TY.BCOM
SEMESTER - 5
FINANCIAL MANAGEMENT
MCQS - October 2017
Total sales Rs.20,00,000
Credit sales - 80% of total sales
Debtors - Rs.1,60,000
What will be the average collection period ? (Assume 360 days in a year)
(A) 72 days
(B) 30 days
(C) 45 days
(D) 36 days
(2) Which one of the following is not a treasure's function ?
(A) Cash and receivables management
(B) Internal audit
(C) Banking relationship
(D) Obtaining finance
(3) Tulip limited's debtors turnover ratio is 4 times while the industry standard is 8 times. This is an indicator of the firm's
(A) Liberal credit policy
(B) Low use debt as a source of financing
(C) High use of debt as a source of financing
(D) Strict credit policy
(4) In which of the following statement, figures in income statement and balance sheet, of two or more periods are placed side by side and any increase or decrease in the item is found out ?
(A) Trend analysis
(B) Common size financial statement
(C) Comparative Financial statement
(D) None of the above
(5) The managment of marigold limited is planning to invest Rs.100 lakhs in a project whose estimated life is 5 years. Find the pay back period of the project if the project if the estimated cash inflows from the project are as follows:
|
YEAR |
CFAT (RS. In lakhs) |
|
1 |
50 |
|
2 |
30 |
|
3 |
40 |
|
4 |
40 |
|
5 |
30 |
(A) 2 years.
(B) 3 years
(C) 3 years & 6 months
(D) 2 years & 6 months
(6) If the interest on long term debt is 18% p.a. and the tax rate for the company is 35%, the cost of debt is
(A) 18%
(B) 10.70%
(C) 11.7%
(D) 12.85%
(7) Calculate net present value from the following information :
Profitability index = 1.12,
Present value of cash outflow (PVCO) = 1,00,000
(A) 1,12,000
(B) 2,12,000
(C) 12,000
(D) 1,00,000
(8) Which of the following statement is/are correct ?
(A) The risk means the chance that the actual returns may differ from the expected returns
(B) A rupee today is worth more than a rupee tomorrow
(C) There are two dimensions of cash flows : cash inflows and cash outflows
(D) All of the above
(9) A low inventory turnover ratio may indicate
(A) Inefficient managment of investment in inventory
(B) A high risk of stock out situation
(C) Stringent credit policy
(D) Extremely efficient managment of investment in inventory
(10) The concept of cost of capital is very important in the financial management from view point of :
(A) Capital structure planning decisions
(B) Capital budgeting decision
(C) Both (A) & (B)
(D) None of the above
(11) _______ Measures the liquidity and solvency of the company in the short - term.
(A) Price earning ratio
(B) Current ratio
(C) Debt - Equity ratio
(D Debtors turnover ratio
(12) Match the following :
|
i. Profitability Ratios |
a. Measures the operating efficiency of business. |
|
ii. Leverage Ratios |
b. Efficiency with which the
assets are utilised in business |
|
iii. Turnover Ratios |
c. Helps in assessing the risk
arising from use of Debt hands |
(A) (i)-a, (ii)-b, (iii)-c
(B) (i)-a, (ii)-c, (iii)-b
(C) (i)-c, (ii)-b, (iii)-a
(D) (i)-b, (ii)-c, (iii)-a
(13) Which of the following is/are core concept of financial management ?
(A) Opportunity cost
(B) Value
(C) Risk and return
(D) All of the above
(14) Match the following :
|
(i) Independent Project decision |
a. Shortage of capital |
|
(ii) Mutually Exclusive Project Decisions |
b. Do not compete With one another |
|
(iii) Capital rationing decisions |
c. Similar or identical, compete
with one another |
(A) (i) - a, (ii) - b, (iii) - c
(B) (i) - c, (ii) - b, (iii) - a
(C) (i) - c, (ii) - a, (iii) - b
(D) (i) - b, (ii) - c, (iii) -a
(15) Form the following information, calculate weighted average cost of capital (WACC) :
|
Sources of Fund |
Book Value Weight |
After Tax Cost |
|
1. Equity share Capital |
0.40 |
15.60% |
|
2. Preference Share Capital |
0.30 |
10.50% |
|
3. Retained Earnings |
0.10 |
15.60% |
|
4. Debt |
0.20 |
4.50% |
|
TOTAL |
1.00 |
- |
(A) 15.60%
(B) 11.85%
(C) 12.65%
(D) 10.50%
SOLUTION
(1) (D) - 36 days
SOLUTION :
OTR = Credit sales / average debtors
= 20,00,000 × 80% / 1,60,000
= 10
ACP = 360 / OTR
= 360 / 10
= 36 Days
(2) (B) - Internal audit
(3) (D) - Strict credit policy
(4) (C) - Comparative Financial statement
(5) (D) - 2 year & 6 months
(6) (C) - 11.7%
18 % ( 1 - 0.35 )
= 11.7 %
(7) (C) - 12,000
SOLUTION :
PI = PVCI / PVCO
1.12 = PVCI / 1,00,000
PVCI = 1,00,000 × 1.12
PVCI = 1,12,000
NPV = PVCI - PVCO
= 1,12,000 - 1,00,000
= 12,000
(8) (D) - All of the above
(9) (A) - Inefficient managment of investment in inventory
(10) (C) - Both (A) & (B)
(11) (B) - Current ratio
(12) (B) - (i)-a, (ii)-c, (iii)-b
(13) (D) - All of the above
(14) (D) - (i) - b, (ii) - c, (iii) -a
(15) (B) - 11.85%
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