Financial Management - 11 LIST OF ATTEMPTED QUESTIONS AND ANSWERS

True/False Question Mortgage mode o se!urit" #ertains to immo$a%le #ro#erties li&e land and %uildings 'orre!t Ans(er True )our Ans(er True Multi#le '*oi!e Single Ans(er Question T*e mi+ o sour!es rom (*i!* t*e long term unds re,uired %" a %usiness are raised is termed as 'orre!t Ans(er 'a#ital Stru!ture )our Ans(er 'a#ital Stru!ture Multi#le '*oi!e Multi#le Ans(er Question T*e a##roa!*es to !om#ute t*e !ost o e,uit" s*ares are 'orre!t Ans(er Di$idend / Pri!e A##roa!* - Realised )ield A##roa!* - Earnings / Pri!e A##roa!* )our Ans(er Di$idend / Pri!e A##roa!* - Realised )ield A##roa!* - Earnings / Pri!e A##roa!* Multi#le '*oi!e Single Ans(er Question T*e !ost (*i!* remains !onstant irres#e!ti$e o !*anges in t*e sales re$enue is termed as 'orre!t Ans(er Fi+ed !ost )our Ans(er Fi+ed !ost Multi#le '*oi!e Multi#le Ans(er Question Internal sour!es o !as* are 'orre!t Ans(er De#re!iation - Amorti.ation o intangi%le assets )our Ans(er Issue o ne( s*ares - Raising long term loans - De#re!iation Mat!* T*e Follo(ing Question 'orre!t Ans(er )our Ans(er Disad$antage o A!!ounting rate o return uses #ro its a ter de#re!iation and ta+es and not t*e !as* in lo(s or e$aluating t*e #ro/e!ts uses #ro its a ter de#re!iation and ta+es and not t*e !as* in lo(s or e$aluating t*e #ro/e!ts

It ma" gi$e dissatis a!tor" results i t*e alternati$e #ro/e!ts in$ol$e $ar"ing in$estment outla" .It #resu##oses t*at !as* in lo(s !an %e rein$ested immediatel" to "ield t*e return e.It ma" gi$e dissatis a!tor" results i t*e alternati$e #ro/e!ts in$ol$e $ar"ing in$estment outla" .ui$alent to t*e dis!ounting rate (*i!* ma" not %e #ossi%le )our Ans(er It #resu##oses t*at t*e dis!ounting rate is &no(n .It #resu##oses t*at !as* in lo(s !an %e rein$ested immediatel" to "ield t*e return e.onl" ta&es remuneration Sele!t T*e 1lan& Question 22222222 is an e+am#le o Intangi%le asset 'orre!t Ans(er 3ood(ill )our Ans(er Land Multi#le '*oi!e Single Ans(er Question T*e traditional a##roa!* to inan!ial management re ers onl" to t*e #ro!urement o unds %" 'orre!t Ans(er 'or#orate entit" )our Ans(er 'or#orate entit" .Disad$antage o Pa" %a!& #eriod ignores time $alue o mone" ignores time $alue o mone" Ad$antage o Dis!ounted Pa" %a!& #eriod !onsiders time $alue o mone" !onsiders time $alue o mone" Ad$antage o Net #resent $alue !onsiders !as* in lo(s rom t*e #ro/e!t t*roug*out its li e !onsiders !as* in lo(s rom t*e #ro/e!t t*roug*out its li e Multi#le '*oi!e Multi#le Ans(er Question Disad$antages o Net Present $alue 'orre!t Ans(er It #resu##oses t*at t*e dis!ounting rate is &no(n .ui$alent to t*e dis!ounting rate (*i!* ma" not %e #ossi%le True/False Question 'as* rom o#eration is t*e main internal sour!e o !as* 'orre!t Ans(er True )our Ans(er True Multi#le '*oi!e Single Ans(er Question T*e (or&ing Partner is a Partner (*o 'orre!t Ans(er #arti!i#ates in da"0to0da" a airs o t*e irm )our Ans(er does not #arti!i#ate in da" to da" a airs.

t*e norms suggested or !onsum#tion o ra( materials s*ould %e in 22222222 'orre!t Ans(er mont*s )our Ans(er da"s Multi#le '*oi!e Single Ans(er Question T*e e e!t o 1onus #aid in t*e orm o 'orre!t Ans(er No !*ange in !as* )our Ans(er In!rease in !as* Multi#le '*oi!e Single Ans(er Question T*e Pro#rietar" !on!ern is o(ned %" 'orre!t Ans(er Onl" one #erson )our Ans(er Minimum t(o #ersons True/False Question Pro ita%ilit" Statement is a #eriod statement 'orre!t Ans(er True )our Ans(er False Sele!t T*e 1lan& Question T*e !om#arison o t*e ratios o one organisation (it* t*at o t*e ot*er organisation is termed as 22222222 !om#arison 'orre!t Ans(er Inter0 irm )our Ans(er Intra0 irm True/False Question Pu%li! de#osits are unse!ured %orro(ings or t*e !om#an" 'orre!t Ans(er True )our Ans(er False ull" #aid s*ares on unds 4 !as* !on!e#t 5 is .!al!ulate and understand 'orre!t Ans(er True )our Ans(er True Sele!t T*e 1lan& Question As #er t*e Tandon 'ommittee.True/False Question Internal rate o return is di i!ult to use .

