FINANCIAL MANAGEMENT

                

                                                         ASSIGNMENT C
Question No.  1     
Compounding technique shows---       
  
Options 
Present Value 
Future Value 
Both present and future value 
None of the above. 

Question No.  2     
An infinite series of periodic cash flows growing at a constant rate is---       
  
Options     
    
Annuity 
Perpetuity 
Future value 
compounding

Question No.  3     
Working capital represents---     
  
Options     
 
the capital raised by the company 
capital required to meet day to day expenses 
Equity capital of the company 
Total capital of the company

Question No.  4     
An example of liquidity ratio is---     
  
Options     
    
Current ratio 
Debt –equity ratio 
Debtors turnover ratio 
Return on equity

Question No.  5     
Discounting techniques in capital budgeting include---     
  
Options     
    
NPV 
Profitability Index 
Payback period 
None of the above

Question No.  6     
Net Profit Ratio Signifies---     
  
Options     
    
Operational Profitability 
Liquidity Position 
Big-term Solvency 
Profit for Lenders.

Question No.  7     
ABC Ltd. has a Current Ratio of 1.5: 1 and Net Current Assets of Rs. 5, 00,000. What are the Current Assets?       
  
Options     
    
Rs. 5,00,000 
Rs. 10,00,000 
Rs. 15,00,000 
Rs. 25,00,000

Question No.  8     
Financial Planning deals with---       
  
Options     
    
Preparation of Financial Statements 
Planning for a Capital Issue 
Preparing Budgets 
All of the above

Question No.  9     
Capital Budgeting is a part of---     
  
Options     
    
Investment Decision 
Working Capital Management 
Marketing Management 
Capital Structure

Question No.  10     
A proposal is not a Capital Budgeting proposal if it--     
  
Options     

is related to Fixed Assets 
brings long-term benefits 
brings short-term benefits only 
has very large investment

Question No.  11     
Two mutually exclusive projects with different economic lives can be compared on the basis of---     
  
Options     
    
Internal Rate of Return 
Profitability Index 
Net Present Value 
Equivalent Annuity Value

Question No.  12     
Risk in Capital budgeting implies that the decision-maker knows ___________of the cash flows.     
  
Options     
    
Variability 
Probability 
Certainty 
None of the above

Question No.  13     
Cost of Capital refers to---     
  
Options     
    
Flotation Cost 
Dividend 
Rate of Return Required 
None of the above

Question No.  14     
Which of the following cost of capital require tax adjustment?       
  
Options     
    
Cost of Equity Shares 
Cost of Preference Shares 
Cost of Debentures 
Cost of Retained Earnings

Question No.  15     
Which is the most expensive source of funds?     
  
Options     
    
New Equity Shares 
New Preference Shares 
New Debts 
Retained Earnings

Question No.  16     
In case the firm is all-equity financed, WACC would be equal to---     
  
Options     
    
Cost of Debt 
Cost of Equity 
Neither (a) nor (b) 
Both (a) and (b)

Question No.  17     
Which of the following is true?       
  
Options     
    
Retained earnings are cost free 
External Equity is cheaper than Internal Equity 
Retained Earnings are cheaper than External Equity 
Retained Earnings are costlier than External Equity

Question No.  18     
Advantage of Debt financing is---     
  
Options     
    
Interest is tax-deductible 
It reduces WACC 
Does not dilute owners control 
All of the above

Question No.  19     
Cost of Equity Share Capital is more than cost of debt because---       
  
Options     
    
Face value of debentures is more than face value of shares 
Equity shares have higher risk than debt 
Equity shares are easily saleable 
All of the three above

Question No.  20     
Which of the following is true for Net Income Approach?       
  
Options     
    
Higher Equity is better 
Higher Debt is better 
Debt Ratio is irrelevant 
None of the above

Question No.  21     
NOI Approach advocates that the degree of debt financing is---     
  
Options     
    
Relevant 
May be relevant 
Irrelevant 
May be irrelevant

Question No.  22     
Dividend Pay-out Ratio is---       
  
Options     
    
PAT÷ Capital 
DPS ÷ EPS 
Pref. Dividend ÷ PAT 
Pref. Dividend ÷ Equity Dividend

Question No.  23     
Which of the following is not the responsibility of financial management?       
  
