Financial Management Test

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Financial Management Test - 8

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Weekly Quiz Competition

Question 1
1 / -0

Short-term financial instruments in the descending order if their liquidity
(i) Call loans
(ii) Cash loans
(iii) Treasury bills
(iv) Commercial bills

A
i, iii, iv ,ii

B
ii, i, iii, iv

C
iv, i iii, ii

D
iii, ii, iv, iii

E
ii, i, iv, iii
Question 2
1 / -0

Degree of total leverage can be applied in measuring change in ______________________,

A
EBIT to a percentage change in quantity

B
EPS to a percentage change in EBIT

C
EPS to a percentage change in quantity

D
DFL to a percentage change in DOL

E
Quantity to a percentage change in EBIT

Solution

The degree of total leverage is a combination of the operating and financial leverages. Thus it is a measure of the output and EPS of the company.
DOL = percentage change in EBIT/percentage change in output.
DFL = percentage change in EPS/percentage change in EBIT
Thus, DTL = DOL X DFL = Change in EPS / change in output.
Hence, option (C) is the correct answer.
Question 3
1 / -0

The difference between current assets and current liabilities is:

A
Gross working capital

B
Net working capital

C
Permanent working capital

D
Temporary working capital
Question 4
1 / -0

________ is a person or association of persons in whose favor the letter of credit is opened.

A
Applicant

B
Issuing bank

C
Beneficiary

D
Advising bank

E
None of the above

Solution

A letter of credit is defined as an arrangement by means of which a bank acting at the request of a customer, undertakes to pay a third party a predetermined amount by a given date, according to agreed stipulations and against presentation of stipulated documents. A beneficiary is an exporter in whose favor the letter of credit is opened.
Hence, option (C) is the correct answer.
Question 5
1 / -0

For a weak unit which of the following should hold good _____________.

A
Accumulated losses greater or equal to $$50\%$$ of its peak net worth during immediately preceding our accounting years

B
A current ratio of less than 1:1

C
Suffering losses in the previous accounting year

D
All of the above

E
Both (A) and (C) above

Solution

A non-small scale industrial unit is defined as weak if the accumulated losses at the end of any accounting year, resulting in the erosion of fifty percent or more of its peak net worth during the immediately preceding four accounting years.
Question 6
1 / -0

Any firm that goes bankrupt gradually will face one or more of the following symptoms _______________.

A
Persistent cash loses

B
Failure of pay taxes

C
Cost overruns

D
All of the above

E
Both (A) and (C) above

Solution

Persistent cash losses, failure to pay taxes, cost overruns, low capacity utilization, accumulation of finished goods, etc. are the symptoms of bankruptcy.
Hence, option (D) is the correct answer.
Question 7
1 / -0

A true and usual method of paying dividend is _______.

A
stock dividend

B
cash dividend

C
profit dividend

D
property dividend
Question 8
1 / -0

Which of the following methods does a firm adopt to avoid dividend payments?

A
Share splitting

B
Declaring bonus shares

C
Rights issue

D
All of the above

E
Both (A) and (B) above
Question 9
1 / -0

Higher amount of debt means __________ interest rate in future.

A
higher

B
lower

C
similar

D
equal

Solution

more the debt will increase more will be intrest rate in future.
Question 10
1 / -0

India has signed a loan agreement of how much amount with the World Bank for strengthening the public financial management in Rajasthan project?

A
$$\$ 25.0$$ million

B
$$\$ 31.0$$ million

C
$$\$ 21.7$$ million

D
$$\$ 23.8$$ million

Solution

India has signed a loan agreement with the World Bank (WB) for $21.7 million for strengthening the public financial management in Rajasthan project in New Delhi on May 29, 2018. The objective of the project is to contribute to improved budget execution, enhanced accountability and greater efficiency in revenue administration in Rajasthan.
It involves strengthening of the Public Financial Management Framework; strengthening of expenditure and revenue systems; and project management and capacity building among others. The project size is approximately $31 million, of which $21.7 million will be financed by the World Bank, and remaining amount will be funded out of the state budget. The project duration is 5 years.

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Financial Management Test - 8

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Financial Management Test - 8

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Question 1

i, iii, iv ,ii

ii, i, iii, iv

iv, i iii, ii

iii, ii, iv, iii

ii, i, iv, iii

Question 2

EBIT to a percentage change in quantity

EPS to a percentage change in EBIT

EPS to a percentage change in quantity

DFL to a percentage change in DOL

Quantity to a percentage change in EBIT

Solution

Question 3

Gross working capital

Net working capital

Permanent working capital

Temporary working capital

Question 4

Applicant

Issuing bank

Beneficiary

Advising bank

None of the above

Solution

Question 5

Accumulated losses greater or equal to $$50\%$$ of its peak net worth during immediately preceding our accounting years

A current ratio of less than 1:1

Suffering losses in the previous accounting year

All of the above

Both (A) and (C) above

Solution

Question 6

Persistent cash loses

Failure of pay taxes

Cost overruns

All of the above

Both (A) and (C) above

Solution

Question 7

stock dividend

cash dividend

profit dividend

property dividend

Question 8

Share splitting

Declaring bonus shares

Rights issue

All of the above

Both (A) and (B) above

Question 9

higher

lower

similar

equal

Solution

Question 10

$$\$ 25.0$$ million

$$\$ 31.0$$ million

$$\$ 21.7$$ million

$$\$ 23.8$$ million

Solution

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