T*e $arious le$els i+ed are not i+ed on a #ermanent %asis and are su%/e!t to re$ision regularl" True/False Question In!ome ta+ #aid in t*e !ase o sole #ro#rietor irms s*ould %e treated as a #ersonal e+#ense o t*e #ro#rietor 'orre!t Ans(er True )our Ans(er True Multi#le '*oi!e Multi#le Ans(er Question Limitations o A$erage !olle!tion #eriod 'orre!t Ans(er A$erage 'olle!tion #eriod assumes t*at t*e !redit sales are e$enl" s#read t*roug*out t*e "ear7 In #ra!ti!al !ir!umstan!es.!redit sales are not e$enl" s#read t*roug*out t*e "ear .T*e amount o !redit sales made %" !om#an" or t*e normal !redit #eriod o ered %" t*e !om#an" are not a$aila%le in t*e #u%lis*ed inan!ial statements )our Ans(er A$erage 'olle!tion #eriod assumes t*at t*e !redit sales are e$enl" s#read t*roug*out .Multi#le '*oi!e Single Ans(er Question A s"stemati! re!ord o t*e e$ents o t*e %usiness leading to a #resentation o a !om#lete inan!ial #i!ture is &no(n as 'orre!t Ans(er A!!ounting )our Ans(er A!!ounting Multi#le '*oi!e Multi#le Ans(er Question E+ternal sour!es o !as* are as ollo(s 6 'orre!t Ans(er Issue o ne( s*ares .T*e $arious le$els i+ed are not i+ed on a #ermanent %asis and are su%/e!t to re$ision regularl" )our Ans(er T*ere *as to %e a !onstant (at!* on t*e a!tual sto!& le$el o $arious &inds o materials so t*at #ro#er a!tion !an %e ta&en .s*ort term %orro(ings )our Ans(er Issue o ne( s*ares .long term loans .long term loans Multi#le '*oi!e Single Ans(er Question In inan!ial terms.Pro it %e ore Interest and ta+es !an %e re erred as 'orre!t Ans(er Earnings %e ore Interest and ta+es )our Ans(er Earnings %e ore Interest and ta+es Multi#le '*oi!e Multi#le Ans(er Question Fi+ation o In$entor" le$els are %ased on t*e ollo(ing #ro#ositions 'orre!t Ans(er T*ere *as to %e a !onstant (at!* on t*e a!tual sto!& le$el o $arious &inds o materials so t*at #ro#er a!tion !an %e ta&en .

Not #ro#er !ost %ene it anal"sis made %" t*e !om#an" Mat!* T*e Follo(ing Question 'orre!t Ans(er )our Ans(er T*e relation o Net Sales and Wor&ing 'a#ital Wor&ing 'a#ital turno$er ratio Wor&ing 'a#ital turno$er ratio T*e ratio (*i!* indi!ates t*e s#eed at (*i!* t*e Sundr" de%tors are !on$erted in t*e orm o !as* De%tors turno$er ratio De%tors turno$er ratio T*e ratio (*i!* indi!ates t*e e i!ien!" o t*e organisation (it* (*i!* t*e !a#ital em#lo"ed is %eing utilised 'a#ital turno$er ratio Return on Asset Ratio (*i!* measures t*e #ro ita%ilit" o t*e in$estments in a irm Return on Asset Di$idend Pa"ment ratio True/False Question Under #ledge mode o se!urit".!redit sales are not e$enl" s#read t*roug*out t*e "ear .t*e "ear7 In #ra!ti!al !ir!umstan!es.#ossession o t*e goods is (it* t*e 1an& and t*e goods #ledged are in t*e !ustod" o t*e 1an& 'orre!t Ans(er True )our Ans(er True Sele!t T*e 1lan& Question T*e situation o (atered !a#ital ma" arise due to 22222222 'orre!t Ans(er 'om#an" #a"s *ig*er #ri!e to t*e $endors o t*e assets trans erred )our Ans(er 'om#an" #a"s *ig*er #ri!e to t*e $endors o t*e assets trans erred Multi#le '*oi!e Single Ans(er Question T*e term re!ei$a%les is de ined as 'orre!t Ans(er De%ts o(ned to t*e irm %" !ustomers arising rom sale o goods or ser$i!es in t*e ordinar" !ourse o %usiness )our Ans(er Amount #aid %" t*e !om#an" in res#e!t o #re#aid e+#enses Multi#le '*oi!e Single Ans(er Question T*e 8going !on!ern !on!e#t8 is t*e underl"ing %asis or 'orre!t Ans(er de#re!iating i+ed asset o$er t*eir use ul li$es )our Ans(er dis!losing t*e sales and ot*er o#erating in ormation in t*e in!ome statement True/False .

