Financial Management

711. The time required to process and execute an order is called ______________.

  1. allowed time
  2. lead time
  3. accepted time
  4. fixed time
Correct answer: (B)
lead time

712. The dividend-pay out ration is equal to

  1. The dividend yield plus the capital gains yield
  2. Dividends per share divided by earnings per share
  3. Dividends per share divided by par value per share
  4. Dividends per share divided by current price per share
Correct answer: (B)
Dividends per share divided by earnings per share

713. Working Capital management is managing

  1. Long term assets
  2. Short term assets and liabilities
  3. Long term liabilities
  4. Only short term assets
Correct answer: (B)
Short term assets and liabilities

714. The acquisition of land by issuing common stock is

  1. a noncash transaction that is not reported in the body of a statement of cash flows
  2. a cash transaction and would be reported in the body of a statement of cash flows
  3. a noncash transaction and would be reported in the body of a statement of cash flows
  4. only reported if the statement of cash flows is prepared using the direct method
Correct answer: (A)
a noncash transaction that is not reported in the body of a statement of cash flows

715. If a company has both an inflow and outflow of cash related to property, plant, and equipment, the

  1. two cash effects can be netted and presented as one item in the investing activities section
  2. cash inflow and cash outflow should be reported separately in the investing activities section
  3. two cash effects can be netted and presented as one item in the financing activities section
  4. cash inflow and cash outflow should be reported separately in the financing activities section
Correct answer: (B)
cash inflow and cash outflow should be reported separately in the investing activities section

716. A company would be expected to generate small amounts of cash provided by operating activities during the

  1. introductory phase
  2. growth phase
  3. maturity phase
  4. decline phase
Correct answer: (B)
growth phase

717. Debt Equity Ratio is 3:1, the amount of total assets Rs.20 lac,current ratio is 1.5:1 and owned funds Rs.3 lac. What is the amount of current asset?

  1. Rs.5 lac
  2. Rs.3 lac
  3. Rs.12 lac
  4. none of the above
Correct answer: (C)
Rs.12 lac

718. In the balance sheet amount of total assets is Rs.10 lac, current liabilities Rs.5 lac & capital & reserves are Rs.2 lac .What is the debt equity ratio?

  1. 1;1
  2. 1.5:1
  3. 2:1
  4. none of the above
Correct answer: (D)
none of the above

719. Current ratio is 2:5. Current liability is Rs.30000. The Net working capital is

  1. Rs.18,000
  2. Rs.45,000
  3. Rs.(-) 45,000
  4. Rs.(-)18000
Correct answer: (D)
Rs.(-)18000

720. Which of the following statements is false?

  1. No rules of thumb apply to the interpretation of financial ratios
  2. Financial ratios can indicate areas of potential strength and weakness
  3. Financial ratios are predictive
  4. Financial ratios can serve as screening devices
Correct answer: (C)
Financial ratios are predictive
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