FINANCE M.COM ( Part II ) Question bank 2020

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Suraj Patel Education

FINANCE

M.COM ( Part II )

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FILL IN THE BLANKS .

1.     Low gearing capital structure involves low risk

 

2.     An appropriate capital structure is minimum risk of loss of control

 

3.     The project with highest npv should be accepted

 

4.     Lower gross profit ratio may be due to lower trading efficiency

 

5.     Tax saving on retrenchment compensation is treated as cash inflow.

 

6.     Combined  cost of capital of various sources of capital to composite cost.

 

7.     Financial statements can judge liquidity, short term solvency ,long term solvency all of these.

 

8.     The rate of dividend on preference shares is fixed.

 

9.     The security which has controlling right is equity shares .

 

10.Cost of new machine is treated as cash outflow.

 

11.Net working capital is excess of current assets over current liabilities .

 

12.Float is concerned with cash management.

 

13.Cost incurred for storage of inventory is carrying cost.

 

14.Stock turnover ratio of 3 times means , inventory holding period 4 month.

 

15.Zero interest bonds are issued at discounts.

 

16.The project with lower net present value is rejected .

 

17.When goods are shipped to an agent for sale it is called consignment sale.

 

18.Net working capital is the difference between current assets less current liabilities.

 

19.Bonus shares are given in equity shareholders.

 

20.Product of operating leverage & financial leverage is known as composite leverage.

 

21.Public deposits are which source of funds unsecured .

 

22.Increase in accounts receivable results what in working capital increase.

 

23.Zero beta indicates no volatility.

 

24.Depreciation is an which source of finance internal .

 

25.Capital budgeting decisions involve greater risk.

 

26.Higher gross profit ratio may be due to higher rate of profitability , strict control over cost of goods sold & higher trading efficiency.

27.The factor which is not relevant for determination debt equity mix  

industry norms .

 

28.Interest on debenture is paid out of income.

 

29.Ideal situation for profit maximization is low operating & high financial norms.

 

30.The security on which the rate of dividend is not fixed is equity shares.

 

31.Negative working capital is equal to current liabilities less current assets.

 

32.The cost incurred to collect the dues from customers is called as collection cost.

 

33.Following is not a function of a finance manager marketing.

 

34.Which factor determines the present value of future cash flow discounting factors.

 

35.Debtors velocity measures the speed of collection from customers.

 

36.Capital gearing is a proportion between ownership securities & creditorship securities.

 

37.As per mm theory market value of the firm is independent of its capital structure.

 

38.NPV is the excess of pv of cash inflow over its initial outlay .

 

39.Gross  working capital is equal to total current assets.

 

40.Stock turnover is the relationship between cost of goods sold & overage stock.

 

41.EOQ is the size of order at which ordering cost & carrying cost of inventory are minimum.

 

42.Return on capital employed is a relationship between net operating profit &capital employed.

 

43.Optimum capital structure implies a ratio debt & equity at when (WACC)-weighted average capital cost [ko] would be least & market value of the firm would be highest.

 

44.Relationship between dividend per share & earning per share is known as dividend payout.

 

45.Tax saving on retrenchment compensation is treated as cost outflow.

 

46.Public deposits are accepted for a maximum of 3 years.

 

47.In evaluation of credit policies debtors are valued at cost.

 

48.Capital rationing is done when limited funds are available  for investments.

 

49.Traditionally option capital structure is assume a point where wacc is maximum.

 

50.The accept ,reject decision can occur when how many project can compete each other two.

 

51.Trading on equity is used to increase eps- earning per share.

 

52.Capital structure refers to sources of long term funds.

 

53.Share holder’s equity includes reserves.

 

54.High fixed operating cost increase the financial leverage.

 

55.Over all cost of capital decreases on payment of entire long term debt.

 

56.Eoq is the level of inventory at which total cost of ordering & carrying cost is minimal.

 

57.Interest on debenture is a tax deductible expense.

 

58.Bank reference is the source of credit information.

 

59.Return on capital employed measures overall efficiency in the utilization of total funds.

 

60.Lower liquidity ratio shows bad liquidity position.

 

61.Mm approach is essentially net operating income approach .

 

62.Gross working capital means amount of total current assets.

 

63.“net present value ”is the best method of evaluation of capital budgeting project.

 

64.Trading organization requires less working capital.

 

65.Capital structure influence risk &return of the shareholders.

 

66.A letter of credit is issued by a bank an the behalf of its customers.

 

 










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