Redu!es e+#enditure on maintenan!e )our Ans(er In an o#erating lease arrangement t*e e.Question O$erdra t is gi$en %" t*e %an& or a $er" s*ort #eriod o time.ui#ment .at t*e end o (*i!* t*e !om#an" is su##osed to re#a" t*e same 'orre!t Ans(er True )our Ans(er True Sele!t T*e 1lan& Question O#erating Lease is also re erred to as 22222222 lease 'orre!t Ans(er Ser$i!e )our Ans(er Le$erage Multi#le '*oi!e Multi#le Ans(er Question T*e ad$antages o o#erating lease is 'orre!t Ans(er In an o#erating lease arrangement t*e e.t*e resultant IRR is !om#ared (it* t*e 22222222 'orre!t Ans(er .uired o$er and a%o$e t*e #ermanent (or&ing !a#ital )our Ans(er t*e (or&ing !a#ital re.ui#ment ris& is trans erred to t*e lessor .uired o$er and a%o$e t*e #ermanent (or&ing !a#ital Sele!t T*e 1lan& Question In !ase o Internal Rate o Return Met*od.It minimi.T*e lessee is res#onsi%le or maintenan!einsuran!e and ta+es Sele!t T*e 1lan& Question T*e #ro/e!ts *a$ing Pro ita%ilit" inde+ o less t*an 22222222 (ill %e re/e!ted 'orre!t Ans(er one )our Ans(er one Multi#le '*oi!e Multi#le Ans(er Question De%t Ser$i!e !o$erage ratio ma" %e !onsidered to %e one o t*e most im#ortant ratios !al!ulated %" t*e 'orre!t Ans(er 1an&ers .Finan!ial Institutions Multi#le '*oi!e Single Ans(er Question 9aria%le Wor&ing 'a#ital is 'orre!t Ans(er t*e (or&ing !a#ital re.es in$estment in e.ui#ment ris& is trans erred to t*e lessor .It minimi.ui#ment .es in$estment in e.Finan!ial Institutions )our Ans(er 1an&ers .

Pro!eeds o issue o an" s*ares or ot*er s#e!i ied se!urities )our Ans(er Free Reser$es o t*e !om#an" .Pro!eeds o issue o an" s*ares or ot*er s#e!i ied se!urities Sele!t T*e 1lan& Question Finan!ial Institution #la"s t*e role o 22222222 in a!toring ser$i!e o ered 'orre!t Ans(er Fa!tor )our Ans(er 'lient Multi#le '*oi!e Single Ans(er Question Sto!& at t*e end results in t*e 'orre!t Ans(er Sour!e o unds )our Ans(er Sin&ing und Sele!t T*e 1lan& Question T*e o#erating #ro it earned %" t*e !om#an" is in t*e orm o !ontri%ution dul" redu!ed %" t*e 22222222 'orre!t Ans(er Fi+ed o#erating !ost )our Ans(er 9aria%le o#erating !ost Multi#le '*oi!e Multi#le Ans(er Question Pro/e!ts or (*i!* #ro ita%ilit" is not t*e !riterion are 'orre!t Ans(er Ser$i!e De#artment #ro/e!ts .S*are Premium A!!ount o t*e !om#an" .Pro/e!ts or re#la!ement o manual o#erations %" la%our sa$ing de$i!e Sele!t T*e 1lan& Question 22222222 in lia%ilities in$ol$es out lo( o 'orre!t Ans(er De!rease )our Ans(er De!rease True/False unds .Edu!ational #ro/e!ts )our Ans(er Edu!ational #ro/e!ts .!ost o !a#ital )our Ans(er !ost o !a#ital Multi#le '*oi!e Multi#le Ans(er Question T*e s*ares o t*e !om#an" !an %e %oug*t %a!& out o t*e ollo(ing amounts 'orre!t Ans(er Free Reser$es o t*e !om#an" .S*are Premium A!!ount o t*e !om#an" .Wel are #ro/e!ts .

Dis!loses t*e su!!ess or ailure o !as* #lanning )our Ans(er :el#s in e i!ient !as* management .6<= AM = !omments Lin&s to t*is #ost La%els6 Finan!ial Management 4Set III5 Financial Management .Dis!loses t*e mo$ements o !as* .Dis!loses t*e su!!ess or ailure o !as* #lanning Sele!t T*e 1lan& Question 22222222 ratio (ill %e use ul in indi!ating t*e s"m#tom o ina%ilit" to #a" dues to inan!ial institutions 'orre!t Ans(er De%t Ser$i!e 'o$erage ratio )our Ans(er De%t Ser$i!e 'o$erage ratio at .ation goal is onl" an e+tension o Pro it ma+imi.Dis!loses t*e mo$ements o !as* .ation goal o t*e organisation 'orre!t Ans(er True )our Ans(er True Multi#le '*oi!e Single Ans(er Question A se!ured instrument usuall" se!ured %" a !*arge on t*e immo$a%le #ro#erties o t*e !om#an" (*ere t*ere is a #romise to #a" interest and re#a" #rin!i#al at a sti#ulated #eriod o time is &no(n as 'orre!t Ans(er De%entures )our Ans(er Pu%li! de#osits True/False Question Introdu!tion o a *ea$" amount o de%t !a#ital in t*e !a#ital stru!ture (ill not onl" redu!e t*e $aluation o t*e irm %ut (ill also in!rease t*e !ost o !a#ital 'orre!t Ans(er True )our Ans(er True Multi#le '*oi!e Multi#le Ans(er Question Ad$antages o !as* lo( statement are 'orre!t Ans(er :el#s in e i!ient !as* management .Question Wealt* ma+imi.10 Multi#le '*oi!e Multi#le Ans(er Question T*e !auses o under!a#italisation are 'orre!t Ans(er Future earnings ma" %e underestimated .'om#an" ollo(ing too !onser$ati$e #oli!" or #a"ing t*e di$idends .

