Professional Documents
Culture Documents
13. ___________________ of a firm refers to the composition of its long-term funds and its capital
structure.
1a) Capitalisation
2b) Over-capitalisation
3c) Under-capitalisation
4d) Market capitalization
14. In the _______________, the future value of all cash inflow at the end of time horizon at a particular
rate of interest is calculated.
5. ______________ is the price at which the bond is traded in the stock exchange. a) Redemption value
b) Face value c) Market value d) Maturity value
16. In _______________ approach, the capital structure decision is relevant to the valuation of the firm.
2a) Net income
3b) Net operating income
4c) Traditional
5d) Miller and Modigliani
17. _______________ refers to the amount invested in various components of current assets.
18. ____________ is the length of time between the firm’s actual cash expenditure and its own cash
receipt.
2a) Net operating cycle
3b) Cash conversion cycle
4c) Working capital cycle
5d) Gross operating cycle
19. _______________ refers to a firm holding some cash to meet its routine expenses that are incurred
in the ordinary course of business.
2a) Speculative motive
3b) Transaction motive
4c) Precautionary motive
5d) Compensating motive
110. _______________ refers to the length of time allowed by a firm for its customers to make payment
for their purchases.
2a) Holding period
3b) Pay-back period
4c) Average collection period
5d) Credit period
11. ____________________ and __________________________ are the two versions of goals of the
financial management of the firm.
112. Which of the following would NOT improve the current ratio?
2a) Borrow short term to finance additional fixed assets.
3b) Issue long-term debt to buy inventory.
4c) Sell common stock to reduce current liabilities.
5d) Sell fixed assets to reduce accounts payable.
13. The gross profit margin is unchanged, but the net profit margin declined over the same period. This
could have happened if
16. Which of the following is NOT a cash outflow for the firm?
a) depreciation.
b) dividends.
c) interest payments.
d) taxes.
118. To increase a given present value, the discount rate should be adjusted
2a) upward.
3b) downward.
4c) No change.
5d) constant
119. In deciding the appropriate level of current assets for the firm, management is confronted with
2a) a trade-off between profitability and risk.
3b) a trade-off between liquidity and marketability.
4c) a trade-off between equity and debt.
5d) a trade-off between short-term versus long-term borrowing.
126. What are the different options other than cash used for distributing profits to shareholders?
a) Bonus shares
b) Stock split
c) Stock purchase
d) All of these
28. When total current assets exceeds total current liabilities it refers to.
a. Gross Working Capital
b. Temporary Working Capital
c. Both a and b
d. Net Working Capital
129. What is the difference between the current ratio and the quick ratio?
2a) The current ratio includes inventories and the quick ratio does not.
3b) The current ratio does not include inventories and the quick ratio does.
4c) The current ratio includes physical capital and the quick ratio does not.
5d) The current ratio does not include physical capital and the quick ratio does.
131. Which of the following are not among the daily activities of financial management?
2a) sale of shares and bonds
3b) credit management
4c) inventory control
5d) the receipt and disbursement of funds
132. An asset is a-
a. Source of fund
b. Use of fund
c. Inflow of funds
d. none of the above.
133. If a company issues bonus shares the debt equity ratio will
a) Remain unaffected
b) Will be affected
c) Will improve
d) none of the above.
1 b
2 d
3 a
4 c
5 c
6 a
7 c
8 a
9 b
10 d
11 a
12 a
13 c
14 d
15 b
16 a
17 a
18 b
19 a
20 a
21 b
22 a
23 a
24 a
25 b
26 d
27 d
28 d
29 a
30 c
31 a
32 b
33 c
34 d
35 b