Financial Management

351. In ABC inventory management system, class A items may require

  1. Higher Safety Stock
  2. Frequent Deliveries
  3. Periodic Inventory system
  4. Updating of inventory records
Correct answer: (A)
Higher Safety Stock

352. If A = Annual Requirement, O = Order Cost and C = Carrying Cost per unit per annum, then EOQ

  1. (2AO/C) 2
  2. 2AO/C
  3. 2A÷OC
  4. 2AOC
Correct answer: (B)
2AO/C

353. System of procuring goods when required, is known as,

  1. Free on Board (FOB)
  2. always Butter Control (ABC)
  3. Jest in Time (JIT)
  4. Economic Order Quantity
Correct answer: (C)
Jest in Time (JIT)

354. Commercial paper is a type of

  1. Fixed coupon Bond
  2. Unsecured short-term debt
  3. Equity share capital
  4. Government Bond
Correct answer: (B)
Unsecured short-term debt

355. Cash discount terms offered by trade creditors never be accepted because

  1. Benefit in very small
  2. Cost is very high
  3. No sense to pay earlier
  4. None of the above
Correct answer: (D)
No sense to pay earlier

356. A lease which is generally not cancellable and covers full economic life of the asset is known as

  1. Sale and leaseback
  2. Operating Lease
  3. Finance Lease
  4. Economic Lease
Correct answer: (C)
Finance Lease

357. Which of the following is not true for a "Lease decision for the lessee?

  1. Helps in project selection
  2. Helps in project financing
  3. Helps in project location
  4. All of the above
Correct answer: (B)
Helps in project financing

358. If the intrinsic value of a share is less than the market price, which of the most reasonable?

  1. That shares have lesser degree of risk
  2. That market is over valuing the shares
  3. That the company is high dividend paying
  4. That market is undervaluing the share
Correct answer: (B)
That market is over valuing the shares

359. Net Profit Ratio Signifies:

  1. Operational Profitability
  2. Liquidity Position
  3. Solvency
  4. Profit
Correct answer: (A)
Operational Profitability

360. Debt to Total Assets Ratio can be improved by:

  1. Borrowing More
  2. Issue of Debentures
  3. Issue of Equity Shares
  4. Redemption of Debt
Correct answer: (D)
Redemption of Debt
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