'Bird in hand' argument is given by
1.Walker's Model
2.Gordon's Model
3.MM Mode
4.Residuals Theory
'That there is no corporate tax' is assumed by:
1.Net Income Approach
2.Net Operating Income Approach
3.Traditional Approach
4.All of these
5Cs of the credit does not include
1.Collateral
2.Character
3.Conditions
4.None of the above
80% of sales of 10,00,000 of a firm are on credit. It has a Receivable Turnover of 8. What is the Average collection period (360 days a year) and Average Debtors of the firm?
1.45 days and 1,00,000
2.360 days and 1,00,000
3.45 days and 8,00,000
4.360 days and 1,25,000
A short-term lease which is often cancellable is known as
1.Finance Lease
2.Net Lease
3.Operating Lease
4.Leverage Lease
ABC Analysis is used in
1.Inventory Management
2.Receivables Management
3.Accounting Policies
4.Corporate Governance
An implicit cost of increasing proportion of debt is:
1.Tax should would not be available on new debt
2.P.E. Ratio would increase
3.Equity shareholders would demand higher return
4.Rate of Return of the company would decrease
Basic objective of diversification is
1.Increasing Return
2.Maximising Return
3.Decreasing Risk
4.Maximizing Risk
Benefit of 'Trading on Equity' is available only if:
1.Rate of Interest < Rate of Return
2.Rate of Interest > Rate of Return
3.Both (a) and (b)
4.None of (d) and (b)
Between two capital plans, if expected EBIT is more than indifference level of EBIT, then
1.Both plans be rejected
2.Both plans are good
3.One is better than other
4.None of the above
Capital Budgeting is a part of:
1.Investment Decision
2.Working Capital Management
3.Marketing Management
4.capital structure
Cash Inflows from a project include:
1.Tax Shield of Depreciation
2.After-tax Operating Profits
3.Raising of Funds
4.Both (a) and (b)
Cheques deposited in bank may not be available for immediate use due to
1.Payment Float
2.Recceipt Float
3.Net Float
4.Playing the Float
Concept of Maximum Permissible Bank finance was introduced by
1.Kannan Committee
2.Chore Committee
3.Nayak Committee
4.Tandon Committee
Cost of Capital refers to:
1.Flotation Cost
2.Dividend
3.Required Rate of Return
4.None of the above
Cost of issuing new shares to the public is known as:
1.Cost of Equity
2.Cost of Capital
3.Flotation Cost
4.Marginal Cost of Capital
Debt to Total Assets of a firm is.2. The Debt to Equity boo would be:
1.0.80
2.0.25
3.1.00
4.0.75
Dividends are paid out of
1.Accumulated Profits
2.Gross Profit
3.Profit after Tax
4.General Reserve
Financial break-even level of EBIT is:
1.Intercept at Y-axis
2.Intercept at X-axis
3.Slope of EBIT-EPS line
4.None of the above
Financial Leverage measures relationship between
1.EBIT and PBT
2.EBIT and EPS
3.Sales and PBT
4.Sales and EPS
Float management is related to
1.Cash Management
2.Inventory Management
3.Receivables Management
4.Raw Materials Management
Gordon's Model of dividend relevance is same as
1.No-growth Model of equity valuation
2.Constant growth Model of equity valuation
3.Price-Earning Ratio
4.Inverse of Price Earnings Ratio
High degree of financial leverage means:
1.High debt proportion
2.Lower debt proportion
3.Equal debt and equity
4.No debt
If 'r' = 'ke', than MP by Walter's Model and Gordon's Model for different payout ratios would be
1.Unequal
2.Zero
3.Equal
4.Negative
If a firm has a DOL of 2.8, it means:
1.If sales increase by 2.8%, the EBIT will increase by 1%
2.If EBIT increase by 2.896, the EPS will increase by 1 %
3.If sales rise by 1%, EBIT will rise by 2.8%
4.None of the above
If cash discount is offered to customers, then which of the following would increase?
