Financial Management
k
1. Receiptkofkloanskborrowingskappearkinkthekcashkbudgetkunderkthekheadk:kNonkoperatingkcashkinflo
w
2. Thekformkofkthekorganizationkwherekthekpersonalkassetskofkthekownerkarekatkstate,kifkthekassetskofkth
ekfirmkarekinsufficientktokmeetkthekliabilitieskisk:kUnlimitedkliabilitykorganization
3. Privateklimitedkcompanykandkpublicklimitedkcompanykarekthekcompanieskbasedkonkthekclassificationk
ofk:kNumberkofkMembers
4. Akdecreasekinkthekcurrentkassetsk:kDecreaseskworkingkcapital
5. Thekformulakforkfixedkassetskturnoverkratiokisk:kNetksalesk/kFixedkassets
6. Shortcomingskofkdebentureskfromkinvestor’skpointkofkview:kThekinterestkofkdebentureskarekfullykta
xable,kTheykdoknotkcarrykthekrightktokvote,kdebentureskpriceskarekvulnerablektokincreasekinkt
hekinterest
7. Ratiokcankbekexpresseskonlykinkpercentagek:kFalse
8. Thekratiokwhichkmeasureskthekprofitkavailablektokthekequitykshareholderskonkaskperksharekbasiskiskte
rmedkask:kEarningkperkshare
9. Externalksourceskofkfundskarek:kFundskfromklongktermkloans,kSalekofkfixedkassets
10. FactoringkiskakfinancialkaskwellkaskAdministrativekfunction.
11. Thekcombinationkofkirrevocablekandkconfirmedkletterkofkcreditkcankbekcankbekconsideredktokbekakgua
ranteedkpaymentkonkthekpartkofkthekexporterk:kTrue
12. Grosskprofitkcankbekincreasedkbykeitherk:kReducedkproductionkcost,ksaleskpricekremainingktheks
ame;kincreasedksaleskprice,kreducedkproductionkcost;kIncreasedksaleskprice,kproductionkco
stkremainingktheksame.
13. Inkcertainkcasesk,kthekcapitalkexpenditurekmayknotkinvolvekanykspecifickinflowkofkfunds,kbutkonlykoutfl
owkofkfundsk:kTrue
14. Chhorrekcommitteekhasksuggestedkthatkthekbankskshouldkappraisekandkfixkseparateklimitskforknorma
lknonkpeakklevelskandkalsokpeakklevels,kitkshouldkbekdonekinkrespectkofkallkborrowerskenjoyingkthekba
nkingkcreditklimitskofkmorekthankRs.k:k10kLakhs.
15. Registeredkcompanieskarekthekcompanieskwhichkarekformedkandkregisteredkunderkthek:kCompanie
skActk1956kk
16. Accountskreceivablekiskankexamplekofkcurrentkassetsk:kTrue
17. Earningskperksharekiskcalculatedkask:k(Profitkafterktaxk–kpreferencekdividend)/kNokofkequitykshare
18. Floatkindicatesk:kThekdifferencekbetweenkthekbankkbalancekaskperkthekbankkbookkandkaskperkt
hekbankkpassbookk/kBankkstatement.
19. Inkfinancialkterms,kprofitkafterktaxkcankbekreferredkask:kEarningkafterktax
20. Advantageskofkpreferencekshareskfromkshareholderskpointkofkviewk:kForkakcorporatekinvestor,kpre
ferencekdividedkincome;kkitkearnskakstablekdividendkrate
21. Grosskprofitkiskascertainedkbykthekdifferencekbetweenksaleskandknormallykthekfollowingkexpensesk:k
Costkofkpurchases,kExpenseskrelatedktokpurchases,kStockkadjustments
, Financial Management
k
22. Disadvantagekofkfactoringkarek:kThekfinancialkburdenkonkthekcompanykincreases;kItkmaykbekcon
sideredktokbeksymptomkofkfinancialkweaknesskonkthekpartkofktheksellingkcompany;kInkIndiank
circumstances,kfactoringkiskmainlykwithkresourcekfactoring.kThekriskkofknonkpaymentkonkthe
k partkofkthekcustomerkiskbornekbyktheksellingkfirm.kThiskrestrictskitskpopularity.