ues !an %e used to dela" !as* #a"ments 'orre!t Ans(er Pa"ments !an %e made rom a %an& (*i!* is distant rom t*e %an& o t*e !om#an" to (*i!* #a"ment is to %e made .)our Ans(er 'om#an" ollo(ing too !onser$ati$e #oli!" or #a"ing t*e di$idends .Attem#ts s*ould %e made %" t*e !om#an" to get t*e ma+imum !redit or t*e goods or ser$i!e su##lied .t*e !om#an" 22222222 'orre!t Ans(er in!urs t*e losses )our Ans(er in!urs t*e losses Sele!t T*e 1lan& Question Pre#aration o Finan!ial #lan at t*e time o !om#an" #romotion is 22222222 dut" o t*e inan!e e+e!uti$e 'orre!t Ans(er Non0re!urring )our Ans(er Non0re!urring Multi#le '*oi!e Single Ans(er Question T*e ratio (*i!* indi!ates t*e e+tent to (*i!* t*e O(ners8 unds are sun& in di erent &inds o assets is termed as 'orre!t Ans(er Pro#rietor" ratio )our Ans(er Pro#rietor" ratio Sele!t T*e 1lan& Question 22222222 is t*e summar" o !as* %oo& or Re!ei#ts and Pa"ments Statement 'orre!t Ans(er 'as* lo( statement )our Ans(er 'as* lo( statement True/False Question Retained earnings or #loug*ed %a!& #ro its is one o t*e %est sour!e o raising long term unds or t*e !om#an" 'orre!t Ans(er True )our Ans(er True .A$oid earl" #a"ments )our Ans(er Pa"ments !an %e made rom a %an& (*i!* is distant rom t*e %an& o t*e !om#an" to (*i!* #a"ment is to %e made .Future earnings ma" %e underestimated Sele!t T*e 1lan& Question Su%s!ri#tion list o a #u%li! issue o s*ares s*all %e &e#t o#en or minimum 22222222 (or&ing da"s 'orre!t Ans(er > )our Ans(er > Sele!t T*e 1lan& Question 22222222 in lia%ilities in$ol$es out lo( o 'orre!t Ans(er De!rease )our Ans(er De!rease unds Multi#le '*oi!e Single Ans(er Question T*e In$estment de!isions are mainl" !on!erned (it* 'orre!t Ans(er A##li!ation o unds )our Ans(er A##li!ation o unds Multi#le '*oi!e Multi#le Ans(er Question T*e ollo(ing te!*ni.A$oid earl" #a"ments Sele!t T*e 1lan& Question Till t*e sales re$enue rea!*es t*e %rea& e$en #oint.Attem#ts s*ould %e made %" t*e !om#an" to get t*e ma+imum !redit or t*e goods or ser$i!e su##lied .

E+e!uti$e !ommittee .Management !ommittee )our Ans(er 1oard o Dire!tors .It gi$es an indi!ation regarding t*e e+tent to (*i!* Earning #er s*are ma" %e a e!ted due to e$er" !*ange in Earning %e ore Interest and ta+ .Earnings / Pri!e A##roa!* )our Ans(er Di$idend / Pri!e A##roa!* .Earnings / Pri!e A##roa!* True/False Question Introdu!tion o a *ea$" amount o de%t !a#ital in t*e !a#ital stru!ture (ill not onl" redu!e t*e $aluation o t*e irm %ut (ill also in!rease t*e !ost o !a#ital 'orre!t Ans(er True )our Ans(er True True/False Question 1e ore t*e !om#an" !an #a" t*e di$idend on E.uit" s*are*olders a ter t*e #a"ment o annual di$idend Multi#le '*oi!e Multi#le Ans(er Question Uses o inan!ial le$erage are 'orre!t Ans(er It a!ts as a guideline in setting ma+imum limit u#to (*i!* t*e !om#an" s*ould use t*e de%t !a#ital .uit" s*ares are 'orre!t Ans(er Di$idend / Pri!e A##roa!* .It #ro$ides use ul guidelines or determining t*e o#timal !a#ital stru!ture .It gi$es an indi!ation regarding t*e e+tent to (*i!* Earning #er s*are ma" %e a e!ted due to e$er" !*ange in Earning %e ore Interest and ta+ )our Ans(er It a!ts as a guideline in setting ma+imum limit u#to (*i!* t*e !om#an" s*ould use t*e de%t !a#ital .E+e!uti$e !ommittee .True/False Question W*en a !om#an" issues %onus s*ares.reser$es o t*e !om#an" get redu!ed and s*are !a#ital o t*e !om#an" in!reases 'orre!t Ans(er True )our Ans(er True Multi#le '*oi!e Multi#le Ans(er Question To# management (*o !an a!!e#t or re/e!t !a#ital e+#enditure #ro#osals ma" %e in t*e orm o 'orre!t Ans(er 1oard o Dire!tors .Realised )ield A##roa!* .it is %ound to #a" t*e di$idend on Pre eren!e s*ares 'orre!t Ans(er True )our Ans(er True Mat!* T*e Follo(ing Question 'orre!t Ans(er )our Ans(er Term loan re#resents a sour!e o de%t inan!e (*i!* is generall" re#a"a%le in more t*an one "ear %ut less t*an ten "ears re#resents a sour!e o de%t inan!e (*i!* is generall" re#a"a%le in more t*an one "ear %ut less t*an ten "ears Lessee Not a%le to !laim de#re!iation on asset Not a%le to !laim de#re!iation on asset :irer 'laims t*e de#re!iation on t*e asset 'laims t*e de#re!iation on t*e asset Retained earnings Residue le t %e*ind rom earnings a$aila%le to e.uit" s*are*olders a ter t*e #a"ment o annual di$idend Residue le t %e*ind rom earnings a$aila%le to e.uit" s*ares.Realised )ield A##roa!* .Management !ommittee Multi#le '*oi!e Multi#le Ans(er Question T*e a##roa!*es to !om#ute t*e !ost o e.

