FINANCIAL MANAGEMENT
The time lag between placement of orders and actual receipt of the materials by the firm is called ___.
Lead time
The inability of a business to meet its fixed financial obligations, like payment of interest, is known as______.
Financial risk
Which decision affects the liquidity as well as profitability of a business?
Working capital decisions.
The fund-raising exercise also costs something. This cost is called _______
Flotation cost
When the stock market is bearish, a company may depend upon_____ in order to raise the required funds.
Debt
Assertion (A):Debt and equity differ significantly in their cost and riskiness for the firm.
Reason (R): Debt is cheaper but is more risky because the payment of interest and the return of principal is obligatory for the business.
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A)
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True.
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
The concept which provides a link between investment and financing decision is_________.
Financial planning
In case of boom, larger amount of working capital is required whereas during depression, working capital requirement will be lower. Identify the related factor of working capital being described in the given lines.
Business Cycle
How is financial leverage computed?
Debt/equity or Debt/ Debt+ equity
Under what situation does the EPS of a company falls with the increased use of Debt?
When ROI is less than the cost of Debt
Under which of the following situations a company should not issue debt capital?
(a) When the cash flow condition of the company is strong.
(b) When the rate of tax is low.
(c) When the return on investment is high.
(d) When the interest coverage ratio is high.
(b) When the rate of tax is low.
As the financial leverage of a company increases, it leads to
(a) A decline in the cost of funds but an increase in the financial risk
(b) An increase in the cost of funds but a decline in the financial risk
(c) Both an increase in the cost of funds and financial risk
(d) Both a decline in the cost of funds and financial risk
(a) A decline in the cost of funds but an increase in the financial risk
The total capital of XYZ Ltd. is Rs.60 lakhs. The amount of Debt is Rs.20 lakhs. The company has earned a profit of Rs.15 lakhs during the current financial year. It’s ROI for the present year is _______.
25%
ABC Limited is a company dealing in ready-to-eat food products. Over the years, the earning potential of the company has gone up and it enjoys a good reputation. The Financial Manager is confident of the fact that not just the earnings of the current year, but of our future years are likely to be high. Identify the related factor of dividend decision being described in the given lines.
Stability of dividend
Arrange the following steps involved in the process of financial planning in the correct sequence.
(a) Estimation of expected profit, Preparation of a sales forecast, Preparation of financial statements
(b) Preparation of a sales forecast, Preparation of financial statements, Estimation of expected profit
(c) Preparation of a sales forecast, Estimation of expected profit, Preparation of financial statements
(d) Preparation of financial statements, Estimation of expected profit, Preparation of a sales forecast
(b) Preparation of a sales forecast, Preparation of financial statements, Estimation of expected profit