23. Advantageskofkinternationalkratekofkreturnkisk:kItkconsiderktimekvaluekofkthekmoney,kitkconsidersk
cashkinflowskfromkthekprojectkthroughoutkitsklife,kitkcankbekcomputedkevenkinkthekabsencekof
k thekknowledgekaboutkthekfirm’skcostkofkcapital.
24. Traditionalkapproachkbelieveskthekexistencekofkoptimalkcapitalkstructurek:kTrue
25. Thekcollectionkprogrammekofkthekfirmkkconsistskofk:kmaintainingkthekstatekofkreceivables,kdispatc
hkofkletterktokcustomerkwhosekduekdatekifkapproaching,kTelegraphickandkTelephonickadvisekt
okcustomerskaroundkthekduekdate.
26. Inkcasekofkcashkcredit,kthekcompanykneedknotkhavekakformalkcurrentkaccountk:kTrue
27. Earningsk/kPricekapproachktokcomputekcostkofkequitykshareskiskobjectedkonkthekfollowingkgroundsk:kIt
k wronglykassumeskthatkearningkperksharekwillkremainkconstantkinkfuture,kallkthekearningkmay
k notkbekdistributedkamongkthekshareholderskbykwaykofkdividend
28. Forkthekcomputationkofkgrosskprofitkratio,kmanufacturingkcostkisktokbekconsideredkinkcasekofkmanufac
turingkcompanyk:kTrue
29. Shortcomingskofkdebentureskfromkcompany’skpointkofkviewk:kThekdebenturekinterestkandkcapitalkr
epaymentkarekobligatorykpayment,kDebenturekfinancingkenhanceskthekfinancialkriskkassocia
tedkwithkthekfirm
30. Factorkcankpurchasekthekdebtskofkthekcapitalkmakingkthekimmediatekpaymentkofktheksame,kthiskredu
ceskthekstrainkonkthekWorkingkCapitalkrequirementskofkthekclient.k
31. Akwiderkconnotationkofkthektermkfundkiskfoundkinkthekinterpretationkofkthektermk“funds”kaskResources
k concept.
32. ThekprojectkhavingkmaximumkpositiveknetkpresentkvaluekwillkbekrankedkHighest.
33. OperatingkProfitkwillkbekshownkasksourcekofkfundsknetkofkproposedkdividend.
34. Thekassetskheldkbykakbusinesskwhichkcankbekconvertedkinkthekformkofkcashkorkusedkduringkthekcours
eskofknormalkoperationskisktermedkask:kCurrentkAssets
35. k DahejjakCommitteek:kTokexaminekthekextentktokwhich;kkChorrekCommittee:Tokreviewkmainlyktheksys
temkofk
MarathekCommittee:kTokreviewkthekcreditkauthorization;kNayakkCommitteek:kTokrecognizekthekcontri
bution
36. Thekadvantageskofkcontinuouskstockktakingkarek:kThekfigureskofkstockkcankbekreadilykavailablekf
orkthekpurposekofkperiodickprofitkandklosskaccount,kitkenablesktoklocatekslowkandknonkmovin
gkitems.
37. ProfitabilitykRatiok:kRatiokwhichkreflectkthekfinal,kTurnoverkRatiok:kRatiokmeasuringkthekefficienc
y,kOverallkprofitabilitykratiok:kRatiokwhichkindicatekthek,kFinancialkRatiok:kRatiokdisclosingkthekfinancia
l
, Financial Management
k
38. Theksymptomkofklowkcapacitykutilizationkwillkbekshownkbyk:kFixedkassetskturnoverkratio
39. NetkpresentkvaluekconsiderskCashkInflowkfromkthekprojectkthroughoutkitsklife.
40. ThekoperatingkprofitkearnedkbykthekcompanykiskinkthekformkofkcontributionkdulykreducedkbykthekFixed
k operatingkcost.
41. Thekcurrentkratiokofk2k:k1kiskconsideredktokbekstandard.
42. Creditkratingkisknotkakrecommendationkforkbuying,ksellingkorkholdingkaksecurityk:kTrue
43. ThekmostkcrucialkfinancialkdecisionskofkthekorganizationkarektakenkbykBoardkofkdirectors.
44. Dividentk/kPricekapproachktokcomputekcostkofkequitykshareskiskobjectedkonkthekfollowingkgroundsk:kT
hiskpresupposeskthatkankinvestorklookskforwardkonlyktokreceivekdividendkonkequityksharesk
whichkmayknotkbekcorrect,kItkassumeskthatkthekcompanykwillknotkearnkonkitskretainedkearnin
gskwhichkiskakwrongkassumption.
