of the owners by increasing the value of the firm |
403. |
Which of the following is the main objective of financial management? |
A. | Revenue Maximisation |
B. | Profit Maximisation |
C. | Wealth Maximisation |
D. | Cost Minimisation |
Answer» C. Wealth Maximisation |
404. |
Which one of the following activities is outside the purview of financing decision in financial management? |
A. | Identification of the source of funds |
B. | Measurement of the cost of funds |
C. | Deciding on the time of raising the funds |
D. | Deciding on the utilization of the funds |
Answer» D. Deciding on the utilization of the funds |
405. |
A firm has a capital of Rs. 10 lakhs, sales of Rs. 5 lakhs, gross profit of Rs. 2 lakhs and expenses of Rs. 1 lakh. The Net Profit Ratio is: |
A. | 50% |
B. | 40% |
C. | 20% |
D. | 10% |
Answer» C. 20% |
406. |
Which of the following forms of equity financing is especially designed for funding High Risk & High Reward projects? |
A. | ADR |
B. | GDR |
C. | FCCB |
D. | Venture Capital |
Answer» D. Venture Capital |
407. |
A process through which loans and other receivables are underwritten and sold in a form of asset is known as: |
A. | Factoring |
B. | Forfeiting |
C. | Securitisation |
D. | Bill Discounting |
Answer» C. Securitisation |
408. |
In Net Profit Ratio, the denominator is: |
A. | Credit Sales |
B. | Net Sales |
C. | Cost of Sales |
D. | Cost of Goods Sold |
Answer» B. Net Sales |
409. |
Current Assets Rs. 20,00,000; Current Liabilities Rs. 10,00,000 and Stock Rs. 2,00,000, then what is liquid ratio? |
A. | 2 times |
B. | 1.8 times |
C. | 1.4 times |
D. | None of these |
Answer» B. 1.8 times |
410. |
Annual credit sales Rs. 4,00,000; Average collection period 45 days (assume 360 days in a year). What is Average debtors? |
A. | Rs. 60,000 |
B. | Rs. 74,000 |
C. | Rs. 50,000 |
D. | Rs. 4,00,000 |
Answer» C. Rs. 50,000 |
411. |
Investment in a project is Rs. 200 lakhs and Net Present Value is Rs. 50 lakhs. Then the amount of inflows is : |
A. | Rs. 150 lakhs |
B. | Rs. 200 lakhs |
C. | Rs. 100 lakhs |
D. | Rs. 250 lakhs |
Answer» D. Rs. 250 lakhs |
412. |
PAT of a company Rs. 100 lakhs and number of equity shares of Rs. 10 each with a capital of Rs. 50 lakhs, then EPS is: |
A. | Rs. 2 |
B. | Rs. 1 |
C. | Rs. 10 |
D. | None of these |
Answer» D. None of these |
413. |
Degree of operating leverage is: |
A. | EBIT / EBT |
B. | Contribution / EBT |
C. | Contribution / EBIT |
D. | None of these |
Answer» C. Contribution / EBIT |
414. |
Cost of goods sold is Rs. 8000 and gross margin is Rs. 5000 then revenue will be |
A. | Rs. 3,000 |
B. | Rs. 5,000 |
C. | Rs. 8,000 |
D. | Rs. 13,000 |
Answer» D. Rs. 13,000 |
415. |
Present value of inflows Rs. 10 lakhs from a project and initial investment is Rs. 7.5 lakhs. The NPV is: |
A. | Rs. 17.5 lakhs |
B. | Rs. 7.5 lakhs |
C. | Rs. 10 Lakhs |
D. | Rs. 2.5 lakhs |
Answer» D. Rs. 2.5 lakhs |
416. |
Cash & Bank Rs. 20,000; Debtors Rs. 2,00,000; Stock Rs. 2,80,000 and Current Liabilities: Creditors Rs. 1,00,000; Bills Payable Rs. 50,000. Then the working capital is: |
A. | Rs. 4,00,000 |
B. | Rs. 3,80,000 |
C. | Rs. 3,50,000 |
D. | Rs. 70,000 |
Answer» C. Rs. 3,50,000 |
417. |
1,00,000; 10% Debentures of Rs. 100 each of company, the interest payable for quarter is: |
A. | Rs. 10,00,000 |
B. | Rs. 2,50,000 |
C. | Rs. 5,00,000 |
D. | None of these |
Answer» B. Rs. 2,50,000 |
418. |
Gross margin is added to cost of sold goods for calculating |
A. | revenues |
B. | selling price |
C. | unit price |
D. | bundle price |
Answer» A. revenues |
419. |
Cash Flow Statement is also known as |
A. | Statement of Changes in Financial Position on Cash basis |
B. | Statement accounting for variation in cash |
C. | Both a and b |
D. | None of the above |
Answer» C. Both a and b |
420. |
Degree of financial leverage of business indicates. |
