Financial Management Set 30 MCQs

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