02 FM Question Bank

Financial Management
FINANCIAL MANAGEMENT 1
MODULE 1
Multiple choice questions

1 What is the primary goal of financial management?
A) Maximizing profits
B) Maximizing shareholder wealth
C) Minimizing expenses
D) Maximizing sales
2 Which financial statement provides a snapshot of a company's financial
position at a specific point in time?
A) Income statement
B) Cash flow statement
C) Balance sheet
D) Statement of retained earnings
3 What does the Debt-to-Equity ratio measure?
A) A company's liquidity
B) A company's profitability
C) A company's financial leverage
D) A company's efficiency
4 Which financial ratio indicates a company's ability to pay its short-term
liabilities with its short-term assets?
A) Debt-to-Equity ratio
B) Current ratio
C) Return on Equity
D) Earnings per Share
5 What does the term "working capital" represent?
A) Long-term investments
B) Current assets minus current liabilities
C) Shareholder equity
D) Fixed assets
6 What does the term "capital budgeting" refer to in financial management?
A) Managing day-to-day expenses
B) Evaluating long-term investment opportunities
C) Managing debt obligations
D) Determining dividend pay outs
7 Which financial market deals with the issuance and trading of long-term debt
and equity instruments?
A) Money market
B) Capital market
C) Forex market
D) Derivatives market
8 If the principal amount is ₹1000, the interest rate is 5%, and the time period is 3
years, what is the simple interest?
A) ₹50
B) ₹150
C) ₹250
D) ₹300
9 Which of the following will result in an increase in simple interest earned on an
investment?
A) Decreasing the principal amount
B) Increasing the interest rate
C) Decreasing the time period
D) Both A and C
10 If the simple interest earned on an investment is ₹120 and the interest rate is
8%, what is the principal amount?
A) ₹1500
B) ₹1350
C) ₹1400
D) ₹1600
11 If the interest rate is 10% and the time period is 2 years, what is the total
amount accrued on a principal of ₹2000?
A) ₹2200
B) ₹2400
C) ₹2600
D) ₹2800
12 What does the term "simple interest" mean?
A) Interest calculated on the principal amount only
B) Interest calculated on the principal and accrued interest
C) Interest calculated using complex mathematical formulas
D) Interest compounded annually
13 Which of the following statements is true regarding simple interest?
A) It is typically used in mortgages and loans.
B) It is calculated based on compound growth.
C) It is always lower than compound interest.
D) It remains constant over time.
14 If the principal amount is ₹5000 and the simple interest earned is $750, what is
the interest rate?
A) 10%
B) 12%
C) 15%
D) 20%
15 What does the term "compound interest" mean?
A) Interest calculated on the principal amount only
B) Interest calculated on the principal and accrued interest
C) Interest calculated using complex mathematical formulas
D) Interest compounded annually
16 Which of the following statements is true regarding compound interest?
A) It is typically used in mortgages and loans.
B) It is calculated based on simple growth.
C) It is always lower than simple interest.
D) It grows exponentially over time.
17 Which of the following is NOT considered an objective of financial
management?
A) Ensuring long-term solvency
B) Maximizing employee satisfaction
C) Maximizing profits
D) Enhancing shareholder value
18 What does the objective of maximizing shareholder wealth imply?
A) Focusing solely on short-term profits
B) Enhancing the well-being of all stakeholders
C) Maximizing the value of the firm's common stock
D) Maximizing the firm's market share
19 What does the objective of maximizing liquidity focus on?
A) Maximizing the firm's profits
B) Minimizing the firm's expenses
C) Ensuring the firm's ability to meet short-term obligations
D) Maximizing the firm's market share
20 What does the objective of maximizing market share focus on?
B) Maximizing shareholder wealth
C) Increasing the firm's sales volume relative to competitors
D) Minimizing risk
21 Which of the following is NOT a type of financial management decision?
A) Investment decisions
B) Financing decisions
C) Marketing decisions
D) Dividend decisions
22 Which financial management decision involves determining the optimal mix of
debt and equity to finance the firm's operations?
C) Operating decisions
D) Dividend decisions
23 What is the primary focus of investment decisions in financial management?
A) Determining the firm's dividend policy
B) Evaluating long-term investment opportunities
C) Managing day-to-day expenses
D) Maximizing shareholder wealth
24 Dividend decisions involve determining:
A) How to allocate resources among different projects
B) The optimal capital structure for the firm
C) The distribution of profits to shareholders
D) How to manage the firm's working capital
25 Which financial management decision involves determining the allocation of
funds among different projects or assets?