A. | Total risk |
B. | Operating risk |
C. | Financial risk |
D. | None of these |
Answer» C. Financial risk |
421. |
Which of the following is not a characteristic of GDR? |
A. | Is a negotiable instrument |
B. | Carry voting rights |
C. | Freely tradable in International Market |
D. | Denominated in US Dollars |
Answer» B. Carry voting rights |
422. |
Which of the following is a feature of Factoring? |
A. | Tool of short term borrowing |
B. | Purchase of export bill only |
C. | Used in Export business only |
D. | Done without recourse to the client |
Answer» A. Tool of short term borrowing |
423. |
Which of the following is a Profitability Ratio? |
A. | Proprietary Ratio |
B. | Debt –equity Ratio |
C. | Price Earnings Ratio |
D. | Fixed Asset Ratio |
Answer» C. Price Earnings Ratio |
424. |
GP Margin=20%, GP= Rs. 54000, Sales= |
A. | Rs. 300000 |
B. | Rs. 270000 |
C. | Rs. 280000 |
D. | Rs. 290000 |
Answer» B. Rs. 270000 |
425. |
EBIT= Rs. 1120000, PBT= Rs. 320000, Fixed Costs= Rs. 700000, Operating Leverage = |
A. | 1.625 |
B. | 2.625 |
C. | 6.625 |
D. | 3.625 |
Answer» A. 1.625 |
426. |
Which of the following is not a Source of Fund? |
A. | Issue of Capital |
B. | Issue of Debenture |
C. | Decrease in working capital |
D. | Increase in working capital |
Answer» D. Increase in working capital |
427. |
Determinants of credit policy relates to: |
A. | Credit standards |
B. | Credit terms |
C. | Collection Procedures |
D. | All of the above |
Answer» D. All of the above |
428. |
The following is not a Discounted Cash Flow Technique: |
A. | NPV |
B. | PI |
C. | Accounting of Average rate of return |
D. | IRR |
Answer» C. Accounting of Average rate of return |
429. |
β (Beta) of a security measures its: |
A. | Diversifiable risk |
B. | Financial risk |
C. | Market risk |
D. | None of above |
Answer» C. Market risk |
430. |
Following method is also known as ‘Benefit Cost Ratio.’ |
A. | NPV |
B. | IRR |
C. | ARR |
D. | PI |
Answer» D. PI |
431. |
ROI (Return on Investment) can be decomposed into the following ratios: |
A. | Overall Turnover Ratio and Current Ratio |
B. | Net Profit Ratio and Fixed Assets Turnover |
C. | Working Capital Turnover Ratio and Net Profit Ratio |
D. | Net Profit Ratio and Overall Turnover Ratio |
Answer» D. Net Profit Ratio and Overall Turnover Ratio |
432. |
Which one of the following activities is outside the purview of dividend decision in financial management? |
A. | Identification of the profit after taxes |
B. | Measurement of the cost of funds |
C. | Deciding on the pay-out ratio |
D. | Considering issue of bonus shares to equity shareholders |
Answer» B. Measurement of the cost of funds |
433. |
Which of the following does not help to increase Current Ratio? |
A. | Issue of Debentures to buy Stock |
B. | Issue of Debentures to pay Creditors |
C. | Sale of Investment to pay Creditors |
D. | Avail Bank Overdraft to buy Machine |
Answer» D. Avail Bank Overdraft to buy Machine |
434. |
Which of the following statements is correct? |
A. | A higher Receivable Turnover is not desirable. |
B. | Interest Coverage Ratio depends upon Tax Rate. |
C. | Increase in Net Profit Ratio means increase in Sales |
D. | Lower Debt Equity Ratio means lower Financial Risk |
Answer» D. Lower Debt Equity Ratio means lower Financial Risk |
435. |
“Shareholders Wealth” in a firm is reflected by: |
A. | the number of people employed in the firm |
B. | the book value of the firm’s assets less the book value of its liabilities |
C. | the amount of salary paid to its employees |
D. | the market price per share of the firm |
Answer» D. the market price per share of the firm |
436. |
The excess of Current Assets over Current Liabilities is called: |
A. | Net Current Assets |
B. | Net Working Capital |
C. | Working Capital |
D. | All of the above |
Answer» D. All of the above |
