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- 1. Multiple Choice
Flotation cost is the cost involved in the issue of shares and debentures.
True
False
- 2. Multiple Choice
Flotation cost includes the cost of discount of issue of shares.
True
False
- 3. Multiple Choice
If existing shareholders want to exercise complete control them they should prefer debt.
True
False
- 4. Multiple Choice
If existing share holders can share the control then they may go for debt.
True
False
- 5. Multiple Choice
Investment in current assets for longer duration is called fixed capital.
True
False
- 6. Multiple Choice
Nature of business is an important factor to decide requirement of fixed capital.
True
False
- 7. Multiple Choice
Fixed capital finance depends on the short term sources of finance.
True
False
- 8. Multiple Choice
If a company follows labour intensive technique in production, they will go for less requirement of fixed capital.
True
False
- 9. Multiple Choice
Firm having higher degree of operating efficiency require higher amount of working capital
True
False
- 10. Multiple Choice
Higher Inventory to be maintained when more working capital is required.
True
False
- 11. Multiple Choice
Working capital refers to excess of current assets over current liabilities.
True
False
- 12. Multiple Choice
Gross working capital refers to the investment in all the current liabilities.
True
False
- 13. Multiple Choice
Net working capital refers to excess of current liabilities over current assets.
True
False
- 14. Multiple Choice
Capital structure means the portion of current assets and current liabilities.
True
False
- 15. Multiple Choice
Financial leverage refers to the portion of debt in the overall capital.
True
False
- 16. Multiple Choice
Debt and equity differ in cost and risk.
True
False
- 17. Multiple Choice
High Interest Coverage Ratio means companies can have more of borrowed funds.
True
False
- 18. Multiple Choice
Capital budgeting decision has a direct impact on liquidity as well as profitability of a business
True
False
- 19. Multiple Choice
Debt causes a dilution of control
True
False
- 20. Fill in the Blank
Working capital is calculated by reducing ...............................out of current assets.
- 21. Fill in the Blank
Cost of raising funds is called ..........................
- 22. Fill in the Blank
Another name for long term investment decision is................................. .
- 23. Fill in the Blank
Financial leverage is proportion of ...................... in overall capital
- 24. Fill in the Blank
If there is shortage of cash then company employs more of .......................in capital structure.
- 25. Fill in the Blank
Company having higher tax rate prefer............................ instead of Equity.—
- 26. Multiple Choice
A fixed asset should be financed through:
a. a long-term liability
b. a short-term liability
c. a mix of long and short-term liabilities
d. current liability
- 27. Multiple Choice
Current assets of a business firm should be financed through:
a. current liability only
b. long-term liability only
c. both types (i.e. long and short term liabilities)
d. shareholders’ funds
- 28. Multiple Choice
What is the other name of long term decision?
a. Capital Budgeting
b. Gross working capital
c. Financial management
d. Working Capital
- 29. Multiple Choice
Return on investment is computed as?
a. Total Investment X EBIT
b. EBIT X EBT
c. EBIT / Total Investment
d. EBT / Total Investment
- 30. Multiple Choice
What is the cost of raising funds called?
a. Flotation Cost
b. Marginal Cost
c. Fixed Cost
d. Variable Cost
- 31. Multiple Choice
Working capital refers:
a. Excess of Current Assets over Current Liabilities
b. Excess of Current Liabilities over Current Assets
c. Excess of Fixed Assets over Current Liabilities Fixed Cost
d. Excess of Current Assets over Fixed Assets
- 32. Multiple Choice
EBIT refers to:
a. Earning Before Interest and Tax
b. Earning Before Income and Tax
c. Earning Before Investment and Tax
d. Earning Before Installment and Tax
- 33. Multiple Choice
The cheapest source of finance is:
a. debenture
b. equity share capital
c. preference share
d. retained earnings
- 34. Multiple Choice
A decision to acquire a new and modern plant to upgrade an old one is a:
a. financing decision
b. working capital decision
c. investment decision
d. None of the above
- 35. Multiple Choice
Companies with a higher growth pattern are likely to:
a. pay lower dividends
b. pay higher dividends
c. dividends are not affected by growth considerations
d. none of the above
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