A) Financing decisions
B) Dividend decisions
C) Investment decisions
D) Operating decisions
26 Financing decisions primarily deal with:
A) Managing the firm's working capital
B) Determining the firm's dividend policy
C) Raising funds to support the firm's operations
D) Evaluating potential investment opportunities
27 Which decision in financial management is concerned with managing the firm's
short-term assets and liabilities?
A) Financing decisions
B) Dividend decisions
C) Investment decisions
28 What is the objective of dividend decisions in financial management?
A) Maximizing shareholder wealth
B) Minimizing the firm's expenses
C) Increasing the firm's market share
D) Managing the firm's liquidity
29 Which decision in financial management involves determining the appropriate
dividend payout ratio?
C) Dividend decisions
30 What is one of the primary functions of a finance manager?
A) Human resource management
B) Production planning
C) Financial planning and forecasting
D) Marketing strategy development
31 Which of the following is NOT a function of a finance manager?
A) Cash management
B) Risk management
C) Inventory management
D) Capital budgeting
32 What does financial analysis involve for a finance manager?
A) Evaluating market trends
B) Assessing employee performance
C) Analyzing financial statements
D) Forecasting customer demand
33 Which function of a finance manager involves managing the firm's cash flow to
ensure liquidity?
A) Financial reporting
B) Capital budgeting
C) Cash management
D) Risk management
34 What is the role of financial reporting for a finance manager?
A) Analyzing competitor performance
B) Communicating financial information to stakeholders
C) Recruiting new employees
D) Developing marketing strategies
35 Which function of a finance manager involves evaluating investment
opportunities to allocate capital effectively?
A) Financial planning
B) Risk management
C) Capital budgeting
D) Financial analysis
36 What is the purpose of risk management for a finance manager?
B) Minimizing expenses
C) Protecting the firm from financial uncertainties
D) Increasing market share
37 Which function of a finance manager involves raising funds from various
sources to finance the firm's operations?
A) Financial planning
B) Capital budgeting
C) Financing decisions
D) Financial analysis
38 What does financial planning entail for a finance manager?
A) Setting production targets
B) Developing marketing campaigns
C) Forecasting future financial needs
D) Managing employee benefits
39 Which function of a finance manager involves managing the firm's long-term
investments?
A) Financial reporting
B) Cash management
C) Capital budgeting
D) Risk management
40 What does the time value of money principle suggest?
A) Money decreases in value over time
B) Money has the same value irrespective of time
C) Money increases in value over time
D) Money's value depends on its location
41 Which concept explains the idea that an amount received today is worth more
than an amount received in the future?
A) Present value
B) Future value
C) Discounting
D) Compounding
42 What is the process of calculating the present value of future cash flows called?
A) Compounding
B) Discounting
C) Accumulation
D) Amortization
43 What does the future value represent in the context of time value of money?
A) The value of money at a future point in time
B) The value of money at the present time
C) The value of money at a specific point in time
D) The value of money in the past
44 Which factor influences the future value of an investment?
A) Interest rate
B) Present value
C) Discount rate
D) Number of periods
45 What does the present value represent in the context of time value of money?
A) The value of money at a future point in time
B) The value of money at the present time
C) The value of money at a specific point in time
D) The value of money in the past
46 What is the formula to calculate the future value of a single sum investment?
A) ��=��×(1+�)�
B) ��=��÷(1+�)n
C) ��=��×(1−�)n
D) ��=��÷(1−�)�
47 Which financial concept states that a dollar today is worth more than a dollar in
the future due to its potential earning capacity?
A) Present value
B) Future value
C) Time value of money
D) Discounting
48 What is an annuity?
a) A one time lumpsum payment
b) A Series of equal periodic payments
c) A type of loan
d) A form of insurance policy
49 An immediate annuity typically starts making payments
a) Immediately after purchase
b) After a specified period
c) After the annuitant reaches a certain age
d) Upon the death of annuitant
50 Which of the following is an example of an annuity due?
a) Rent payment
b) Mortgage payment
c) Car loan payment
d) Credit card payments
Questions (Answer in 300 words)