437. |
Profit Maximization is the main objective of business because: |
A. | Profit acts as a measure of efficiency and |
B. | It serves as a protection against risk |
C. | Both |
D. | none |
Answer» C. Both |
438. |
Stock holder’s wealth = ____________ |
A. | No. of shares owned x Current stock price per share |
B. | No. of shares owned x Current stock price per share |
C. | No. of shares owned x Current stock price per share |
D. | none |
Answer» A. No. of shares owned x Current stock price per share |
439. |
Working Capital Management refers to a Trade-off between _____________and Profitability. |
A. | Liquidity |
B. | Risk |
C. | Both of the above |
D. | None of the above |
Answer» C. Both of the above |
440. |
Which one of the following is a medium term source? |
A. | Public Deposits |
B. | Lease Financing |
C. | Euro Debt Issue |
D. | All of the above |
Answer» D. All of the above |
441. |
The lease period in such a contract is less than the useful life of asset. Here we are talking about _______. |
A. | Operating or Service Lease |
B. | Service Lease |
C. | Financial Lease |
D. | None of the above |
Answer» A. Operating or Service Lease |
442. |
Which one is the Benefit(s) of Factoring? |
A. | Better Cash Flows |
B. | Better Assets Management |
C. | Better Working Capital Management |
D. | All of the above |
Answer» D. All of the above |
443. |
Find the present value of Rs. 1,000 receivable 6 years hence if the rate of discount is 10 percent. |
A. | 564.5 |
B. | 554.5 |
C. | 574.5 |
D. | 600 |
Answer» A. 564.5 |
444. |
The term _______means manipulation of accounts in a way so as to conceal vital facts and present the financial statements in a way to show a better position than what it actually is. |
A. | window dressing |
B. | creative accounting |
C. | window accounting |
D. | modified accounting |
Answer» A. window dressing |
445. |
Collateralized borrowing and lending obligation (CBLO) is a discounted instrument available in electronic book entry for the maturity period ranging from __________. |
A. | 1 day to 19 days |
B. | 1 day to 15 days |
C. | 1 day to 30 days |
D. | None of the above |
Answer» A. 1 day to 19 days |
446. |
IPO refers to ____________; the first time a company comes to public to raise money. |
A. | Immediate Public Offer |
B. | Immediate Public Offering |
C. | Initial Public Offer |
D. | Initial Public Offering |
Answer» D. Initial Public Offering |
447. |
SPO refers to ________, the second and subsequent time a company raises money from the public directly. |
A. | Second Public Offering |
B. | Subsequent Public Offering |
C. | Subsequent Public Offer |
D. | Seasonal Public Offering |
Answer» B. Subsequent Public Offering |
448. |
Liquid Liability = Current Liability – Bank Overdraft – ___________ |
A. | Cash Credit |
B. | Trade Credit |
C. | Both of the above |
D. | None of the above |
Answer» A. Cash Credit |
449. |
Ratio analysis is the process of determining and interpreting numerical relationships based on _______. |
A. | Financial values |
B. | Financial statements |
C. | Financial numerical information |
D. | All of the above |
Answer» D. All of the above |
450. |
Ratio analysis is based on __________ measure. |
A. | relative |
B. | absolute |
C. | Both of the above |
D. | None of the above |
Answer» A. relative |
451. |
The persons interested in the analysis of financial statements can be grouped as _________. |
A. | Owners or investors |
B. | Creditors |
C. | Financial executives |
D. | All of the above |
Answer» D. All of the above |
452. |
The term “Operating Profit” means profit before __________________. |
A. | interest |
B. | tax |
C. | interest and tax |
D. | interest or tax |
Answer» C. interest and tax |
453. |
Debt- equity Ratio is an example of ________________. |
A. | Short term solvency Ratio |
B. | Long term solvency Ratio |
