Fm 1

Multiple Choice Multiple Answer Question The factor may provide the following services to the client Correct Answer

Your Answer

True/False Question Correct Answer Your Answer

True/False Question Correct Answer Your Answer

True/False Question Correct Answer Your Answer

It may undertake the credit analysis of the customers of the client , It will undertake the various book-keeping and accounting activities in relation to the receivables management , It undertakes the responsibility of following up with the customers for the purpose of making the collection from the customer It will undertake the various book-keeping and accounting activities in relation to the receivables management

Liquid assets includes all current assets except Inventories and Prepaid expenses True False

Turnover ratios indicate the efficiency of the organisation to use the various kinds of assets by converting them in the form of Sales True True

The basic limitation of the capital budgeting process lies in this fact that it involves various estimations True True

Multiple Choice Single Answer Question The main function of finance under the traditional approach comprises of Correct Answer Your Answer

Procurement of funds Application of funds

Multiple Choice Single Answer Question Net Working Capital means Correct Answer Your Answer

Current assets less Current liabilities Current assets

True/False Question Correct Answer Your Answer

Internal rate of return is difficult to use , calculate and understand True True

Multiple Choice Multiple Answer Question Disadvantages of Preference shares from shareholders point of view Correct Answer Your Answer

Preference Dividend rate is rather modest , Price fluctuation preference shares is greater than price fluctuation of debentures , Preference shareholders are vulnerable to arbitrary managerial actions Price fluctuation preference shares is greater than price fluctuation of debentures

Multiple Choice Single Answer Question Earnings per share is calculated as Correct Answer Your Answer

( Profit after tax - Preference Dividend ) / No. of equity shares Net Profit after tax / Total shareholders funds

Multiple Choice Multiple Answer Question Proprietory ratio can be calculated as Correct Answer Your Answer

Total Assets / Owners Funds , Fixed Assets / Owners Funds , Current Assets / Owners Funds Fixed Assets / Owners Funds

Multiple Choice Single Answer Question The operating profit of A ltd. after charging interest on debentures and tax is a sum of Rs. 10,000/-. The amount of interest charged is Rs. 2,000/- and the provision for tax has been made of Rs. 4,000/-. Calculate the interest charges cover ratio Correct 8 Answer Your Answer 9

True/False Question Correct Answer Your Answer

A high debt equity ratio may indicate that the financial stake of the creditors is more than that of the owners True True

Multiple Choice Single Answer Question The Dividend in the form of cash is payable out of the current year's profit after providing for sufficient amount of Correct Depreciation Answer Your Answer Interest

Multiple Choice Multiple Answer Question The methods which consider the risk in capital budgeting decision are Correct Answer Your Answer

Informal method , Risk adjusted discounting rate , Certainty-Equivalent approach Formal method

Match The Following Question

Correct Answer

Your Answer

The ratio which indicates the speed at which the Sundry debtors are converted in the form of cash

Debtors turnover ratio

Dividend Payment ratio

The ratio which indicates the Capital turnover ratio efficiency of the organisation with which the capital employed is being utilised

Debtors turnover ratio

Ratio which measures the profitability of the investments in a firm

Return on Asset

Current Assets turnover ratio

The relation of Net Sales and Working Capital

Working Capital turnover ratio Return on Asset

Multiple Choice Multiple Answer Question The avenues available to the company to invest the excess cash balance on short term basis may be in the form of Correct Commercial paper , inter-corporate bills discounting , Bank deposits Answer Your Answer inter-corporate bills discounting

Select The Blank Question Turnover ratios measures how efficiently the ________ are employed by the firm Correct Assets Answer

Your Answer

Assets

Multiple Choice Single Answer Question Undercapitalisation is Correct Answer Your Answer

Excess of real worth of the assets over the aggregate of shares and debentures outstanding Excess of current assets over current liabilities

Multiple Choice Multiple Answer Question The committees appointed by the Reserve Bank of India to control the working capital financing Correct Marathe committee , Nayak committee , Tandon committee Answer Your Answer Tandon committee

True/False Question Correct Answer Your Answer

Internal rate of return considers time value of money True True

Multiple Choice Single Answer Question The ratio which measures the profits available to the equity shareholders on a per share basis is termed as Correct Earning per share Answer Your Answer Price Earnings ratio

Multiple Choice Multiple Answer Question The advantages of leasing for the lessee are Correct Answer Your Answer