1orro( Mone" on an Interest %earing #romissor" note True/False Question Sol$en!" ratios !onsists o !urrent ratio and Pri!e earnings ratio 'orre!t Ans(er False )our Ans(er False .'ertaint"0E.Ris& ad/usted dis!ounting rate .ui$alent a##roa!* )our Ans(er In ormal met*od .ui$alent a##roa!* Sele!t T*e 1lan& Question Pro it a ter ta+es !an %e distri%uted among t*e o(ners o t*e !om#an" %" (a" o 22222222 'orre!t Ans(er di$idend )our Ans(er di$idend Multi#le '*oi!e Single Ans(er Question Interest 'o$erage ratio is !al!ulated as 'orre!t Ans(er Pro it %e ore Interest and ta+es / Interest !*arges )our Ans(er Pro it %e ore Interest and ta+es / Interest !*arges True/False Question Internal rate o return indi!ates t*at t*e dis!ounting rate at (*i!* net #resent $alue is .Ris& ad/usted dis!ounting rate .in (*i!* !ases (ould t*e !urrent ratio de!line 'orre!t Ans(er Pur!*ase o i+ed Assets .'ertaint"0E.ero 'orre!t Ans(er True )our Ans(er True Sele!t T*e 1lan& Question In A1' anal"sis ' !lass !onsist o 222222227 'orre!t Ans(er a $er" large num%er o items (*i!* are less im#ortant )our Ans(er a $er" large num%er o items (*i!* are less im#ortant True/False Question Semi0$aria%le !ost is t*e !ost (*i!* $aries in dire!t #ro#ortion to t*e sales re$enue 'orre!t Ans(er False )our Ans(er False True/False Question One o t*e most !ommon met*ods to monitor t*e re!ei$a%les on ma!ro %asis is to !al!ulate age0(ise anal"sis o re!ei$a%les 'orre!t Ans(er False )our Ans(er False Multi#le '*oi!e Single Ans(er Question Tangi%le net (ort* means 'orre!t Ans(er s*are !a#ital #lus ree reser$es )our Ans(er 'urrent assets less 'urrent lia%ilities Multi#le '*oi!e Multi#le Ans(er Question Assuming t*e !urrent ratio is ?.Multi#le '*oi!e Multi#le Ans(er Question T*e met*ods (*i!* !onsider t*e ris& in !a#ital %udgeting de!ision are 'orre!t Ans(er In ormal met*od .1orro( Mone" on an Interest %earing #romissor" note )our Ans(er Pur!*ase o i+ed Assets .

Pri!e #er unit Rs7 <==.S*are Premium A!!ount o t*e !om#an" .Ordering !ost Rs7 .22222222 a #eriod ma" not %e use ul 'orre!t Ans(er Too long )our Ans(er Too long Multi#le '*oi!e Multi#le Ans(er Question T*e s*ares o t*e !om#an" !an %e %oug*t %a!& out o t*e ollo(ing amounts 'orre!t Ans(er Free Reser$es o t*e !om#an" .uantit" 6 Annual Demand 6 @=== units.In$entor" !arr"ing !ost is <@A on a$erage in$entor" 'orre!t Ans(er ?== units )our Ans(er ?== units Multi#le '*oi!e Single Ans(er Question In!rease in a$erage !redit #eriod to maintain sales in $ie( o !an %e indi!ated %" 'orre!t Ans(er De%tors turno$er ratio )our Ans(er De%tors turno$er ratio Mat!* T*e Follo(ing Question 'orre!t Ans(er )our Ans(er In!rease in !urrent lia%ilities de!reases (or&ing !a#ital in!reases (or&ing !a#ital In!rease in lia%ilities in lo( o De!rease in lia%ilities out lo( o unds in lo( o unds unds alling demand unds out lo( o In!rease in !urrent assets in!reases (or&ing !a#ital !as* lo( anal"sis Sele!t T*e 1lan& Question T*e situation o (atered !a#ital ma" arise due to 22222222 'orre!t Ans(er 'om#an" #a"s *ig*er #ri!e to t*e $endors o t*e assets trans erred )our Ans(er 'om#an" #a"s *ig*er #ri!e to t*e $endors o t*e assets trans erred True/False Question E!onomi! Order Quantit" model is a $er" use ul model o determining t*e order .S*are Premium A!!ount o t*e !om#an" Multi#le '*oi!e Single Ans(er Question From t*e ollo(ing data.= #er order.Pro!eeds o issue o an" s*ares or ot*er s#e!i ied se!urities )our Ans(er Free Reser$es o t*e !om#an" .Multi#le '*oi!e Single Ans(er Question Re$enue reser$es re#resents 'orre!t Ans(er A!!umulated retained earnings rom t*e #ro its o normal %usiness o#erations )our Ans(er A!!umulated retained earnings rom t*e #ro its o normal %usiness o#erations Sele!t T*e 1lan& Question For t*e sele!tion o t*e #eriod or (*i!* !a#ital e+#enditure %udget s*ould %e #re#ared .(or& out t*e E!onomi! order .uantit" 'orre!t Ans(er True )our Ans(er True Multi#le '*oi!e Multi#le Ans(er .

