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Working Capital Management
solved mcqs
3 of 6 sets
51. If ke = r, then under Walter's Model, which of
the following is irrelevant?
a. earnings per share,

B. dividend per share,

c. dp ratio

d. none of the above

Discussion
c. dp ratio
52. MM Model argues that dividend is irrelevant
as
a. the value of the firm depends upon earning power

B. the investors buy shares for capital gain,

c. dividend is payable after deciding the retained earnings,

d. dividend is a small amount

Discussion
a. the value of the firm depends upon earning power
53. Which of the following represents passive
dividend policy ?
a. that dividend is paid as a % of eps,

B. that dividend is paid as a constant amount,

c. that dividend is paid after retaining profits for reinvestment,

d. all of the above

Discussion
c. that dividend is paid after retaining profits for reinvestment,
54. In case of Gordon's Model, the MP for zero
payout is zero. It means that
a. shares are not traded,

B. shares available free of cost,

c. investors are not ready to offer any price,

d. none of the above

Discussion
c. investors are not ready to offer any price,
55. Gordon's Model of dividend relevance is same
as
a. no-growth model of equity valuation,

B. constant growth model of equity valuation,

c. price-earning ratio

d. inverse of price earnings ratio

Discussion
b. constant growth model of equity valuation,
56. If 'r' = 'ke', than MP by Walter's Model and
Gordon's Model for different payoutratios would
be
a. unequal,

B. zero,

c. equal,

d. negative

Discussion
c. equal,
57. Dividend Payout Ratio is
a. pat÷ capital,

B. dps ÷ eps,

c. pref. dividend ÷ pat,

d. pref. dividend ÷ equity dividend

Discussion
b. dps ÷ eps,
58. Dividend declared by a company must be paid
in
a. 20 days,

B. 30 days

c. 32 days,

d. 42 days

Discussion
b. 30 days
59. Dividend Distribution Tax is payable by
a. shareholders to government

B. shareholders to company,

c. company to government,

d. holding to subsidiary company

Discussion
c. company to government,
60. Shares of face value of 10 are 80% paid up.
The company declares adividend of 50%. Amount
of dividend per share is
a. . 5,

B. .4

c. . 80,

d. . 50

Discussion
b. .4
61. Which of the following generally not result in
increase in total dividend liability?
a. share-split,

B. right issue,

c. bonus issue

d. all of the above

Discussion
a. share-split,
62. Dividends are paid out of
a. accumulated profits

B. gross profit,

c. profit after tax,

d. general reserve

Discussion
c. profit after tax,
63. In India, Dividend Distribution tax is paid on
a. equity share

B. preference share

c. debenture,

d. both (a) and (b)

Discussion
d. both (a) and (b)
64. Every company should follow
a. high dividend payment

B. low dividend payment,

c. stable dividend payment

d. fixed dividend payment

Discussion
c. stable dividend payment
65. 'Constant Dividend Per Share' Policy is
considered as:
a. increasing dividend policy

B. decreasing dividend policy,

c. stable dividend policy

d. none of the above

Discussion
c. stable dividend policy
66. Which of the following is not a type of dividend
payment?
a. bonus issue,

B. right issue,

c. share split,

d. both (b) and (c)

Discussion
c. share split,
67. If the following is an element of dividend
policy?
a. production capacity,

B. change in management,

c. informational content,

d. debt service capacity

Discussion
c. informational content,
68. Stock split is a form of
a. dividend payment,

B. bonus issue,

c. financial restructuring,

d. dividend in kind

Discussion
c. financial restructuring,
69. In stock dividend:
a. authorized capital always increases,

B. paid up capital always increases,

c. face value per share decreases

d. market price for share decreases

Discussion
d. market price for share decreases
70. Which of the following is not considered in
Lintner's Model ?
a. dividend payout ratio,

B. current eps,

c. speed of adjustment,

d. preceding year eps

Discussion
d. preceding year eps
71. Which of the following is not relevant for
dividend payment for a year ?
a. cash flow position

B. profit position,

c. paid up capital,

d. retained earnings

Discussion
d. retained earnings
72. Cash Budget does not include
a. dividend payable

B. postal expenditure,

c. issue of capital,

d. total sales figure

Discussion
d. total sales figure
73. Which of the following is not a motive to hold
cash?
a. transactionary motive,

B. pre-scautionary motive,

c. captal investment,

d. none of the above.

Discussion
c. captal investment,
74. Cheques deposited in bank may not be
available for immediate use due to
a. payment float

B. recceipt float

c. net float,

d. playing the float.

Discussion
b. recceipt float
75. Difference between between the bank balance
as per Cash Book and Pass Bookmay be due to:
a. overdraft,

B. float,

c. factoring,

d. none of the above.

Discussion
b. float,

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