Financial Management

451. Which of the following is not a benefit of carrying inventories

  1. Reduction in ordering cost
  2. Avoiding lost sales
  3. Reducing carrying cost
  4. Avoiding Production Shortages
Correct answer: (C)
Reducing carrying cost

452. Which of the following is a liability of a bank?

  1. Treasury Bills
  2. Commercial papers
  3. Certificate of Deposits
  4. Junk Bonds
Correct answer: (C)
Certificate of Deposits

453. Commercial paper are generally issued at a pries

  1. Equal to face value
  2. More than face value
  3. Less than face value
  4. Equal to redemption value
Correct answer: (C)
Less than face value

454. Under income-tax provisions, depreciation on lease asset is allowed to

  1. Lessor
  2. Lessee
  3. Any of the two
  4. None of the two
Correct answer: (A)
Lessor

455. From the point of view of the lessee, a lease is a:

  1. Working capital decision
  2. Financing decision
  3. Buy or make decision
  4. Investment decision
Correct answer: (B)
Financing decision

456. Risk-aversion of an investor can be measured by

  1. Market Rate of Return
  2. Risk-free Rate of Return
  3. Portfolio Return
  4. None of the above.
Correct answer: (D)
None of the above

457. Working Capital Turnover measures the relationship of Working Capital with:

  1. Fixed Assets
  2. Sales
  3. Purchases
  4. Stock
Correct answer: (A)
Fixed Assets

458. A Current Ratio of Less than One means:

  1. Current Liabilities < Current Assets
  2. Fixed Assets > Current Assets
  3. Current Assets < Current Liabilities
  4. Share Capital > Current Assets
Correct answer: (C)
Current Assets < Current Liabilities

459. Which of the following is a measure of Debt Service capacity of a firm?

  1. Current Ratio
  2. Acid Test Ratio
  3. Interest Coverage Ratio
  4. Debtors Turnover
Correct answer: (C)
Interest Coverage Ratio

460. In Inventory Turnover calculation, what is taken in the numerator?

  1. Sales
  2. Cost of Goods Sold
  3. Opening Stock
  4. Closing Stock
Correct answer: (B)
Cost of Goods Sold
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