Options     
    
allocation of funds to current and capital assets 
obtaining the best mix of financing alternatives 
preparation of the firm's accounting statements 
development of an appropriate dividend policy

Question No.  24     
Which of the following are not among the daily activities of financial management?     
  
Options     
    
sale of shares and corporate bonds 
credit management 
inventory control 
the receipt and disbursement of funds

Question No.  25     
The mix of debt and equity in a firm is referred to as the firm's---       
  
Options     
    
primary capital 
capital composition 
cost of capital 
capital structure

Question No.  26     
(1 + i) n stands for---       
  
Options     
    
PVIF 
FVIF 
PVIFA 
FVIFA

Question No.  27     
Net working capital refers to---       
  
Options     
    
Total assets minus fixed assets. 
Current assets minus current liabilities 
current assets minus inventories 
Current assets

Question No.  28     
Retained earnings are---       
  
Options     
    
An indication of a company's liquidity. 
The same as cash in the bank. 
Not important when determining dividends. 
The cumulative earnings of the company after dividends.

Question No.  29     
The restructuring of a corporation should be undertaken if---       
  
Options     
    
The restructuring can prevent an unwanted takeover. 
The restructuring is expected to create value for shareholders. 
The restructuring is expected to increase the firm's revenue. 
The interests of bondholders are not negatively affected.

Question No.  30     
__________ is concerned with the acquisition, financing, and management of assets with some overall goal in mind.     
  
Options     
    
Financial Management 
Profit Maximization 
Agency theory 
Social responsibility 

Question No.  31     
What is the most appropriate goal of the firm?     
  
Options     
    
Shareholder wealth maximization. 
Profit Maximization 
Stakeholder maximization. 
EPS maximization.

Question No.  32     
A company can improve (lower) its debt-to-total asset ratio by doing which of the following?     
Options     
    
Borrow more. 
Shift short-term to long-term debt. 
Shift long-term to short-term debt. 
Sell common stock.

Question No.  33     
The DuPont Approach breaks down the earning power on shareholders' book value (ROE) as follows--            ROE = __________.       
  
Options     
    
Net profit margin × Total asset turnover × Equity multiplier 
Total asset turnover × Gross profit margin × Debt ratio 
Total asset turnover × Net profit margin 
Total asset turnover × Gross profit margin × Equity multiplier

Question No.  34     
Which group of ratios measures how effectively the firm is using its assets?       
  
Options     
    
Liquidity ratios. 
Coverage ratios. 
Profitability ratios. 
Activity ratios.

Question No.  35     
Which of the following is not a cash outflow for the firm?     
  
Options     
    
Depreciation. 
Dividends. 
Interest payments. 
Taxes.

Question No.  36     
The accounting statement of cash flows reports a firm's cash flows segregated into what categorical order?     
  
Options     
    
Operating, investing, and financing. 
Investing, operating, and financing. 
Financing, operating and investing. 
Financing, investing, and operating. 

Question No.  37     
Which of the following is a basic principle of finance as it relates to the management of working capital?     
  
Options     
    
Profitability varies inversely with risk. 
Liquidity moves together with risk. 
Profitability moves together with risk. 
Profitability moves together with liquidity. 

Question No.  38     
The amount of current assets required to meet a firm's long-term minimum needs is referred to as __________ working capital     
  
Options     
    
permanent 
temporary 
net 
gross

Question No.  39     
The overall (weighted average) cost of capital is composed of a weighted average of __________.       
  
Options     
    
the cost of common equity and the cost of debt 
the cost of common equity and the cost of preferred stock 
the cost of preferred stock and cost of debt 
the cost of common equity, the cost of preferred stock and cost of debt

Question No.  40     
What is the most likely reason that a firm (who is highly profitable) might consider acquiring a firm that has had large recent losses and will continue to have losses into the near future?       
Options     
    
Hubris 
White knight. 
Tax-loss usage. 
Increase assets