Financial Management

601. Net Profit Ratio Signifies:

  1. Operational Profitability
  2. Liquidity Position
  3. Big-term Solvency
  4. Profit for Lenders
Correct answer: (D)
Profit for Lenders

602. ABC Ltd. has a Current Ratio of 1.5: 1 and Net Current Assets of Rs. 5,00,000. What are the Current Assets?

  1. Rs. 5,00,000
  2. Rs. 10,00,000
  3. Rs. 15,00,000
  4. Rs. 25,00,000
Correct answer: (C)
Rs. 15,00,000

603. Suppliers and Creditors of a firm are interested in

  1. Profitability Position
  2. Liquidity Position
  3. Market Share Position
  4. Debt Position
Correct answer: (B)
Liquidity Position

604. XYZ Ltd. has a Debt Equity Ratio of 1.5 as compared to 1.3 Industry average. It means that the firm has:

  1. Higher Liquidity
  2. Higher Financial Risk
  3. Higher Profitability
  4. Higher Capital Employed
Correct answer: (B)
Higher Financial Risk

605. 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

606. Which one of the following is NOT a tool of financial forecasting ?

  1. Cash budget
  2. Capital budget
  3. Pro forma Balance sheet
  4. Pro forma Income statement
Correct answer: (B)
Capital budget

607. The transaction motive for holding cash is for

  1. A safety cushion
  2. Daily operating requirements
  3. Compensating Balance requirements
  4. None of the above
Correct answer: (B)
Daily operating requirements

608. Adequate working capital means

  1. Sufficient funds
  2. Insufficient funds
  3. Lack of funds
  4. All of the above
Correct answer: (A)
Sufficient funds

609. The net working capital measures

  1. Ability
  2. Liquidity
  3. Credibility
  4. None
Correct answer: (B)
Liquidity

610. A level of working capital which is required by the firm always is knows as

  1. Gross working capital
  2. Permanent working capital
  3. Temporary working capital
  4. Net working capital
Correct answer: (B)
Permanent working capital
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