1 What is the meaning of Finance and Financial Management.
2 What is working capital decisions?
3 What is scope and coverage of Dividend decisions?
4 What is profit maximization?
5 What is wealth maximization?
6 Explain time value of money.?
7 What is meaning of the simple interest?
8 Write down the formula for simple interest and explain it.
9 Discuss conversion period and provide the example for the same.
10 What is the definition of compound interest.
Long questions (Answer 600 words)
1 Explain the objectives of Financial Management
2 What are the decisions to be taken in financial management.
3 Factors to be consider at time of taking dividend decisions.
4 What are the primary functions of Financial Manager?
5 What re the other functions of the Financial Manager?
6 Discuss the factors to be considered at the time of taking financing decisions.
7 Discuss the application of time value of money.
8 What is effective rate of interest? Interpret it.
9 Discuss the meaning, Features and types of annuity.
10 Z invests Rs. 10,000 every year starting from today for next 10 years. Suppose interest
rate is 8% per annum compounded annually. Calculate future value of an annuity.
Given that (1+0.08)10 = 2.15892500.
MODULE 2

1 Which of the following factors will NOT affect the current market price of a bond?
a) Face value of the bond

b) Coupon rate of the bond
c) Time to maturity of the bond
d) Creditworthiness of the issuer
2 Which of the following statements is TRUE about the relationship between bond price and
yield to maturity (YTM)?
a) As YTM increases, bond price increases.
b) As YTM increases, bond price remains constant.
c) As YTM increases, bond price decreases.
d) The relationship is not linear.
3 Valuation refers to the process of determining the:
a) Historical cost of an asset
b) Fair market value of an asset
c) Selling price of an asset during a fire sale
d) Replacement cost of an asset
4 Which of the following is NOT a common approach used in valuation?
a) Market-based approach
b) Income-based approach
c) Cost-based approach
d) Popularity-based approach
5 What is the main purpose of financial valuation?
a) To determine the historical performance of an asset
b) To make informed investment decisions
c) To set arbitrary prices for assets
d) To predict future market trends
6 What is the difference between fair value and market value?
a) There is no practical difference.
b) Fair value is always higher than market value.
c) Fair value is always lower than market value.
d) Fair value considers an ideal market with perfect information.
7 When valuing a business using a discounted cash flow (DCF) method, what is being
discounted?
a) The historical cost of the business
b) The future cash flows the business is expected to generate
c) The current market interest rate
d) The risk associated with the business
8 What is the main challenge associated with valuation?
a) The process is always very complex and time-consuming.
b) There is no single universally accepted valuation method.
c) Valuation is not necessary for any investment decision.
d) There are no reliable data sources for valuation.
9 Current yield is calculated as:
a) Annual coupon payment divided by the bond's face value
b) Annual coupon payment divided by the current market price of the bond
c) Face value of the bond divided by the annual coupon payment
d) Current market price of the bond divided by the annual coupon payment
10 Yield to Maturity (YTM) of a bond refers to the:
a) Historical return on the bond
b) Guaranteed return promised by the issuer
c) Discount rate that equates the present value of all future cash flows to the current
market price of the bond
d) Annual coupon payment divided by the face value of the bond
11 Preference shares differ from common shares by:
a) Having voting rights in the company
b) Receiving a fixed dividend before common shareholders
c) Having a higher claim on assets in case of liquidation
d) All of the above
12 When valuing a preference share, which of the following factors is NOT typically
considered?
a) Current market price of the share
b) Face value of the share (par value)
c) Dividend discount model (DDM)
d) Price-to-earnings (P/E) ratio (common for common shares, not preference shares)
13 The dividend discount model (DDM) is a popular method for valuing preference shares.
What does the DDM consider?
a) The current market price of the share and the expected future growth rate
b) The face value of the share and the dividend payout ratio
c) The fixed dividend per share and the required rate of return for investors
d) The company's earnings per share and the beta coefficient
14 Equity shares, also known as common stock, represent what ownership right in a
company?
a) Fixed claim on assets and dividends
b) Residual claim on assets and profits after all other claims are settled
c) Voting rights in the company
d) All of the above
15 Which of the following is NOT a common method used for valuing equity shares?
a) Market-based valuation
b) Income-based valuation
c) Cost-based valuation
d) Replacement cost valuation (not typically used for equity shares)
16 The Price-to-Earnings (P/E) ratio is a popular market-based valuation metric. What does it
compare?
