Working Capital Management Set 3 MCQs

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.