Financial Management
681. Financing activities involve
- lending money
- acquiring investments
- issuing debt
- acquiring long-lived assets
Correct answer: (C)
issuing debt
682. Which of the following transactions does not affect cash during a period?
- Write-off of an uncollectible account
- Collection of an accounts receivable
- Sale of treasury stock
- Exercise of the call option on bonds payable
Correct answer: (A)
Write-off of an uncollectible account
683. In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment will appear as.
- subtraction from net income
- an addition to net income
- an addition to cash flow from investing activities
- a subtraction from cash flow from investing activities
Correct answer: (B)
an addition to net income
684. If a company issues bonus shares the debt equity ratio will
- Remain unaffected
- Will be affected
- Will improve
- none of the above
Correct answer: (C)
Will improve
685. Current ratio of a concern is 1,its net working capital will be
- Positive
- Negative
- Nil
- None of the above
Correct answer: (C)
Nil
686. A very high current ratio indicates
- High efficiency
- flabby inventory
- position of more long term funds
- b or c
Correct answer: (D)
b or c
687. Why is it important to calculate cash flow ratios?
- Firms need cash to service debt, dividends and expenses
- Companies that generate healthy profit may be unable to convert profits into cash
- Cash flow ratios help the analyst assess the long-term profitability of a firm
- Both (a) and (b)
Correct answer: (D)
Both (a) and (b)
688. Dividend Payout Ratio is:
- PAT Capital
- DPS ÷ EPS
- Pref. Dividend ÷ PAT
- Pref. Dividend ÷ Equity Dividend
Correct answer: (B)
DPS ÷ EPS
689. In Current Ratio, Current Assets are compared with:
- Current Profit
- Current Liabilities
- Fixed Assets
- Equity Share Capital
Correct answer: (B)
Current Liabilities
690. A Current Ratio of Less than One means:
- Current Liabilities < Current Assets
- Fixed Assets > Current Assets
- Current Assets < Current Liabilities
- Share Capital > Current Assets
Correct answer: (C)
Current Assets < Current Liabilities