Financial Management

571. Financial Break-even level of EBIT is one at which:

  1. EPS is one
  2. EPS is zero
  3. EPS is Infinite
  4. EPS is Negative
Correct answer: (B)
EPS is zero

572. NOI Approach advocates that the degree of debt financing is:

  1. Relevant
  2. May be relevant
  3. Irrelevant
  4. May be irrelevant
Correct answer: (C)
Irrelevant

573. The aftertax cost of debt is expressed:

  1. Kd = Y/k(1-T)
  2. Kd = Y(1-T)
  3. K = (1-t)/Y
  4. K = Y
Correct answer: (B)

Kd = Y(1-T)

574. The formula for the Capital Asset Pricing Model (CAPM) is:

  1. Kj = Rf + β (Rf – Rm)
  2. Kj = Rf + β (Rm – Rf)
  3. K = R + β (R – M)
  4. K = R + β (R – R)
Correct answer: (B)

Kj = Rf + β (Rm – Rf)

575. ______________ is concerned with the acquisition, financing and management of assets with some overall goal in mind.

  1. Financial Management
  2. Profit Maximisation
  3. Agency Theory
  4. Social Responsibility
Correct answer: (A)
Financial Management

576. Balance Sheet shows the:

  1. Profit earned by the business
  2. Total capital employed
  3. Financial position of the business
  4. Trading results of the business
Correct answer: (C)
Financial position of the business

577. Financial management deals with two things:

  1. Operations management and procurement
  2. Warehousing and managing a company's finances
  3. Raising money and managing a company's finances
  4. Marketing and production management
Correct answer: (C)
Raising money and managing a company's finances

578. A company's ability to meet its short-term financial obligations is referred to as:

  1. Stability
  2. Efficiency
  3. Effectiveness
  4. Liquidity
  5. Profitability
Correct answer: (D)
Liquidity

579. A company's ______________ is its merchandise, raw materials, and products waiting to be sold.

  1. Inventory
  2. Liquidity
  3. Accounts Receivable
  4. Accounts Payable
  5. Owners' Equity
Correct answer: (A)
Inventory

580. Which of the following selections correctly matches the financial statement with its description?

  1. Income statement/tells how much a firm is making or losing
  2. Income statement/depicts the structure of a firm's assets and liabilities
  3. Balance sheet/tells how much a firm is making or losing
  4. Statement of cash flows/depicts the structure of a firm's assets and liabilities
Correct answer: (A)
Income statement/tells how much a firm is making or losing
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