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This set of Financial Management Multiple Choice Questions & Answers (MCQs) focuses on Financial Management Set 30

Q1 | In Walter model formula D stands for
  • Dividend per share
  • Direct Dividend
  • Dividend Earning
  • None of these
Q2 | In MM model MM stands for...
  • M.Khan and Modigiliani
  • Miller and M.Khan
  • Modigiliani and M.Khan
  • Miller and Modigliani
Q3 | The addition of all current assets investment is known as...
  • Net Working Capital
  • Gross Working capital
  • Temporary Working Capital
  • All of these
Q4 | When total current assets exceeds total current liabilities it refers to.
  • Gross Working Capital
  • Temporary Working Capital
  • Both a and b
  • Net Working Capital
Q5 | If the weighting of equity in total capital is 1/3, that of debt is 2/3, the return on equity is 15% that of debt is 10% and the corporate tax rate is 32%, what is the Weighted Average Cost of Capital (WACC)?
  • 10.533%
  • 7.533%
  • 9.533%
  • 11.350%
Q6 | Which of the following would not be financed from working capital?
  • Cash float.
  • Accounts receivable.
  • Credit sales.
  • A new personal computer for the office.
Q7 | What is the difference between the current ratio and the quick ratio?
  • The current ratio includes inventories and the quick ratio does not.
  • The current ratio does not include inventories and the quick ratio does.
  • The current ratio includes physical capital and the quick ratio does not.
  • The current ratio does not include physical capital and the quick ratio does.
Q8 | Which of the following working capital strategies is the most aggressive?
  • Making greater use of short term finance and maximizing net short term asset.
  • Making greater use of long term finance and minimizing net short term asset.
  • Making greater use of short term finance and minimizing net short term asset.
  • Making greater use of long term finance and maximizing net short term asset.
Q9 | Which of the following is not a metric to use for measuring the length of the cash cycle?
  • Acid test days.
  • Accounts receivable days.
  • Accounts payable days.
  • Inventory days.
Q10 | Which of the following is not the responsibility of financial management?
  • 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
Q11 | Which of the following are not among the daily activities of financial management?
  • sale of shares and bonds
  • credit management
  • inventory control
  • the receipt and disbursement of funds
Q12 | Debt Equity Ratio is 3:1,the amount of total assets Rs.20 lac,current ratio is 1.5:1 and owned funds Rs.3 lac.What is the amount of current asset?
  • Rs.5 lac
  • Rs.3 lac
  • Rs.12 lac
  • d) none of the above.
Q13 | Banks generally prefer Debt Equity Ratio at :
  • 1:1
  • 1:3
  • 2:1
  • 3:1
Q14 | An asset is a
  • Source of fund
  • Use of fund
  • Inflow of funds
  • none of the above.
Q15 | If a company issues bonus shares the debt equity ratio will
  • Remain unaffected
  • Will be affected
  • Will improve
  • none of the above.
Q16 | In the balance sheet amount of total assets is Rs.10 lac, current liabilities Rs.5 lac & capital & reserves are Rs.2 lac .What is the debt equity ratio?
  • a)1;1
  • 1.5:1
  • c)2:1
  • none of the above.
Q17 | In last year the current ratio was 3:1 and quick ratio was 2:1.Presently current ratio is 3:1 but quick ratio is 1:1.This indicates comparably
  • high liquidity
  • higher stock
  • lower stock
  • low liquidity
Q18 | Authorised capital of a company is Rs.5 lac, 40% of it is paid up. Loss incurred during the year is Rs.50,000. Accumulated loss carried from last year is Rs.2 lac. The company has a Tangible Net Worth of
  • Nil
  • Rs.2.50 lac
  • (-)Rs.50,000
  • Rs.1 lac.
Q19 | Proprietary ratio is calculated by
  • Total assets/Total outside liability
  • Total outside liability/Total tangible assets
  • Fixed assets/Long term source of fund
  • Proprietors’’ Funds/Total
Q20 | Current ratio of a concern is 1,its net working capital will be
  • Positive
  • Negative
  • Nil
  • None of the above
Q21 | Current ratio is 4:1.Net Working Capital is Rs.30,000.Find the amount of currentAssets.
  • Rs.10,000
  • Rs.40,000
  • Rs.24,000
  • Rs.6,000
Q22 | Current ratio is 2:5.Current liability is Rs.30000.The Net working capital is
  • Rs.18,000
  • Rs.45,000
  • Rs.(-) 45,000
  • Rs.(-)18000
Q23 | Quick assets do not include
  • Govt.bond
  • Book debts
  • Advance for supply of raw materials
  • Inventories.
Q24 | The ideal quick ratio is
  • 2:1
  • 1:1
  • 5:1
  • None of the above