a) Market price per share to book value per share
b) Market price per share to earnings per share
c) Dividend yield to company's growth rate
d) Market capitalization to total debt
17 A company has a high P/E ratio compared to its industry peers. What might this suggest?
a) The company is undervalued
b) The company is overvalued by the market
c) The company has a high debt-to-equity ratio (not directly related to P/E)
d) The company is expected to experience high future growth
18 The CAPM helps determine the:
a) Historical cost of an investment
b) Intrinsic value of an asset
c) Expected return on an asset based on its risk
d) Fair market value of an asset based on recent transactions
19 Beta (β) in CAPM measures the:
a) Unique risk of an individual investment (can be diversified away)
b) Systematic risk of an investment relative to the overall market
c) Correlation between the investment's return and the return on a specific bond
d) Volatility of the investment's price over time
20 A stock with a beta of 1.2 is considered to be:
a) Risk-free
b) Less risky than the market
c) As risky as the market
d) More risky than the market
21 Operating leverage refers to the:
a) Ability of a company to pay its short-term debts
b) Impact of changes in sales volume on a company's operating profit
c) Ratio of a company's total debt to its total equity
d) Company's ability to generate cash flow from its operations
22 A company with high operating leverage will experience what when sales volume
increases?
a) No change in operating profit
b) A smaller proportional increase in operating profit compared to sales
c) A larger proportional increase in operating profit compared to sales
d) The effect depends on the company's cost structure
23 The degree of operating leverage (DOL) is a metric used to quantify operating leverage.
What does DOL express?
a) The percentage change in operating profit for every 1% change in sales
b) The ratio of variable costs to total costs
c) The difference between the selling price and the variable cost per unit
d) The contribution margin ratio multiplied by the sales volume
24 Which of the following factors contributes to a higher degree of operating leverage?
a) A higher proportion of variable costs in the cost structure
b) A lower proportion of fixed costs in the cost structure
c) Higher product diversification
d) Lower product diversification
25 What are some potential benefits of high operating leverage?
a) Increased profitability during periods of rising sales
b) Improved cash flow generation
c) Reduced risk of financial distress
d) Greater flexibility in adapting to changing market conditions
26 What are some potential drawbacks of high operating leverage?
a) Lower profitability during periods of declining sales
b) Increased risk of financial distress if sales fall
c) Less flexibility in managing costs
d) All of the above
27 How does operating leverage differ from financial leverage?
a) Operating leverage focuses on sales volume changes, while financial leverage focuses on
debt levels.
b) Operating leverage affects operating profit, while financial leverage affects earnings per
share.
c) Operating leverage is always positive, while financial leverage can be positive or
negative.
d) All of the above
28 Financial leverage refers to the:
a) Ability of a company to meet its short-term obligations
b) Use of debt financing to magnify the impact of changes in operating profit
c) Ratio of a company's current assets to its current liabilities
d) Company's ability to generate cash flow from its operations
29 A company with high financial leverage will experience what when its operating profit
increases?
a) No change in EPS
b) A smaller proportional increase in EPS compared to operating profit
c) A larger proportional increase in EPS compared to operating profit
d) The effect depends on the interest rate on debt
30 The degree of financial leverage (DFL) is a metric used to quantify financial leverage. What
does DFL express?
a) The percentage change in EPS for every 1% change in operating profit
b) The ratio of a company's total debt to its total equity
c) The interest expense incurred on debt as a percentage of total debt
d) The ratio of operating profit to earnings before interest and taxes (EBIT)
31 What are some potential benefits of financial leverage?
a) Increased EPS growth during periods of rising operating profit
d) All of the above
32 What are some potential drawbacks of financial leverage?
a) Lower EPS growth during periods of declining operating profit
b) Increased risk of financial distress if operating profit falls
c) Higher interest expense
d) All of the above
33 How does financial leverage differ from operating leverage?
a) Financial leverage focuses on debt levels, while operating leverage focuses on sales
volume.
b) Financial leverage affects EPS, while operating leverage affects operating profit.
c) Financial leverage is always positive, while operating leverage can be positive or
negative.
d) All of the above
34 Combined leverage refers to the:
a) Ability of a company to manage its short-term and long-term debt obligations
b) Impact of changes in sales volume and capital structure on earnings per share (EPS)
c) Ratio of a company's total debt to its total equity plus long-term liabilities
d) Company's overall financial health and risk profile
35 A company with high combined leverage will experience what when sales volume
increases?