A !lose and stri!t !ontrol is a!ilitated on t*e most im#ortant items .ues o Anal"sis and Inter#retation o 'orre!t Ans(er Ratio Anal"sis .ui#ment .It minimi.Redu!es e+#enditure on maintenan!e )our Ans(er In an o#erating lease arrangement t*e e.es in$estment in e.Annual Re#orting Multi#le '*oi!e Single Ans(er Question T*e s"m#tom o lo( !a#a!it" utilisation (ill %e s*o(n %" 'orre!t Ans(er Fi+ed Assets Turno$er ratio )our Ans(er Fi+ed Assets Turno$er ratio Multi#le '*oi!e Single Ans(er Question I a !om#an" de!ides to in$ite #u%li! de#osits 'orre!t Ans(er It s*ould #u%lis* an ad$ertising in leading ne(s#a#er )our Ans(er It s*ould #u%lis* an ad$ertising in leading ne(s#a#er Multi#le '*oi!e Multi#le Ans(er Question T*e te!*ni.ui#ment .Re!ord Bee#ing .O#timum utilisation o t*e a$aila%le unds !an %e assured )our Ans(er It ena%les to lo!ate slo( and non0mo$ing items .O#timum utilisation o t*e a$aila%le unds !an %e assured Sele!t T*e 1lan& Question T*e amount o #ro it earned a ter re!o$ering t*e interest on long term sour!es o !a#ital is re erred to as 22222222 'orre!t Ans(er Pro it %e ore ta+es )our Ans(er Pro it %e ore ta+es Multi#le '*oi!e Single Ans(er Question Mr7 A in$ested Rs7 <=-=== in i+ed de#osit !arr"ing interest C<=A #7a7 !om#ounded annuall"7 'al!ulate t*e $alue o in$estment a ter t(o "ears 'orre!t Ans(er Rs7 <?-<== )our Ans(er Rs7 <?-<== Multi#le '*oi!e Single Ans(er Question In!rease in t*e amount o %ills #a"a%le results in 'orre!t Ans(er In!rease in !as* )our Ans(er De!rease in !as* .'as* lo( Anal"sis )our Ans(er Ratio Anal"sis .Question T*e ad$antages o o#erating lease is 'orre!t Ans(er In an o#erating lease arrangement t*e e.Redu!es e+#enditure on maintenan!e Sele!t T*e 1lan& Question 22222222 in assets in$ol$es in lo( o 'orre!t Ans(er De!rease )our Ans(er De!rease unds Multi#le '*oi!e Multi#le Ans(er Question T*e un!tions o a Finan!e 'ontroller are 6 'orre!t Ans(er 1udgeting .es in$estment in e.It minimi.Annual Re#orting )our Ans(er 1udgeting .'as* lo( Anal"sis inan!ial statements are Multi#le '*oi!e Multi#le Ans(er Question Ad$antages o A1' Anal"sis are 'orre!t Ans(er A !lose and stri!t !ontrol is a!ilitated on t*e most im#ortant items :el#s in maintaining a *ig* in$entor" turno$er ratio .Re!ord Bee#ing .ui#ment ris& is trans erred to t*e lessor .ui#ment ris& is trans erred to t*e lessor .

Multi#le '*oi!e Single Ans(er Question T*e assets *eld %" a %usiness (*i!* !an %e !on$erted in t*e orm o !as* or used during t*e !ourse o normal o#erations is termed as 'orre!t Ans(er 'urrent assets )our Ans(er 'urrent assets True/False Question Inade.Wit* t*e *el# o a!toring t*e !om#an" !an %e relie$ed o administrati$e res#onsi%ilities )our Ans(er T*e !om#an" !an ta&e ad$antage o t*e e+#ertise o t*e a!tor in $arious ields .Wit* t*e *el# o a!toring t*e !om#an" !an %e relie$ed o administrati$e res#onsi%ilities Fa!toring is t*e (a" in (*i!* t*e !om#an" !an inan!e its re.uirement o Wor&ing !a#ital in res#e!t o re!ei$a%les Multi#le '*oi!e Single Ans(er Question T*e #rodu!ts (*i!* are read" or sale in t*e mar&et are termed as 'orre!t Ans(er Finis*ed goods )our Ans(er Finis*ed goods Multi#le '*oi!e Single Ans(er Question .uirement o Wor&ing !a#ital in res#e!t o re!ei$a%les .uate #ro$ision or de#re!iation ma" %e t*e !ause o o$er!a#italisation 'orre!t Ans(er True )our Ans(er True at .9 LIST OF ATTEMPTED QUESTIONS AND ANSWERS True/False Question Interest in #ro$ision or dou%t ul de%ts s*ould %e added %a!& in order to ind out !as* rom o#erations 'orre!t Ans(er True )our Ans(er True Multi#le '*oi!e Multi#le Ans(er Question Ad$antages o a!toring 'orre!t Ans(er Fa!toring is t*e (a" in (*i!* t*e !om#an" !an inan!e its re.T*e !om#an" !an ta&e ad$antage o t*e e+#ertise o t*e a!tor in $arious ields .6=D AM = !omments Lin&s to t*is #ost La%els6 Finan!ial Management 4Set III5 Financial Management .

