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This set of Strategic Financial Management Multiple Choice Questions & Answers (MCQs) focuses on Strategic Financial Management Set 6

Q1 | The ideal situation is to have high financial leverage and low operating leverage.
  • False
  • True
  • none
  • all
Q2 | Composite leverage explains change in taxable income on account of change in sales
  • True
  • False
  • none
  • all
Q3 | Dividend on preference share capital is ignored while calculating operating leverage.
  • True
  • False
  • none
  • all
Q4 | Trading on equity implies having a ------ debt-equity ratio.
  • Low
  • Medium
  • High
  • Normal
Q5 | ………. on capital is called cost of capital.
  • Minimum expected return
  • Normally expected return
  • Higher expected return
  • None of these
Q6 | Which among the following method is based on time value of money?
  • Pay-back period
  • Post pay-back profitability
  • Discounted cash flow method
  • ARR method
Q7 | Under net present value criteria, a project is approved if ……
  • NPV is positive
  • The funds are unlimited
  • Both A & B
  • None of these
Q8 | The return available from the project after the pay-back period is not considered in the case of ……
  • Net present value
  • Profitability index
  • Internal rate of return
  • Pay-back period method
Q9 | Internal rate of return and net present value are synonymous terms.
  • True
  • False
  • none
  • all
Q10 | Ind AS deals with Lease finance is ____
  • Ind AS 17
  • Ind AS 117
  • Ind AS 102
  • Ind AS 115
Q11 | ……..is a long term lease and the lessee will be paying much more than the cost of the property orequipment to the lessor in the form of lease charges.
  • Operating lease
  • Financial lease
  • Leveraged lease
  • Direct lease
Q12 | ………is also known as dividend capitalisation model
  • Walter’s model
  • Gordon’s model
  • Modiglani & Millers model
  • None of these
Q13 | SVA stands for….
  • Share value accounted
  • Statutory value addition
  • Shareholder value added
  • None of the above
Q14 | Financial risk arises when there is an involvement of ……in the capital structure
  • Debt
  • Equity
  • Right issue
  • Bonus issue
Q15 | The concept of EVA has been developed by …….
  • Alfred marshal
  • Benjamin Fleming
  • Stern Steward
  • Charles H Dow
Q16 | Use of more debt capital rather than equity capital is called……
  • Risk taking
  • Operating leverage
  • Combined leverage
  • Financial leverage
Q17 | The policy on quantum of dividend to be distributed as dividend is termed as ……
  • Profit sharing policy
  • Appropriation
  • Dividend policy
  • Distribution policy
Q18 | Operating leverage is not favourable when ………
  • Fixed costs are more than contribution
  • Fixed cost is less than variable cost
  • Fixed cost and variable cost are equal
  • None of the above cases
Q19 | Stock dividend and bonus shares are synonymous terms.
  • True
  • False
  • none
  • all