Financial Management

481. Which of the following is not a motive to hold cash?

  1. Transactionary Motive
  2. Pre-scautionary Motive
  3. Captal Investment
  4. None of the above
Correct answer: (C)
Captal Investment

482. Which of the following is not an objective of cash management ?

  1. Maximization of cash balance
  2. Minimization of cash balance
  3. Optimization of cash balance
  4. Zero cash balance
Correct answer: (C)
Optimization of cash balance

483. Which of the following is not an element of credit policy?

  1. Credit Terms
  2. Collection Policy
  3. Cash Discount Terms
  4. Sales Price
Correct answer: (D)
Sales Price

484. Credit Policy of a firm should involve a trade-off between increased

  1. Sales and Increased Profit
  2. Profit and Increased Costs of Receivables
  3. Sales and Cost of goods sold
  4. None of the above
Correct answer: (B)
Profit and Increased Costs of Receivables

485. If the average balance of debtors has increased, which of the following might not show a change in general?

  1. Total Sales
  2. Average Payables
  3. Current Ratio
  4. Bad Debt loss
Correct answer: (B)
Average Payables

486. Receivables Management deals with

  1. Receipts of raw materials
  2. Debtors collection
  3. Creditors Management
  4. Inventory Management
Correct answer: (B)
Debtors collection

487. Inventory holding cost may include

  1. Material Purchase Cost
  2. Penalty charge for default
  3. Interest on loan
  4. None of the above
Correct answer: (D)
None of the above

488. Cost of not carrying sufficient inventory is known as

  1. Carrying Cost
  2. Holding Cost
  3. Total Cost
  4. Stock-out Cost
Correct answer: (D)
Stock-out Cost

489. A firm has inventory turnover of 6 and cost of goods sold is 7,50,000. With better inventory management, the inventory turnover is increased to 10. This would result in:

  1. Increase in inventory by 50,000
  2. Decrease in inventory by. 50,000
  3. Decrease in cost of goods sold
  4. Increase in cost of goods sold
Correct answer: (B)
Decrease in inventory by. 50,000

490. In India, Commercial Papers are issued as per the guidelines issued by

  1. Securities and Exchange Board of India
  2. Reserve Bank of India
  3. Forward Market Commission
  4. None of the above
Correct answer: (B)
Reserve Bank of India
Page 49 of 78