C. | Profitability Ratio |
D. | None of the above |
Answer» B. Long term solvency Ratio |
454. |
In Cash Flow Statement, Cash includes________________. |
A. | cash on hand |
B. | demand deposits with banks |
C. | cash on hand and demand deposits with banks |
D. | cash on hand or demand deposits with banks |
Answer» C. cash on hand and demand deposits with banks |
455. |
The treatment of interest and dividends received and paid depends upon the nature of the enterprise. For this purpose, the enterprises are classified as ____________. |
A. | (i) Financial enterprises, and (ii) Operating enterprises |
B. | (i) Financial enterprises, and (ii) Other enterprises |
C. | (i) Financial enterprises, and (ii) Non-Financial enterprises |
D. | (i) Trading enterprises, and (ii) Non - Trading enterprises |
Answer» B. (i) Financial enterprises, and (ii) Other enterprises |
456. |
Cash Flow Statement is _____________ for Income Statement or Funds Flow Statement. |
A. | not a substitute |
B. | a substitute |
C. | depends on situation |
D. | None of the above |
Answer» A. not a substitute |
457. |
Funds Flow Statement reveals the change in _______________ between two Balance Sheet dates. |
A. | Working capital |
B. | Internal capital |
C. | Share capital |
D. | Both (A) & (C) |
Answer» A. Working capital |
458. |
A firm following an aggressive working capital strategy would: |
A. | Hold substantial amount of fixed assets |
B. | Minimize the amount of short term borrowing |
C. | Finance fluctuating assets with long term financing |
D. | Minimize the amount of fund in very liquid assets |
Answer» D. Minimize the amount of fund in very liquid assets |
459. |
Which of the following would be consistent with a conservative approach to financing working capital? |
A. | Financing short-term needs with short-term funds |
B. | Financing short-term needs with long-term debt |
C. | Financing seasonal needs with short-term funds |
D. | Financing some long-term needs with short-term fund |
Answer» B. Financing short-term needs with long-term debt |
460. |
To financial analysts, "net working capital" means the same thing as __________. |
A. | total assets |
B. | fixed assets |
C. | current assets |
D. | current assets minus current liabilities |
Answer» D. current assets minus current liabilities |
461. |
Baumol's Model of Cash Management attempts to: |
A. | Minimise the holding cost |
B. | Minimization of transaction cost |
C. | Minimization of total cost |
D. | Minimization of cash balance |
Answer» C. Minimization of total cost |
462. |
Which of the following is not considered by Miller-Orr Model? |
A. | Variability in cash requirement |
B. | Cost of transaction |
C. | Holding cost |
D. | Total annual requirement of cash |
Answer» D. Total annual requirement of cash |
463. |
A firm is said to be financially unlevered firm if the firm has ………. |
A. | only external equity in its capital structure |
B. | only owner‘s equity in its capital structure |
C. | both external equity and owner‘s equity in its capital structure |
D. | only equity share capital in its capital structure |
Answer» B. only owner‘s equity in its capital structure |
464. |
The term optimal capital structure‘ implies that combination of external equity and internal equity at which ……… |
A. | the overall cost of capital is minimised |
B. | the overall cost of capital is maximised |
C. | the market value of the firm is minimised |
D. | the market value of firm is greater than the overall cost of capital |
Answer» A. the overall cost of capital is minimised |
465. |
Net Income Approach to capital structure decision was proposed by ……. |
A. | J. E. Walter |
B. | M.H. Miller and D.Orr |
C. | E. Solomon |
D. | D. Durand |
Answer» D. D. Durand |
466. |
There is a reciprocal relationship between ………………. |
A. | DOL and DFL |