45. Debtkequitykratiokindicateskthekstakekofksharekholderskandkcreditorskinkthekorganizationk:kTrue
46. Thekprofitkofkthekpartnershipkfirmkisktaxedkatkakflatkratekofk:k35%.
47. OperatingkleveragekiskcalculatedkaskearningskbeforekinterestkandkTaxk/k(EarningskbeforekInterestkan
dkTaxk–kInterest)k:kkFalse
48. Calculatekthekgrosskprofitkratiok:kSaleskRs.k1,00,000/-,kPurchasekRs.k60,000/-
,kSaleskreturnkRs.k10,000/-,kopeningkstockkRs.k20,000/-,kPurchasekreturnkRs.k15,000/-
k Closingkstockk5,000/-k:k33.33%
49. Bankskofkfinancialkinstitutionskgrantingkthektermkloanskarekthekcreditorskofkthekcompanyk:kkTrue
50. Thekdepositkreceiptkshouldkcontaink:kAmountkofkdeposit
51. Ifkthekprofitkmaximizationkiskacceptedkaskthekonlykgoalkofkfinancekfunction,kitkiskcriticizedkonkthekfollo
wingkgroundsk:kIgnoreskriskkfactor,kDoesknotkconsiderksocialkobligation,kIgnoreskqualitykaspe
ctkofkbenefitskassociatedkwithkakfinancialkcoursekifkaction
52. Onekofkthekmostkcommonkmethodsktokmonitorkthekreceivableskonkmacrokbasiskisktokcalculatekagekwi
sekanalysiskofkreceivablesk:kFalse
53. CapitalkRationingk:kSituationkwherekthekcompanykhas,kProblemskrelatingktoksituationkofkcapitalkrat
ioning:kProjectkindividually,kInformalkmethodkofkcapitalkbudgetingkdecision:kSubjectivekmethod,k
Riskkadjustingkdiscountingkratekmethodkofkcapitalkbudgetingkdecisionk:kDiscountingkratekiskincrea
sed
54. Whichkimportantkaccountingkratioskwouldkbekusedkbykakshareholderkwhokiskexaminingkhiskportfolioka
ndkwhokisktokdecidekwhetherkhekholdkorksellkhiskshareskinkthekcompanyk:kEarningskperkshare
55. Forkthekcalculationkofkoperatingkprofitk/kloss,kpreliminarykexpenseskwrittenkoffkshouldkbek:kAddedktok
theknetkprofitkandklosskaccount
56. ForkaccountingkandkTaxkpurposeskofkhirekpurchasekagreement,konlykinterestkisktreatedkaskrevenue
k expenditurekandkiskconsideredktokbekaktaxkdeductiblekexpenditure.
57. Registeredkdebentureskarekthosek:kwhichkcankbektransferredktokanotherkpersonkonlykthroughkt
hekcompany
58. Depreciationkisksometimesktreatedkasksourcekfunds.
, Financial Management
k
59. AskperkthekIIndkmethodksuggestedkbykthekTandonkcommittee,kthekborrowerkshouldkfinancek25%kofkc
urrentkassetskoutkofklongktermkfundskandkthekbankkprovidekthekremainingkfinance.
60. Limitationskofkcapitalkbudgetingkisk:kLifekofkprojectkcankbekestimatedkaccurately,kCashkinflowkca
nknotkbekestimatedkaccurately,kDifficultieskinkdecidingkthekcostkofkcapital
61. Ifkthekprocesskofkcapitalkrationingkiskstrictlykfollowedkthenktherekwillkbekavoidancekofksmallerkprojects
.
62. Floorkratekiskthekmaximumkratekofkinterestkpayablekbykthekcompanykonkthekbondskevenkifkthek
basekratekfallskbelowkakcertainklimit.
