Financial Management Questions - 1

1. While evaluating two or more projects, project giving a ———–
IRR would be preferred.

A) Lower
B) higher
C) Equal
D) less than equal

2. Present value method always provides for correct ranking of mutually exclusive investment projects, whereas———— methods sometimes does not.

A) Profitability index
B) IRR
C) Payback period
D) Net present value

3. Which concepts represent excess of current assets over current liabilities?

A) Working capital
B) Gross working capital
C) Net working capital
D) Going concern concept

4. ———- working capital represents current assets required on a continuous basis over the entire year.

A) Gross
B) Permanent
C) Variable
D) Net

5. Tandon committee has referred which of the following working capital as core current assets.

A) Regular
B) Net
C) Temporary
D) Gross

6. When current liabilities exceed current assets——- working capital emerges.

A) Positive
B) Cash
C) Negative
D) Balance sheet

7. Which of the following is the process of life cycle of working capital of trading firm?

A) Conversion of cash into raw materials
B) Conversion of debtors into cash
C) Cash into inventories
D) Conversion of work in progress

8. Which of the following is not the internal factor of determining working capital?

A) Profit margin & dividend policy
B) Access to money market
C) Firm’s credit policy
D) Technological developments

9. Where production &distribution activities are——– pressure on working capital will be———.

A) minimized, co-ordination
B) co-ordination, minimized
C) maximized, co-ordination
D) co-ordination, maximized

10. Business expands during the period of ——— & declines during the period of———–

A) inflation, depression
B) prosperity, depression
C) depression, prosperity
D deflation, inflation

11. Just in time approach is developed in————–

A) China
B) India
C) Japan
D) Australia

12. Throughput time= Processing time = ——– + Conveyance time waiting time.

A) Factory time
B) Perfect time
C) Inspection time
D) Lead time

13. The major sources of spontaneous financing are—— & ———-

A) trade credit, outstanding expenses
B) short term bank loans, commercial papers
C) trade credit, commercial papers
D) debentures, trade credits

14. LIFO stands for

A) Leave in first out
C) Lead in first out
B) Last in first out
D) Last in first operation

15. Which of the following is a not determinant of inventory of finished goods?

A) Change in economic conditions
B) Durability &style of product
C) Business cycle
D) Attitude of mgmt.

16. ———should be followed while financing different components of working capital.

A) Principle of optimization
B) Principle of investment in working capital
C) Principle of optimization of profit
D) Principle of suitability

17. According to——— approach all requirements of funds should be met from long term sources.

A) Matching
B) Conservative
C) Aggressive
D) Suitability

18. The return that must be paid to the suppliers of capital is known as——-
A) Interests
B) Capital
C) Cost of capital
D) Dividend

19. Which of the following is not the name of cost of capital?

A) Barrier rate
B) Minimum attractive rate of return
C) Cost of funds
D) Discount rate

20. ——— cost of capital is also known as opportunity cost of capital.

A) Explicit
B) Implicit
C) Opportunity
D) Historical