Financial Management

311. The cash purchase of another company may best be viewed as:

  1. a necessary growth strategy
  2. a capital budgeting problem
  3. a cash budgeting problem
  4. an undesirable alternative
Correct answer: (B)
a capital budgeting problem

312. The main factor influencing foreign exchange rates is:

  1. the supply and demand relationship
  2. domestic policies
  3. foreign government policies
  4. banking activities
Correct answer: (A)
the supply and demand relationship

313. The appropriate objective of an enterprise is;

  1. Maximisation of sale
  2. Maximisation of owners wealth
  3. Maximisation of profits.
  4. None of these
Correct answer: (B)
Maximisation of owners wealth

314. Return on Investment may be improved by:

  1. Increasing Turnover
  2. Reducing Expenses
  3. Increasing Capital Utilization
  4. All of the above
Correct answer: (D)
All of the above

315. A firm has Capital of 10,00,000; Sales of 5,00,000; Gross Profit of. 2,00,000 and Expenses of. 1,00,000. What is the Net Profit Ratio?

  1. 20%
  2. 50%
  3. 10%
  4. 40%
Correct answer: (A)
20%

316. Which of the following helps analysing return to equity Shareholders?

  1. Return on Assets
  2. Earnings Per Share
  3. Net Profit Ratio
  4. Return on Investment
Correct answer: (B)
Earnings Per Share

317. Which of the following is not used in Capital Budgeting?

  1. Time Value of Money
  2. Sensitivity Analysis
  3. Net Assets Method
  4. Cash Flows
Correct answer: (C)
Net Assets Method

318. Which of the following does not effect cash flows proposal?

  1. Salvage Value
  2. Depreciation Amount
  3. Tax Rate Change
  4. Method of Project Financing
Correct answer: (D)
Method of Project Financing

319. Which of the following is not applied in capital budgeting?

  1. Cash flows be calculated in incremental terms
  2. All costs and benefits are measured on cash basis
  3. All accrued costs and revenues be incorporated
  4. All benefits are measured on after-tax basis
Correct answer: (C)
All accrued costs and revenues be incorporated

320. In capital budgeting, the term Capital Rationing implies:

  1. That no retained earnings available
  2. That limited funds are available for investment
  3. That no external funds can be raised
  4. That no fresh investment is required in current year
Correct answer: (B)
That limited funds are available for investment
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