B. | DOL and margin of safety ratio |
C. | DFL and margin of safety ratio |
D. | DOL and break-even-point |
Answer» B. DOL and margin of safety ratio |
467. |
The genesis of financial risk lies in ……………. |
A. | capital budgeting decision |
B. | capital structure decision |
C. | dividend decision |
D. | liquidity decision |
Answer» B. capital structure decision |
468. |
Financial break-even point is that level of EBIT at which …………. |
A. | EPS > 0 |
B. | EPS < 0 |
C. | EPS = 0 |
D. | EPS > 1 |
Answer» C. EPS = 0 |
469. |
In mutually exclusive projects, projects which are selected for comparison must have |
A. | positive net present value |
B. | negative net present value |
C. | zero net present value |
D. | none of the above |
Answer» A. positive net present value |
470. |
In a single projects situation, results of internal rate of return and net present value lead to |
A. | cash flow decision |
B. | cost decision |
C. | same decisions |
D. | different decisions |
Answer» C. same decisions |
471. |
The discount rate which forces net present values to become zero is classified as |
A. | positive rate of return |
B. | negative rate of return |
C. | external rate of return |
D. | internal rate of return |
Answer» D. internal rate of return |
472. |
A point where profile of net present value crosses horizontal axis at plotted graph indicates project |
A. | costs |
B. | cash flows |
C. | internal rate of return |
D. | external rate of return |
Answer» C. internal rate of return |
473. |
Payback period in which an expected cash flows are discounted with the help of project cost of capital is classified as |
A. | discounted payback period |
B. | discounted rate of return |
C. | discounted cash flows |
D. | discounted project cost |
Answer» A. discounted payback period |
474. |
Number of years forecasted to recover an original investment is classified as |
A. | payback period |
B. | forecasted period |
C. | original period |
D. | investment period |
Answer» A. payback period |
475. |
In proper capital budgeting analysis, we evaluate incremental |
A. | Accounting income |
B. | Cash flow |
C. | Earnings |
D. | Operating profit |
Answer» B. Cash flow |
476. |
The term mutually exclusive investments mean: |
A. | Choose only the best investments |
B. | Selection of one investment precludes the selection of an alternative |
C. | The elite investment opportunities will get chosen |
D. | There are no investment options available |
Answer» B. Selection of one investment precludes the selection of an alternative |
477. |
Which of the following is a Profitability Ratio? |
A. | Proprietary Ratio |
B. | Debt-Equity Ratio |
C. | Price-Earning Ratio |
D. | Fixed Asset Ratio |
Answer» C. Price-Earning Ratio |
478. |
The 'Dividend-Payout Ratio' is equal to |
A. | The Dividend yield plus the capital gains yield |
B. | Dividends per share divided by Earning per Equity Share |
C. | Dividends per share divided by par value per share |
D. | Dividends per share divided by current price per share |
Answer» B. Dividends per share divided by Earning per Equity Share |
479. |
If EBIT = Rs. 1,00,000, Fixed Assets = Rs. 2,00,000, Sales = Rs. 10,00,000 and Variable Cost = Rs. 7,00,000. Then, the Operating Leverage will be |
A. | 2 |
B. | 3 |
C. | 6 |
D. | 4 |
Answer» B. 3 |
480. |
Which of the following is not considered while preparing cash budget? |
A. | Accrual Principal |
B. | Difference in Capital and Revenue items |
C. | Conservation Principle |
D. | All of the above |
Answer» D. All of the above |
481. |
At Indifference level of EBIT, different capitals have: |
A. | same EBIT |
B. | same EPS |
C. | same PAT |
D. | same PBT |
Answer» B. same EPS |
482. |
ABC Analysis is used in |
A. | Inventory Management |
B. | Receivables Management |
C. | Accounting Policies |
D. | Corporate Governance |
Answer» A. Inventory Management |