ation and sim#li i!ation o %udgetar" #ro!edures 'orre!t Ans(er True )our Ans(er True .O$erdra t .uit" S*are 'a#ital 4Rs7 <= ea!*5 Rs7 <-==-===/0 'orre!t Ans(er D )our Ans(er <= Multi#le '*oi!e Single Ans(er Question T*e main un!tion o inan!e under t*e traditional a##roa!* !om#rises o 'orre!t Ans(er Pro!urement o unds )our Ans(er Pro!urement o unds Multi#le '*oi!e Multi#le Ans(er Question Fund %ased lending o %an&s in!lude 'orre!t Ans(er O$erdra t .t*e Earning #er s*are is 22222222 6 Net Pro it %e ore ta+ Rs7 ?-==-===/0.it is termed as 'orre!t Ans(er Trade 'redit )our Ans(er Trade 'redit Multi#le '*oi!e Single Ans(er Question Dis!ounted Pa"%a!& #eriod is an im#ro$ement o$er t*e #a" %a!& #eriod met*od as it !onsiders 'orre!t Ans(er time $alue o mone" )our Ans(er time $alue o mone" True/False Question Funds lo( statements and !as* lo( statement are one and t*e same 'orre!t Ans(er False )our Ans(er True Sele!t T*e 1lan& Question From t*e ollo(ing data.Ta+ation at @=A o Net Pro it.E.<=A Pre eren!e S*are 'a#ital 4Rs7 <= ea!*5 Rs7 <-==-===/0.I t*e !om#an" %u"s t*e ra( material rom t*e su##liers on !redit %asis.Letter o !redit True/False Question A good 1udget manual #romotes standardi.1ills Pur!*ased )our Ans(er 1an& 3uarantee .

uit" s*ares Pri!e earning ratio Mar&et Pri!e #er s*are / Earnings #er s*are Mar&et Pri!e #er s*are / Earnings #er s*are O#erating le$erage 'ontri%ution / Earnings %e ore interest and ta+ 4 Sales 0 9aria%le !ost 5 / 4 Earning %e ore interest and ta+ 0 Interest 5 Multi#le '*oi!e Single Ans(er Question A se!ured instrument usuall" se!ured %" a !*arge on t*e immo$a%le #ro#erties o t*e !om#an" (*ere t*ere is a #romise to #a" interest and re#a" #rin!i#al at a sti#ulated #eriod o time is &no(n as 'orre!t Ans(er De%entures )our Ans(er De%entures True/False Question .Sele!t T*e 1lan& Question In$estment o t*e $enture !a#italist does not e+!eed 22222222 so t*at t*e e e!ti$e !ontrol o t*e #ro/e!t remains (it* t*e entre#reneur 'orre!t Ans(er =7ED )our Ans(er =7ED True/False Question 'ross0se!tional Anal"sis is t*e !om#arison o inan!ial data o same time #eriod o di erent organisations engaged in similar %usiness 'orre!t Ans(er True )our Ans(er True Multi#le '*oi!e Single Ans(er Question E+#e!ted uture earnings o A1' Ltd7 are Rs7 ?-==-===7 Find out t*e amount o !a#italisation i t*e rate o return earned %" similar t"#es o !om#anies is <=A7 'orre!t Ans(er Rs7 ?=-==-=== )our Ans(er Rs7 ?=-=== Mat!* T*e Follo(ing Question 'orre!t Ans(er )our Ans(er Finan!ial le$erage Earning %e ore interest and ta+ / 4 Earning %e ore interest and ta+ 0 Interest 5 Earning %e ore interest and ta+ / 4 Earning %e ore interest and ta+ 0 Interest 5 Earnings #er s*are 4Pro it a ter ta+ 0 Pre eren!e di$idend5 / Num%er o E.uit" s*ares 4Pro it a ter ta+ 0 Pre eren!e di$idend5 / Num%er o E.

