MBA/MBA Financial Management MCQ Set 5 Sample Test,Sample questions

Question:
'Constant Dividend Per Share' Policy is considered as:

1.Increasing Dividend Policy

2.Decreasing Dividend Policy

3.Stable Dividend Policy

4.None of the above


Question:
A lease which is generally not cancellable and covers full economic life of the asset is known as

1.Sale and leaseback

2.Operating Lease

3.Finance Lease

4.Economic Lease


Question:
Ageing schedule incorporates the relationship between

1.Creditors and Days Outstanding

2.Debtors and Days Outstanding

3.Average Age of Directors

4.Average Age of All Employees


Question:
Baumol's Model of Cash Management attempts to:

1.Minimise the holding cost

2.Minimization of transaction cost

3.Minimization of total cost

4.Minimization of cash balance


Question:
Cash discount terms offered by trade creditors never be accepted because

1.Benefit in very small

2.Cost is very high

3.No sense to pay earlier

4.None of the above


Question:
Combined leverage can be used to measure the relationship between:

1.EBIT and EPS

2.PAT and EPS

3.Sales and EPS

4.Sales and EBIT


Question:
Commercial paper is a type of

1.Fixed coupon Bond

2.Unsecured short-term debt

3.Equity share capital

4.Government Bond


Question:
Concentration Banking helps in

1.Reducing Idle Bank Balance

2.Increasing Collection

3.Increasing Creditors

4.Reducing Bank Transactions


Question:
Cost of Capital for Government securities is also known as:

1.Risk-free Rate of Interest

2.Maximum Rate of Return

3.Rate of Interest on Fixed Deposits

4.None of the above


Question:
Cost of capital may be defined as:

1.Weighted Average cost of all debts

2.Rate of Return expected by Equity Shareholders

3.Average IRR of the Projects of the firm

4.Minimum Rate of Return that the firm should earn


Question:
Debt to Total Assets Ratio can be improved by:

1.Borrowing More

2.Issue of Debentures

3.Issue of Equity Shares

4.Redemption of Debt


Question:
Depreciation is incorporated in cash flows because it:

1.Is unavoidable cost

2.Is a cash flow

3.Reduces Tax liability

4.Involves an outflow


Question:
Dividend Distribution Tax is payable by

1.Shareholders to Government

2.Shareholders to Company

3.Company to Government

4.Holding to Subsidiary Company


Question:
Financial Leverage is calculated as:

1.EBIT÷ Contribution

2.EBIT÷ PBT

3.EBIT÷ Sales

4.EBIT ÷ Variable Cost


Question:
Financial planning starts with the preparation of:

1.Master Budget

2.Cash Budget

3.Balance Sheet

4.None of the above


Question:
Firm's Cost of Capital is the average cost of:

1.All sources

2.All borrowings

3.Share capital

4.Share Bonds & Debentures


Question:
Gross Profit Ratio for a firm remains same but the Net Profit Ratio is decreasing. The reason for such behavior could be:

1.Increase in Costs of Goods Sold

2.If Increase in Expense

3.Increase in Dividend

4.Decrease in Sales


Question:
If A = Annual Requirement, O = Order Cost and C = Carrying Cost per unit per annum, then EOQ

1.(2AO/C) 2

2.2AO/C

3.2A÷OC

4.2AOC


Question:
If a company issues new share capital to redeem debentures, then:

1.OL will increase

2.FL will increase

3.OL will decrease

4.FL will decrease


Question:
If the fixed cost of production is zero, which one of the following is correct?

1.OL is zero

2.FL is zero

3.CL is zero

4.None of the above


Question:
If the intrinsic value of a share is less than the market price, which of the most reasonable?

1.That shares have lesser degree of risk

2.That market is over valuing the shares

3.That the company is high dividend paying

4.That market is undervaluing the share


Question:
If the Real rate of return is 10% and Inflation s Money Discount Rate is:

1.14.4%

2.2.5%

3.25%

4.14%


Question:
In ABC inventory management system, class A items may require

1.Higher Safety Stock

2.Frequent Deliveries

3.Periodic Inventory system

4.Updating of inventory records


Question:
In case of divisible projects, which of the following can be used to attain maximum NPV?

1.Feasibility Set Approach

2.Internal Rate of Return

3.Profitability Index Approach

4.Any of the above


Question:
In case of partially debt-financed firm, k0 is less

1.Kd

2.Ke

3.Both (a) and (b)

4.None of the above


Question:
In case of the indivisible projects, which of the following may not give the optimum result?

