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This set of Working Capital Management Multiple Choice Questions & Answers (MCQs) focuses on Working Capital Management Set 3

Q1 | If ke = r, then under Walter's Model, which of the following is irrelevant?
  • earnings per share,
  • dividend per share,
  • dp ratio
  • none of the above
Q2 | MM Model argues that dividend is irrelevant as
  • the value of the firm depends upon earning power
  • the investors buy shares for capital gain,
  • dividend is payable after deciding the retained earnings,
  • dividend is a small amount
Q3 | Which of the following represents passive dividend policy ?
  • that dividend is paid as a % of eps,
  • that dividend is paid as a constant amount,
  • that dividend is paid after retaining profits for reinvestment,
  • all of the above
Q4 | In case of Gordon's Model, the MP for zero payout is zero. It means that
  • shares are not traded,
  • shares available free of cost,
  • investors are not ready to offer any price,
  • none of the above
Q5 | Gordon's Model of dividend relevance is same as
  • no-growth model of equity valuation,
  • constant growth model of equity valuation,
  • price-earning ratio
  • inverse of price earnings ratio
Q6 | If 'r' = 'ke', than MP by Walter's Model and Gordon's Model for different payoutratios would be
  • unequal,
  • zero,
  • equal,
  • negative
Q7 | Dividend Payout Ratio is
  • pat÷ capital,
  • dps ÷ eps,
  • pref. dividend ÷ pat,
  • pref. dividend ÷ equity dividend
Q8 | Dividend declared by a company must be paid in
  • 20 days,
  • 30 days
  • 32 days,
  • 42 days
Q9 | Dividend Distribution Tax is payable by
  • shareholders to government
  • shareholders to company,
  • company to government,
  • holding to subsidiary company
Q10 | Shares of face value of 10 are 80% paid up. The company declares adividend of 50%. Amount of dividend per share is
  • . 5,
  • .4
  • . 80,
  • . 50
Q11 | Which of the following generally not result in increase in total dividend liability?
  • share-split,
  • right issue,
  • bonus issue
  • all of the above
Q12 | Dividends are paid out of
  • accumulated profits
  • gross profit,
  • profit after tax,
  • general reserve
Q13 | In India, Dividend Distribution tax is paid on
  • equity share
  • preference share
  • debenture,
  • both (a) and (b)
Q14 | Every company should follow
  • high dividend payment
  • low dividend payment,
  • stable dividend payment
  • fixed dividend payment
Q15 | 'Constant Dividend Per Share' Policy is considered as:
  • increasing dividend policy
  • decreasing dividend policy,
  • stable dividend policy
  • none of the above
Q16 | Which of the following is not a type of dividend payment?
  • bonus issue,
  • right issue,
  • share split,
  • both (b) and (c)
Q17 | If the following is an element of dividend policy?
  • production capacity,
  • change in management,
  • informational content,
  • debt service capacity
Q18 | Stock split is a form of
  • dividend payment,
  • bonus issue,
  • financial restructuring,
  • dividend in kind
Q19 | In stock dividend:
  • authorized capital always increases,
  • paid up capital always increases,
  • face value per share decreases
  • market price for share decreases
Q20 | Which of the following is not considered in Lintner's Model ?
  • dividend payout ratio,
  • current eps,
  • speed of adjustment,
  • preceding year eps
Q21 | Which of the following is not relevant for dividend payment for a year ?
  • cash flow position
  • profit position,
  • paid up capital,
  • retained earnings
Q22 | Cash Budget does not include
  • dividend payable
  • postal expenditure,
  • issue of capital,
  • total sales figure
Q23 | Which of the following is not a motive to hold cash?
  • transactionary motive,
  • pre-scautionary motive,
  • captal investment,
  • none of the above.
Q24 | Cheques deposited in bank may not be available for immediate use due to
  • payment float
  • recceipt float
  • net float,
  • playing the float.
Q25 | Difference between between the bank balance as per Cash Book and Pass Bookmay be due to:
  • overdraft,
  • float,
  • factoring,
  • none of the above.