63. Computekminimumklevelk:kNormalkusagek40kunitskperkweekkeach,kMinimumkusagek15kunitskperkwee
kkeach,kmaximumkusagek65kunitskperkweekkeach,kreorderkquantityk400kunits,kreorderkperiodk4ktok6kw
eeksk:k190kunits
64. Duringkthekphasekofkboomkandkprosperitykthekcompanykwillklikektokretainkmorekprofitskwhichkcankbek
usedkduringkthekdepressionkwhichkisklikelyktokfollow:kTrue
65. Goodskstolenk(SalekPricekRs.k1000/-kcostkpricekRs.k800/-
)kwhichkofkthekaccountskwillkbekaffectedkbykthisktransactionk:kPurchaseskaccount,kLosskbyktheftkac
count
66. Thekeffectkofkundercapitalizationk:kIncreasedktaxkliabilitykofkthekcompany,kDemandkofkthekemplo
yeesktokincreasekwages
67. Onekofkthektoolkavailablektokthekcompanyktokensurekthekmaintenancekofkoptimumkcashkbalancekiskt
okpreparekcashkbudget.
68. Financialkleasekiskalsokreferredktokaskcapitalkleasek:kTrue
69. Financialkinstitutionskleadingklongktermkfinancekarekbasicallykinterestedkinktheksolvencykposition
k ofkthekorganization.
70. Thekprojectskhavingkprofitabilitykindexkofkmorekthankonekwillkbekaccepted.
71. ThekrecommendationskofkthekTandonkcommitteekincludek:kTheknormskforkinventorykandkaccount
skreceivableskforkaskmanykask15kindustrieskexcludingkheavykengineeringkindustry,kThatkthek
amountkofkbankkcreditkshouldknotkbekdecidedkbykthekcapacityk-----------
72. Debtkservicekcoveragekratiokmaykbekconsideredktokbekonekofkthekmostkimportantkratiokcalculatedkbyk
thek:kBankers,kFinancialkinstitutions
73. Akhighkdebtkequitykratiokmaykindicatekthekfinancialkstakekofkthekcreditorskiskmorekthankthatkofkownersk
:kTrue
74. Livekstockkiskankexamplekofk:kFixedkassets
75. Operatingkcostkincurredkbykthekcompanykcankbekclassifiedkintok:kVariablekcost,ksemikvariablekcost
,kfixedkcost
76. Collectionkfromkdebtorskappearkinkthekcashkbudgetkunderkthekheadk:kOperatingkcashkinflow
77. Internationalkfinancialkfunctionkofkthekorganizationkcompriseskofk:kExchangekofkcurrencies,kstudyk
ofkflowkofkfundskbeyondknationalkboundaries
k
1. Receiptkofkloanskborrowingskappearkinkthekcashkbudgetkunderkthekheadk:kNonkoperatingkcashkinflo
w
2. Thekformkofkthekorganizationkwherekthekpersonalkassetskofkthekownerkarekatkstate,kifkthekassetskofkth
ekfirmkarekinsufficientktokmeetkthekliabilitieskisk:kUnlimitedkliabilitykorganization
3. Privateklimitedkcompanykandkpublicklimitedkcompanykarekthekcompanieskbasedkonkthekclassificationk
ofk:kNumberkofkMembers
4. Akdecreasekinkthekcurrentkassetsk:kDecreaseskworkingkcapital
5. Thekformulakforkfixedkassetskturnoverkratiokisk:kNetksalesk/kFixedkassets
6. Shortcomingskofkdebentureskfromkinvestor’skpointkofkview:kThekinterestkofkdebentureskarekfullykta
xable,kTheykdoknotkcarrykthekrightktokvote,kdebentureskpriceskarekvulnerablektokincreasekinkt
hekinterest
7. Ratiokcankbekexpresseskonlykinkpercentagek:kFalse
8. Thekratiokwhichkmeasureskthekprofitkavailablektokthekequitykshareholderskonkaskperksharekbasiskiskte
rmedkask:kEarningkperkshare
9. Externalksourceskofkfundskarek:kFundskfromklongktermkloans,kSalekofkfixedkassets
10. FactoringkiskakfinancialkaskwellkaskAdministrativekfunction.
11. Thekcombinationkofkirrevocablekandkconfirmedkletterkofkcreditkcankbekcankbekconsideredktokbekakgua
ranteedkpaymentkonkthekpartkofkthekexporterk:kTrue
12. Grosskprofitkcankbekincreasedkbykeitherk:kReducedkproductionkcost,ksaleskpricekremainingktheks
ame;kincreasedksaleskprice,kreducedkproductionkcost;kIncreasedksaleskprice,kproductionkco
stkremainingktheksame.