The payment of lease rents is the tax deductible expenditure , It is the quickest method of financing the requirements of long term capital , Avoids risk of ownership Avoids risk of ownership

Multiple Choice Single Answer Question The motive of the company to hold the inventories in order to facilitate the smooth and uninterrupted production and sales operations is known as Correct Transaction motive Answer Your Answer Speculative motive

Select The Blank Question Operating Lease is also referred to as ________ lease Correct Answer Your Answer

Service Financial

Select The Blank Question Under ________, it is not only necessary to decide profitable investments but also necessary to rank the acceptable proposals according to their relative profitabilities Correct Capital rationing Answer Your Answer capital expenditure

Match The Following Question

Correct Answer

Your Answer

Credit rating symbol for Fixed MA Deposits of Adequate safety by Investment Information and Credit rating agency

B

Credit rating symbol for A5 Commercial Paper of Default by Investment Information and Credit rating agency

A5

Credit rating symbol for Debentures of Inadequate safety by CRISIL

BB

FA

Credit rating symbol for Fixed FC Deposits of High risk by CRISIL

MA

True/False Question Correct Answer Your Answer

Economic Order Quantity model is a very useful model of determining the order quantity True True

Select The Blank Question In the case of Overcapitalisation ________ is the worst affected class Correct Answer

Shareholders

Your Answer

Society

Multiple Choice Single Answer Question If the company buys the raw material from the suppliers on credit basis, it is termed as Correct Trade Credit Answer Your Answer Outstanding expenses

Multiple Choice Multiple Answer Question Goods Stolen ( Sale price Rs. 1000/- Cost Rs. 800/- ) ; Which of the accounts will be affected by this transaction Correct Purchases Account , Loss by theft Account Answer Your Answer Stock Account

True/False Question Correct Answer Your Answer

Accounts Receivable is an example of current assets True False

Multiple Choice Single Answer Question The ratio which indicate the long term financial prospects of the company are Correct Answer Your Answer

Solvency ratios Solvency ratios

Select The Blank Question ________ is clubbed with Current Assets in the Balance Sheet Correct Answer Your Answer

Loans and advances Investments

Multiple Choice Single Answer Question The amount of cheques issued by the company awaiting payment by the bank is called as Correct Payment float Answer Your Answer Postal float

Select The Blank Question In case of Bills Purchased, the company gets only the present worth of the amount of the bill, the difference between the face value of the bill and the amount of assistance being in the form of ________ Correct discount charges Answer Your Answer interest charges

Multiple Choice Multiple Answer Question Advantages of letter of credit to the Importer Correct Answer Your Answer

the importer can bargain for better trading terms , he is assured to get proper supply of the goods he is assured to get proper supply of the goods , he can get qualitative goods

Multiple Choice Multiple Answer Question The advantages of ratio analysis are Correct Answer Your Answer

True/False Question Correct Answer Your Answer

It helps in planning and forecasting , It makes possible comparison of the performance of the different divisions of the firm , It simplifies the comprehension of financial statements It simplifies the comprehension of financial statements

Net Present value presupposes that the cash inflows can be reinvested to yield the return equivalent to the Internal rate of return False True

Multiple Choice Single Answer Question Stock at the end results in the Correct Answer Your Answer

Source of funds Application of funds

Multiple Choice Single Answer Question Current Assets Turnover ratio is calculated as Correct Answer Your Answer

Net Sales / Current Assets Current assets / Current liabilities

Select The Blank Question ________ is the most important ratio to measure whether the firm has earned sufficient returns for its shareholders or not Correct Return on Shareholders funds Answer Your Answer Return on Asset

Multiple Choice Multiple Answer Question The Proprietary concern is better than the Partnership concern on the following points Correct Minimum Government regulations , Where the business is small Answer Your Answer Where the business is small , Capacity to raise large amount of funds

True/False Question Correct Answer Your Answer

Secured Premium notes did not carry any interest during the first three years True False

Select The Blank Question In case of Internal Rate of Return Method, the resultant IRR is compared with the ________ Correct cost of capital Answer Your Answer cost of capital

Multiple Choice Multiple Answer Question The letter of credit may be Correct Answer Your Answer

Revocable letter of credit , Confirmed letter of credit Permanent letter of credit

Select The Blank Question A wider connotation of the term fund is found in the interpretation of the term 'funds' as ________ concept Correct Resources Answer Your Answer Cost

Select The Blank

Question Correct Answer Your Answer

________ will be shown as source of funds net of proposed dividend Operating Profit Operating Profit