a) A smaller proportional increase in EPS compared to sales
b) A larger proportional increase in EPS compared to sales
c) The effect depends on the specific levels of operating and financial leverage
d) No impact on EPS
36 What are some potential benefits of high combined leverage?
a) Significant EPS growth during periods of rising sales
d) All of the above
37 What are some potential drawbacks of high combined leverage?
a) Larger EPS decline during periods of falling sales
b) Increased risk of financial distress if sales fall
c) Less flexibility in managing costs and capital structure
d) All of the above
38 EBIT, used in EBIT-EPS analysis, stands for:
a) Earnings Before Interest and Taxes and Depreciation
b) Earnings Before Interest and Subsidies
c) Earnings Before Interest and Amortization
d) Earnings Before Interest and Taxes
39 EBIT-EPS analysis is primarily used to:
a) Evaluate the impact of changes in sales volume on profitability
b) Analyze the effect of different financing decisions on EPS
c) Measure a company's overall financial health
d) Compare a company's performance to industry benchmarks
40 A company is considering issuing new debt to raise capital. How can EBIT-EPS analysis be
helpful?
a) It cannot be used in this scenario.
b) It helps determine the impact of the new debt on EPS, considering the interest
expense.
c) It identifies the optimal sales volume to maximize profitability.
d) It assesses the company's liquidity position.
41 What is the EBIT-EPS indifference point?
a) The level of EBIT where the company's stock price is equal to its book value
b) The point at which EPS is the same under two different financing options (debt vs.
equity)
c) The maximum EBIT the company can achieve before incurring a loss
d) The minimum debt-to-equity ratio required by lenders
42 How does EBIT-EPS analysis relate to financial leverage analysis?
a) EBIT-EPS analysis is a more specific tool used within the broader concept of financial
leverage.
b) They are completely unrelated concepts.
c) Financial leverage analysis focuses on debt-to-equity ratio, while EBIT-EPS focuses on
interest expense.
d) EBIT-EPS analysis considers the impact of financial leverage on EPS.
43 The cost of capital represents:
a) The historical cost of a company's equity financing
b) The minimum return rate investors expect from an investment in the company
c) The average market price of a company's outstanding shares
d) The total amount of debt and equity financing a company has raised
44 The cost of capital is used for various purposes, including:
a) Evaluating the profitability of new investment projects
b) Making capital budgeting decisions (investing in new projects)
c) Setting a benchmark for a company's stock price
d) Assessing the company's overall financial health
45 The Weighted Average Cost of Capital (WACC) is a common method to calculate the overall
cost of capital. What does WACC consider?
a) The market value of debt and equity, and their respective interest rates and required
return
b) The book value of debt and equity, and their historical costs
c) The company's current debt-to-equity ratio and average tax rate
d) The risk profile of the company and the overall market environment
46 What factors can influence the cost of debt?
a) The company's creditworthiness and risk profile (higher risk leads to higher interest
rates)
b) The prevailing market interest rates
c) The maturity (term) of the debt instrument (longer-term debt typically has higher
interest rates)
d) All of the above
47 Why is it important to consider the cost of capital when making investment decisions?
a) To ensure the company doesn't overpay for financing its operations
b) To evaluate if a new project's expected return is sufficient to justify its cost
c) To maintain a healthy balance between debt and equity financing
d) All of the above
48 A company is considering two mutually exclusive investment projects. Project A has a
higher expected return but also involves a greater risk compared to Project B. Based solely
on the cost of capital concept, which project would be preferred?
a) Project A, regardless of the risk
b) Project B, because it's less risky
c) The project with the higher return relative to the cost of capital
d) It's impossible to determine without additional information
49 The EBIT-EPS formula considers the following factors:
a) Market price per share, dividends, and retention ratio
b) EBIT, number of outstanding shares, and interest expense
c) Debt-to-equity ratio, current ratio, and quick ratio
d) Book value per share, price-to-earnings ratio, and growth rate
50 What are some limitations of EBIT-EPS analysis?
a) Ignores the impact of taxes on EPS
b) Assumes a constant number of outstanding shares
c) Doesn't consider the risk associated with different financing options
d) All of the above
1 List out the factors affecting Bond Valuation.
2 What is duration of bond? Discuss its types with implications
3 What is leverage? Discuss various types of leverages.
4 List out the components of cost of capital.
5 What is Financial BEP.
6 Explain the concept of the valuation in brief.
7 A bond of Rs1000 bearing a coupon rate of 12% is redeemable at par in 10 years. Find out
value of bond if required rate of return is 14% and maturity period is 8 years.(PVAF14%,8 =
4.639, PVF14%,8 =0.351)
8 X ltd sold Rs1000, 12% perpetual debenture 10 years ago. Interest rate haven risen since
then so that debentures of X ltd currently selling at 15%. Compute
1. Market price of debenture.
2. If debentures have 8 years of maturity and currently selling at Rs825 (Assumed),
compute Yield to Maturity
9 Explain the concept of the duration.
10 A Bond having face value of Rs100 has YTM of 7.5% and duration of 4.26 Years. Currently it
is traded at par. It will be reprised if there is increase or decrease in market rate by2.5%.