13. Inkcertainkcasesk,kthekcapitalkexpenditurekmayknotkinvolvekanykspecifickinflowkofkfunds,kbutkonlykoutfl
owkofkfundsk:kTrue
14. Chhorrekcommitteekhasksuggestedkthatkthekbankskshouldkappraisekandkfixkseparateklimitskforknorma
lknonkpeakklevelskandkalsokpeakklevels,kitkshouldkbekdonekinkrespectkofkallkborrowerskenjoyingkthekba
nkingkcreditklimitskofkmorekthankRs.k:k10kLakhs.
15. Registeredkcompanieskarekthekcompanieskwhichkarekformedkandkregisteredkunderkthek:kCompanie
skActk1956kk
16. Accountskreceivablekiskankexamplekofkcurrentkassetsk:kTrue
17. Earningskperksharekiskcalculatedkask:k(Profitkafterktaxk–kpreferencekdividend)/kNokofkequitykshare
18. Floatkindicatesk:kThekdifferencekbetweenkthekbankkbalancekaskperkthekbankkbookkandkaskperkt
hekbankkpassbookk/kBankkstatement.
19. Inkfinancialkterms,kprofitkafterktaxkcankbekreferredkask:kEarningkafterktax
20. Advantageskofkpreferencekshareskfromkshareholderskpointkofkviewk:kForkakcorporatekinvestor,kpre
ferencekdividedkincome;kkitkearnskakstablekdividendkrate
21. Grosskprofitkiskascertainedkbykthekdifferencekbetweenksaleskandknormallykthekfollowingkexpensesk:k
Costkofkpurchases,kExpenseskrelatedktokpurchases,kStockkadjustments
, Financial Management
k
22. Disadvantagekofkfactoringkarek:kThekfinancialkburdenkonkthekcompanykincreases;kItkmaykbekcon
sideredktokbeksymptomkofkfinancialkweaknesskonkthekpartkofktheksellingkcompany;kInkIndiank
circumstances,kfactoringkiskmainlykwithkresourcekfactoring.kThekriskkofknonkpaymentkonkthe
k partkofkthekcustomerkiskbornekbyktheksellingkfirm.kThiskrestrictskitskpopularity.
23. Advantageskofkinternationalkratekofkreturnkisk:kItkconsiderktimekvaluekofkthekmoney,kitkconsidersk
cashkinflowskfromkthekprojectkthroughoutkitsklife,kitkcankbekcomputedkevenkinkthekabsencekof
k thekknowledgekaboutkthekfirm’skcostkofkcapital.
24. Traditionalkapproachkbelieveskthekexistencekofkoptimalkcapitalkstructurek:kTrue
25. Thekcollectionkprogrammekofkthekfirmkkconsistskofk:kmaintainingkthekstatekofkreceivables,kdispatc
hkofkletterktokcustomerkwhosekduekdatekifkapproaching,kTelegraphickandkTelephonickadvisekt
okcustomerskaroundkthekduekdate.
26. Inkcasekofkcashkcredit,kthekcompanykneedknotkhavekakformalkcurrentkaccountk:kTrue
27. Earningsk/kPricekapproachktokcomputekcostkofkequitykshareskiskobjectedkonkthekfollowingkgroundsk:kIt
k wronglykassumeskthatkearningkperksharekwillkremainkconstantkinkfuture,kallkthekearningkmay
k notkbekdistributedkamongkthekshareholderskbykwaykofkdividend
28. Forkthekcomputationkofkgrosskprofitkratio,kmanufacturingkcostkisktokbekconsideredkinkcasekofkmanufac
turingkcompanyk:kTrue
29. Shortcomingskofkdebentureskfromkcompany’skpointkofkviewk:kThekdebenturekinterestkandkcapitalkr
epaymentkarekobligatorykpayment,kDebenturekfinancingkenhanceskthekfinancialkriskkassocia
tedkwithkthekfirm
30. Factorkcankpurchasekthekdebtskofkthekcapitalkmakingkthekimmediatekpaymentkofktheksame,kthiskredu
ceskthekstrainkonkthekWorkingkCapitalkrequirementskofkthekclient.k
31. Akwiderkconnotationkofkthektermkfundkiskfoundkinkthekinterpretationkofkthektermk“funds”kaskResources
k concept.
