Financial Management
391. Relationship between change in Sales and d Operating Profit is known as:
- Financial Leverage
- Operating Leverage
- Net Profit Ratio
- Gross Profit Ratio
Correct answer: (B)
Operating Leverage
392. Financial break-even level of EBIT is:
- Intercept at Y-axis
- Intercept at X-axis
- Slope of EBIT-EPS line
- None of the above
Correct answer: (B)
Intercept at X-axis
393. Net Operating Income Approach, which one of the lowing is constant?
- Cost of Equity
- Cost of Debt
- WACC & kd
- Ke and Kd
Correct answer: (C)
WACC & kd
394. 'That there is no corporate tax' is assumed by:
- Net Income Approach
- Net Operating Income Approach
- Traditional Approach
- All of these
Correct answer: (D)
All of these
395. Which of the following is true?
- Under Traditional Approach, overall cost of capital remains same
- Under NI Approach, overall cost of capital remains same
- Under NOI Approach, overall cost of capital remains same
- None of the above
Correct answer: (C)
Under NOI Approach, overall cost of capital remains same
396. Which of the following appearing in the balance! generates tax advantage and hence affects the c, structure decision ?
- Reserves and Surplus
- Long-term debt
- Preference Share Capital
- Equity Share Capital
Correct answer: (B)
Long-term debt
397. 'Bird in hand' argument is given by
- Walker's Model
- Gordon's Model
- MM Mode
- Residuals Theory
Correct answer: (B)
Gordon's Model
398. If ke = r, then under Walter's Model, which of the following is irrelevant?
- Earnings per share
- Dividend per share
- DP Ratio
- None of the above
Correct answer: (C)
DP Ratio
399. If 'r' = 'ke', than MP by Walter's Model and Gordon's Model for different payout ratios would be
- Unequal
- Zero
- Equal
- Negative
Correct answer: (C)
Equal
400. Dividends are paid out of
- Accumulated Profits
- Gross Profit
- Profit after Tax
- General Reserve
Correct answer: (C)
Profit after Tax