1.Internal Rate of Return

2.Profitability Index

3.Feasibility Set Approach

4.All of the above


Question:
In order to calculate EPS, Profit after Tax and Preference Dividend is divided by:

1.MP of Equity Shares

2.Number of Equity Shares

3.Face Value of Equity Shares

4.None of the above


Question:
In order to calculate the proportion of equity financing used by the company, the following should be used:

1.Authorised Share Capital

2.Equity Share Capital plus Reserves and Surplus

3.Equity Share Capital plus Preference Share Capital

4.Equity Share Capital plus Long-term Debt


Question:
In response to market expectations, the credit pence r j been increased from 45 days to 60 days. This would result in

1.Decrease in Sales

2.Decrease in Debtors

3.Increase in Bad Debts

4.Increase in Average Collection Period


Question:
In Risk-Adjusted Discount Rate method, which one is adjusted?

1.Cash flows

2.Life of the proposal

3.Rate of discount

4.Salvage value


Question:
Net Profit Ratio Signifies:

1.Operational Profitability

2.Liquidity Position

3.Solvency

4.Profit


Question:
Operating leverage helps in analysis of:

1.Business Risk

2.Financing Risk

3.Production Risk

4.Credit Risk


Question:
Out of the following, what is not true in respect of factoring?

1.Continuous Arrangement between Factor and Seller

2.Sale of Receivables to the factor

3.Factor provides cost free finance to seller

4.None of the above


Question:
Risk of a Capital budgeting can be incorporated

1.Adjusting the Cash flows

2.Adjusting the Discount Rate

3.Adjusting the life

4.All of the above


Question:
System of procuring goods when required, is known as,

1.Free on Board (FOB)

2.always Butter Control (ABC)

3.Jest in Time (JIT)

4.Economic Order Quantity


Question:
Tax-rate is relevant and important for calculation of specific cost of capital of:

1.Equity Share Capital

2.Preference Share Capital

3.Debentures

4.(a) and (b) above


Question:
That Sales has decreased

1.Preparation of Financial Statements

2.Planning for a Capital Issue

3.Preparing Budgets

4.All of the above


Question:
There is deterioration in the management of working capital of XYZ Ltd. What does it refer to?

1.That the Capital Employed has reduced

2.That the Profitability has gone up

3.That debtors collection period has increased

4.That Sales has decreased


Question:
Two mutually exclusive projects with different economic lives can be compared on the basis of

1.Internal Rate of Return

2.Profitability Index

3.Net Present Value

4.Equivalent Annuity Value


Question:
Use of Preference Share Capital in Capital structure

1.Increases OL

2.Increases FL

3.Decreases OL

4.Decreases FL


Question:
Which of the following cost of capital require tax adjustment?

1.Cost of Equity Shares

2.Cost of Preference Shares

3.Cost of Debentures

4.Cost of Retained Earnings


Question:
Which of the following is not a capital budgeting decision?

1.Expansion Programme

2.Merger

3.Replacement of an Asset

4.Inventory Level


Question:
Which of the following is not a relevant cost in Capital Budgeting?

1.Sunk Cost

2.Opportunity Cost

3.Allocated Overheads

4.Both (a) and (c) above


Question:
Which of the following is not included in incremental A flows?

1.Opportunity Costs

2.Sunk Costs

3.Change in Working Capital

4.Inflation effect


Question:
Which of the following is not relevant for dividend payment for a year ?

1.Cash flow position

2.Profit position

3.Paid up capital

4.Retained earnings


Question:
Which of the following is not true for a "Lease decision for the lessee?

1.Helps in project selection

2.Helps in project financing

3.Helps in project location

4.All of the above


Question:
Which of the following is not true with reference capital budgeting?

1.Capital budgeting is related to asset replacement decisions

2.Cost of capital is equal to minimum required return

3.Existing investment in a project is not treated as sunk cost

4.Timing of cash flows is relevant


Question:
Which of the following is related to Receivables Management?

1.Cash Budget

2.Economic Order Quantity

3.Ageing schedule

4.All of the above


Question:
Which of the following is studied with the help of financial leverage?

1.Marketing Risk

2.Interest Rate Risk

3.Foreign Exchange Risk

4.Financing risk


Question:
Which of the following represents passive dividend policy?

1.that dividend is paid as a % of EPS

2.that dividend is paid as a constant amount

3.that dividend is paid after retaining profits for reinvestment

4.All of the above


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