32. ThekprojectkhavingkmaximumkpositiveknetkpresentkvaluekwillkbekrankedkHighest.
33. OperatingkProfitkwillkbekshownkasksourcekofkfundsknetkofkproposedkdividend.
34. Thekassetskheldkbykakbusinesskwhichkcankbekconvertedkinkthekformkofkcashkorkusedkduringkthekcours
eskofknormalkoperationskisktermedkask:kCurrentkAssets
35. k DahejjakCommitteek:kTokexaminekthekextentktokwhich;kkChorrekCommittee:Tokreviewkmainlyktheksys
temkofk
MarathekCommittee:kTokreviewkthekcreditkauthorization;kNayakkCommitteek:kTokrecognizekthekcontri
bution
36. Thekadvantageskofkcontinuouskstockktakingkarek:kThekfigureskofkstockkcankbekreadilykavailablekf
orkthekpurposekofkperiodickprofitkandklosskaccount,kitkenablesktoklocatekslowkandknonkmovin
gkitems.
37. ProfitabilitykRatiok:kRatiokwhichkreflectkthekfinal,kTurnoverkRatiok:kRatiokmeasuringkthekefficienc
y,kOverallkprofitabilitykratiok:kRatiokwhichkindicatekthek,kFinancialkRatiok:kRatiokdisclosingkthekfinancia
l
, Financial Management
k
38. Theksymptomkofklowkcapacitykutilizationkwillkbekshownkbyk:kFixedkassetskturnoverkratio
39. NetkpresentkvaluekconsiderskCashkInflowkfromkthekprojectkthroughoutkitsklife.
40. ThekoperatingkprofitkearnedkbykthekcompanykiskinkthekformkofkcontributionkdulykreducedkbykthekFixed
k operatingkcost.
41. Thekcurrentkratiokofk2k:k1kiskconsideredktokbekstandard.
42. Creditkratingkisknotkakrecommendationkforkbuying,ksellingkorkholdingkaksecurityk:kTrue
43. ThekmostkcrucialkfinancialkdecisionskofkthekorganizationkarektakenkbykBoardkofkdirectors.
44. Dividentk/kPricekapproachktokcomputekcostkofkequitykshareskiskobjectedkonkthekfollowingkgroundsk:kT
hiskpresupposeskthatkankinvestorklookskforwardkonlyktokreceivekdividendkonkequityksharesk
whichkmayknotkbekcorrect,kItkassumeskthatkthekcompanykwillknotkearnkonkitskretainedkearnin
gskwhichkiskakwrongkassumption.
45. Debtkequitykratiokindicateskthekstakekofksharekholderskandkcreditorskinkthekorganizationk:kTrue
46. Thekprofitkofkthekpartnershipkfirmkisktaxedkatkakflatkratekofk:k35%.
47. OperatingkleveragekiskcalculatedkaskearningskbeforekinterestkandkTaxk/k(EarningskbeforekInterestkan
dkTaxk–kInterest)k:kkFalse
48. Calculatekthekgrosskprofitkratiok:kSaleskRs.k1,00,000/-,kPurchasekRs.k60,000/-
,kSaleskreturnkRs.k10,000/-,kopeningkstockkRs.k20,000/-,kPurchasekreturnkRs.k15,000/-
k Closingkstockk5,000/-k:k33.33%
49. Bankskofkfinancialkinstitutionskgrantingkthektermkloanskarekthekcreditorskofkthekcompanyk:kkTrue
50. Thekdepositkreceiptkshouldkcontaink:kAmountkofkdeposit
51. Ifkthekprofitkmaximizationkiskacceptedkaskthekonlykgoalkofkfinancekfunction,kitkiskcriticizedkonkthekfollo
wingkgroundsk:kIgnoreskriskkfactor,kDoesknotkconsiderksocialkobligation,kIgnoreskqualitykaspe
ctkofkbenefitskassociatedkwithkakfinancialkcoursekifkaction
52. Onekofkthekmostkcommonkmethodsktokmonitorkthekreceivableskonkmacrokbasiskisktokcalculatekagekwi
sekanalysiskofkreceivablesk:kFalse
53. CapitalkRationingk:kSituationkwherekthekcompanykhas,kProblemskrelatingktoksituationkofkcapitalkrat
ioning:kProjectkindividually,kInformalkmethodkofkcapitalkbudgetingkdecision:kSubjectivekmethod,k
Riskkadjustingkdiscountingkratekmethodkofkcapitalkbudgetingkdecisionk:kDiscountingkratekiskincrea
sed
54. Whichkimportantkaccountingkratioskwouldkbekusedkbykakshareholderkwhokiskexaminingkhiskportfolioka
ndkwhokisktokdecidekwhetherkhekholdkorksellkhiskshareskinkthekcompanyk:kEarningskperkshare
55. Forkthekcalculationkofkoperatingkprofitk/kloss,kpreliminarykexpenseskwrittenkoffkshouldkbek:kAddedktok
theknetkprofitkandklosskaccount
56. ForkaccountingkandkTaxkpurposeskofkhirekpurchasekagreement,konlykinterestkisktreatedkaskrevenue
k expenditurekandkiskconsideredktokbekaktaxkdeductiblekexpenditure.