483. |
Which of the following is not incorporated in Capital Building? |
A. | Tax-Effect |
B. | Time Value of Money |
C. | Required Rate of Return |
D. | Rate of Cash Discount |
Answer» D. Rate of Cash Discount |
484. |
Objective of Financial Management is |
A. | Management of Liquidity |
B. | Maximization of Profit |
C. | Maximization of Shareholders’ Wealth |
D. | Management of Fixed Assets |
Answer» C. Maximization of Shareholders’ Wealth |
485. |
Which of the following variables is not known in Internal Rate of Return? |
A. | Initial Cash Flows |
B. | Discount Rate |
C. | Terminal Inflows |
D. | Life of the Project |
Answer» B. Discount Rate |
486. |
Cost of Capital refers to |
A. | Floatation Cost |
B. | Dividend |
C. | Required Rate of Return |
D. | None of the above |
Answer» C. Required Rate of Return |
487. |
Working Capital Management involves financing and management of |
A. | All Assets |
B. | All Current Assets |
C. | Cash and Bank Balance |
D. | Receivables and Payables |
Answer» B. All Current Assets |
488. |
All listed companies are required to prepare |
A. | Funds Flow statement |
B. | Cash Flow Statement |
C. | Statement of Affairs |
D. | All of the above |
Answer» B. Cash Flow Statement |
489. |
Ratio Analysis can be used to study liquidity, turnover, profitability etc., of a firm. What does Debt-Equity Ratio help to study? |
A. | Solvency |
B. | Liquidity |
C. | Profitability |
D. | Turnover |
Answer» A. Solvency |
490. |
A firm determines the shareholders’ wealth by taking |
A. | the number of people employed in the firm |
B. | the book value of the firm’s assets less the book value of its liabilities |
C. | the amount of salary paid to its employees |
D. | the market price per share of the firm |
Answer» B. the book value of the firm’s assets less the book value of its liabilities |
491. |
Capital Budgeting techniques which considers the time value of money is based on |
A. | Cash Flows of the organization |
B. | Accounting Profit of the organization |
C. | Interest Rate on Borrowings |
D. | Last Dividend Paid |
Answer» A. Cash Flows of the organization |
492. |
Debt Financing is a cheaper source of finance because of |
A. | Time Value of Money |
B. | Rate of Interest |
C. | Tax-deductibility of Interest |
D. | Dividends not Payable to lenders |
Answer» C. Tax-deductibility of Interest |
493. |
What should be the optimum Dividend payout ratio, when r=12% and Ke=10%? |
A. | Zero |
B. | 50% |
C. | 12% |
D. | 100% |
Answer» A. Zero |
494. |
The term Float is used in |
A. | Receivable Management |
B. | Cash Management |
C. | Marketable Management |
D. | Inventory Management |
Answer» B. Cash Management |
495. |
Financial planning is ---------- function of a finance manager |
A. | Executive |
B. | Incidental |
C. | Auxiliary |
D. | None of these |
Answer» A. Executive |
496. |
Profit maximization may lead to better and efficient utilization of the recourses only when there is ----------- |
A. | Monopoly |
B. | Oligopoly |
C. | Perfect competition |
D. | None of these |
Answer» C. Perfect competition |
497. |
During inflationary period the risk free interest rate will be ……………………………. |
A. | Lower |
B. | Does not change |
C. | Higher |
D. | Cannot say |
Answer» C. Higher |
498. |
Implicit cost also called …………………………. |
A. | Marginal cost |
B. | Composite cost |
C. | Opportunity cost |
D. | Average cost |
Answer» C. Opportunity cost |
499. |
After tax cost of debt is equal to (1-t)x |
A. | Ko |
B. | WACC |
C. | Before tax cost of debt |
D. | KE |
Answer» C. Before tax cost of debt |
500. |
Cost of irredeemable preferences share capital is equal to kp=preference dividend divided by |
A. | Total liabilities |
B. | Face value Preference issue |
C. | Total capital |
D. | Net proceeds |
Answer» D. Net proceeds |
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