1.Sales
2.Debtors
3.Debt collection period
4.All of the above
If ke = r, then under Walter's Model, which of the following is irrelevant?
1.Earnings per share
2.Dividend per share
3.DP Ratio
4.None of the above
If the closing balance of receivables is less than the opening balance for a month then which one is true out of
1.Collections>Current Purchases
2.Collections>Current Sales
3.Collections<Current Purchases
4.Collections < Current Sales
If the following is an element of dividend policy?
1.Production capacity
2.Change in Management
3.Informational content
4.Debt service capacity
In Capital Budgeting, Sunk cost is excluded because it is:
1.of small amount
2.not incremental
3.not reversible
4.All of the above
In Certainty-equivalent approach, adjusted cash flows are discounted at:
1.Accounting Rate of Return
2.Internal Rate of Return
3.Hurdle Rate
4.Risk-free Rate
In stock dividend:
1.Authorized capital always increases
2.Paid up capital always increases
3.Face value per share decreases
4.Market price for share decreases
In the Traditional Approach, which one of the following remains constant?
1.Cost of Equity
2.Cost of Debt
3.WACC
4.None of the above
In Traditional Approach, which one is correct?
1.ke rises constantly
2.kd decreases constantly
3.k0 decreases constantly
4.None of the above
Inventory Turnover measures the relationship of inventory with:
1.Average Sales
2.Cost of Goods Sold
3.Total Purchases
4.Total Assets
Minimum Rate of Return that a firm must earn in order to satisfy its investors, is also known as:
1.Average Return on Investment
2.Weighted Average Cost of Capital
3.Net Profit Ratio
4.Average Cost of borrowing
Net Operating Income Approach, which one of the lowing is constant?
1.Cost of Equity
2.Cost of Debt
3.WACC & kd
4.Ke and Kd
One difference between Operating and Financial lease is:
1.There is often an option to buy in operating lease
2.There is often a call option in financial lease
3.An operating lease is generally cancelable by lease
4.A financial lease in generally cancelable by lease
Relationship between change in Sales and d Operating Profit is known as:
1.Financial Leverage
2.Operating Leverage
3.Net Profit Ratio
4.Gross Profit Ratio
The job of a finance manager is confined to
1.Raising funds
2.Management of cash
3.Raising of funds and their effective utilization
4.None of these
Walter’s Model suggests that a firm can always increase i.e. of the share by
1.Increasing Dividend
2.Decreasing Dividend
3.Constant Dividend
4.None of the above
Weighted Average Cost of Capital is generally denoted by:
1.kA
2.kw
3.k0
4.kc
What is Economic Order Quantity?
1.Cost of an Order
2.Cost of Stock
3.Reorder level
4.Optimum order size
Which of the following appearing in the balance! generates tax advantage and hence affects the c, structure decision ?
1.Reserves and Surplus
2.Long-term debt
3.Preference Share Capital
4.Equity Share Capital
Which of the following is incorrect for value of the firm?
1.In the initial preposition, MM Model argues that value is independent of the financing mix
2.Total value of levered and unlevered firms is otherwise arbitrage will take place
3.Total value incorporates borrowings by firm but excludes personal borrowing
4.Total value does not change because underlying does not change with financing mix
Which of the following is not a part of credit policy?
1.Collection Effort
2.Cash Discount
3.Credit Standard
4.Paying Practices of debtors
Which of the following is not included in cost of inventory?
1.Purchase cost
2.Transport in Cost
3.Import Duty
4.Selling Costs
Which of the following is true for a company which uses continuous review inventory system
1.Order Interval is fixed
2.Order Interval varies
3.Order Quantity is fixed
4.Both (a) and (c)
Which of the following is true?
1.Under Traditional Approach, overall cost of capital remains same
2.Under NI Approach, overall cost of capital remains same
3.Under NOI Approach, overall cost of capital remains same
4.None of the above
Which of the following stresses on investor's preference reorient dividend than higher future capital gains ?
1.Walter's Model
2.Residuals Theory
3.Gordon's Model
4.MM Model