57. Registeredkdebentureskarekthosek:kwhichkcankbektransferredktokanotherkpersonkonlykthroughkt
hekcompany
58. Depreciationkisksometimesktreatedkasksourcekfunds.
, Financial Management
k
59. AskperkthekIIndkmethodksuggestedkbykthekTandonkcommittee,kthekborrowerkshouldkfinancek25%kofkc
urrentkassetskoutkofklongktermkfundskandkthekbankkprovidekthekremainingkfinance.
60. Limitationskofkcapitalkbudgetingkisk:kLifekofkprojectkcankbekestimatedkaccurately,kCashkinflowkca
nknotkbekestimatedkaccurately,kDifficultieskinkdecidingkthekcostkofkcapital
61. Ifkthekprocesskofkcapitalkrationingkiskstrictlykfollowedkthenktherekwillkbekavoidancekofksmallerkprojects
.
62. Floorkratekiskthekmaximumkratekofkinterestkpayablekbykthekcompanykonkthekbondskevenkifkthek
basekratekfallskbelowkakcertainklimit.
63. Computekminimumklevelk:kNormalkusagek40kunitskperkweekkeach,kMinimumkusagek15kunitskperkwee
kkeach,kmaximumkusagek65kunitskperkweekkeach,kreorderkquantityk400kunits,kreorderkperiodk4ktok6kw
eeksk:k190kunits
64. Duringkthekphasekofkboomkandkprosperitykthekcompanykwillklikektokretainkmorekprofitskwhichkcankbek
usedkduringkthekdepressionkwhichkisklikelyktokfollow:kTrue
65. Goodskstolenk(SalekPricekRs.k1000/-kcostkpricekRs.k800/-
)kwhichkofkthekaccountskwillkbekaffectedkbykthisktransactionk:kPurchaseskaccount,kLosskbyktheftkac
count
66. Thekeffectkofkundercapitalizationk:kIncreasedktaxkliabilitykofkthekcompany,kDemandkofkthekemplo
yeesktokincreasekwages
67. Onekofkthektoolkavailablektokthekcompanyktokensurekthekmaintenancekofkoptimumkcashkbalancekiskt
okpreparekcashkbudget.
68. Financialkleasekiskalsokreferredktokaskcapitalkleasek:kTrue
69. Financialkinstitutionskleadingklongktermkfinancekarekbasicallykinterestedkinktheksolvencykposition
k ofkthekorganization.
70. Thekprojectskhavingkprofitabilitykindexkofkmorekthankonekwillkbekaccepted.
71. ThekrecommendationskofkthekTandonkcommitteekincludek:kTheknormskforkinventorykandkaccount
skreceivableskforkaskmanykask15kindustrieskexcludingkheavykengineeringkindustry,kThatkthek
amountkofkbankkcreditkshouldknotkbekdecidedkbykthekcapacityk-----------
72. Debtkservicekcoveragekratiokmaykbekconsideredktokbekonekofkthekmostkimportantkratiokcalculatedkbyk
thek:kBankers,kFinancialkinstitutions
73. Akhighkdebtkequitykratiokmaykindicatekthekfinancialkstakekofkthekcreditorskiskmorekthankthatkofkownersk
:kTrue
74. Livekstockkiskankexamplekofk:kFixedkassets
75. Operatingkcostkincurredkbykthekcompanykcankbekclassifiedkintok:kVariablekcost,ksemikvariablekcost
,kfixedkcost
76. Collectionkfromkdebtorskappearkinkthekcashkbudgetkunderkthekheadk:kOperatingkcashkinflow
77. Internationalkfinancialkfunctionkofkthekorganizationkcompriseskofk:kExchangekofkcurrencies,kstudyk
ofkflowkofkfundskbeyondknationalkboundaries