uit" !a#ital or #re eren!e !a#ital )our Ans(er In #ost ta+ terms.ual to t*e dis!ounted !as* out lo(s in$ol$ed in t*e #ro/e!t is termed as 'orre!t Ans(er Dis!ounted Pa" %a!& #eriod )our Ans(er Dis!ounted Pa" %a!& #eriod Sele!t T*e 1lan& Question T*e !urrent ratio o 22222222 is !onsidered to %e standard 'orre!t Ans(er ?6< .t*e !ost o term loans is lo(er t*an t*e !ost o e.T*e Sto!& Di$idends are more e+#ensi$e to administer as !om#ared to !as* di$idends 'orre!t Ans(er True )our Ans(er True True/False Question T*e o#erating #ro it is !om#uted as Sales Re$enue Less 9aria%le O#erating 'ost Less Fi+ed O#erating !ost 'orre!t Ans(er True )our Ans(er True Multi#le '*oi!e Single Ans(er Question Ad$antage o term loan rom t*e !om#an"8s #oint o $ie( is 'orre!t Ans(er In #ost ta+ terms.t*e !ost o term loans is lo(er t*an t*e !ost o e.uit" !a#ital or #re eren!e !a#ital Sele!t T*e 1lan& Question Retained earnings indi!ates t*at (*ate$er #ro its are earned %" t*e !om#an" are not distri%uted %" it %" (a" o 22222222 %ut are &e#t aside or use in uture or e+#ansion or ot*er #ur#ose 'orre!t Ans(er Di$idend )our Ans(er Di$idend Multi#le '*oi!e Single Ans(er Question Rig*ts issue is 'orre!t Ans(er Selling t*e se!urities in t*e #rimar" mar&et to t*e e+isting s*are*olders )our Ans(er 1onus Issue Multi#le '*oi!e Single Ans(er Question T*e #eriod t*at indi!ates t*e #eriod (it*in (*i!* t*e dis!ounted !as* in lo(s e.

Fi+ed !ost .Fi+ed !ost .Semi0$aria%le !ost )our Ans(er 9aria%le !ost .)our Ans(er ?6< Multi#le '*oi!e Single Ans(er Question T*e traditional a##roa!* to inan!ial management re ers onl" to t*e #ro!urement o unds %" 'orre!t Ans(er 'or#orate entit" )our Ans(er Indi$iduals Multi#le '*oi!e Multi#le Ans(er Question O#erating !ost in!urred %" t*e !om#an" !an %e !lassi ied into 'orre!t Ans(er 9aria%le !ost .Semi0$aria%le !ost True/False Question In$entor" is t*e intermediate stage %et(een #ur!*ase o ra( materials and !onsum#tion o ra( materials 'orre!t Ans(er True )our Ans(er True Sele!t T*e 1lan& Question Interest on o$erdra t is #a"a%le on t*e a!tual amount dra(n and is !al!ulated on 22222222 #rodu!t %asis 'orre!t Ans(er dail" )our Ans(er dail" Mat!* T*e Follo(ing Question 'orre!t Ans(er )our Ans(er Finan!ial ratios Ratios dis!losing t*e inan!ial #osition or sol$en!" o t*e irm T*e ratios indi!ate t*e long term inan!ial #ros#e!ts o t*e !om#an" Pro ita%ilit" ratio Ratios (*i!* re le!t t*e inal results o %usiness o#erations Ratios measuring t*e e i!ien!" (it* (*i!* t*e assets are em#lo"ed %" a irm Turno$er ratios Ratios measuring t*e e i!ien!" (it* (*i!* t*e assets are em#lo"ed %" a irm Ratios dis!losing t*e inan!ial #osition or sol$en!" o t*e irm O$erall #ro ita%ilit" ratio Ratios (*i!* indi!ates t*e #er!entage o return on t*e total !a#ital em#lo"ed in t*e %usiness Ratios (*i!* re le!t t*e inal results o %usiness o#erations Multi#le '*oi!e Single Ans(er .

9arious #eriodi!al re#orts a%out outstanding rom t*e !ustomers .Question T*e real $alue o t*e assets is less t*an t*e %oo& $alue o t*e assets due to #ur!*ase o t*e assets during in lationar" situations results into 'orre!t Ans(er O$er!a#italisation )our Ans(er O$er!a#italisation Sele!t T*e 1lan& Question Wit*out Re!ourses a!toring is also re erred to as 22222222 'orre!t Ans(er Full a!toring )our Ans(er Fero a!toring Multi#le '*oi!e Multi#le Ans(er Question Indi!ate (*i!* o t*ese are Pro ita%ilit" ratios 'orre!t Ans(er O#erating ratio .3ross Pro it ratio )our Ans(er O#erating ratio .3ross Pro it ratio Multi#le '*oi!e Multi#le Ans(er Question T*e %oo&0&ee#ing and a!!ounting a!ti$ities in relation to t*e re!ei$a%les management underta&en %" t*e a!tor in!ludes 'orre!t Ans(er Maintenan!e o de%tors ledger .9arious #eriodi!al re#orts a%out outstanding rom t*e !ustomers .Pre#aring inan!ial statements Sele!t T*e 1lan& Question 22222222 is more use ul to t*e management as a tool o #eriods 'orre!t Ans(er 'as* lo( anal"sis )our Ans(er Ratio anal"sis inan!ial anal"sis in s*ort Multi#le '*oi!e Single Ans(er Question A!!ounting rate o return is !al!ulated as 'orre!t Ans(er GTotal Pro its / 4Net In$estment H No7 o "ears o Pro its5I H <== )our Ans(er GTotal Pro its / 4Net In$estment H No7 o "ears o Pro its5I H <== .Age0(ise anal"sis o t*e outstanding )our Ans(er Maintenan!e o de%tors ledger .