Find out new prices in both the case
1 Discuss EBIT-EPS Relationship with suitable examples
2 Explain the concept of indifference point with examples.
3 Discuss the conceptual explanation of MV weight and BV weight with its implications.
4 Explain the concept of the Valuation of Preferential share.
5 Explain the various approaches in valuation of equity shares.
6 X ltd has just paid its annual dividend of Rs3 Per share on equity shares having face value
of Rs10. Dividend rate is expected to grow at 8% p.a. forever. The company belongs to risk
group for which equity capitalization rate of 14% is considered to be consistent. What is
intrinsic value per share? What will be your answer if capitalization rate is 16%
7 An investors holding 1000 shares of Fair and Closely ltd. Presently, rate of dividend being
paid by company is Rs2 per share and share is being sold at Rs25 per share in market
Compute the value of equity for existing and revised situation.

8 Differentiate Operating leverage with financial leverage.
9 From the following data of Abhshek Ltd. as on 30th September, 2019, compute the
operating leverage, financial leverage, combined leverage and percentage change in
earnings per share (EPS), if sales are expected to increase by 5%
Earnings before interest and tax (EBIT)= 10 lakh
Profit before tax (PBT)= 4 lakh
Fixed cost= 6 lakh
10 The following data is available for Evergreen Ltd.
Sales 400000
Less: Variable cost @ 35% 140000
Contribution 260000
Less: Fixed cost 180000
EBIT 80000
Less: interest 10000
Profit before tax 70000
Find Out:
1. Using the concept of financial leverage, by what percentage will the taxable income
increase, if EBIT increases by 6%
2. Using the concept of operating leverage, by what percentage will EBIT increase if there
is 10% increase in sales?
3. Using the concept of combined leverage, by what percentage will the taxable income
very, if the sales increase by 6%. Verify the result in view of the above figures.
MODULE 3

1 Which of the following is a criterion for accepting a capital budgeting project?
(a) Payback period is less than one year.
(b) Net Present Value (NPV) is greater than zero.
(c) Internal Rate of Return (IRR) is greater than the cost of capital.
(d) All of the above.
2 The payback period tells you:
(a) The total profit generated by a project over its life.
(b) How long it takes for the project to recover its initial investment.
(c) The project's risk level.
(d) The project's impact on the company's stock price.
3 The cost of capital represents:
(a) The interest rate on a company's debt.
(b) The expected return on an investment with similar risk.
(c) The cost of issuing new equity.
4 Which of the following statements about NPV and IRR is true?
(a) NPV(Project A) + NPV(Project B) = NPV(Project A + B)
(b) IRR cannot be negative.
(c) If NPV is positive, IRR must also be positive.
(d) A project can have multiple IRRs depending on the cash flow stream.
5 Depreciation is a non-cash expense. How should it be treated when calculating cash
flows for capital budgeting?
(a) Added back to cash flows because it's not a real cash outflow.
(b) Subtracted from cash flows because it represents a decrease in asset value.
(c) Ignored since it doesn't affect actual cash flow.
(d) The treatment depends on whether it's straight-line or accelerated depreciation.
6 Which of the following is NOT a common capital budgeting technique?
(a) Net Present Value (NPV)
(b) Internal Rate of Return (IRR)
(c) Payback Period
(d) Return on Equity (ROE)
7 A project with a positive NPV indicates:
(a) The project will lose money.
(b) The project creates value for the company.
(c) The project has a short payback period.
(d) The project has a high internal rate of return.
8 When using the payback period method, a shorter payback period is generally
considered:
(a) Less desirable due to ignoring future cash flows.
(b) More desirable due to faster capital recovery.
(c) Irrelevant to the project's value creation.
(d) Only relevant for high-risk projects.
9 Depreciation is a non-cash expense. How is it treated in capital budgeting cash flow
analysis?
(a) Ignored because it's not a cash outflow.
(b) Subtracted because it represents a decrease in asset value.
(c) Added back because it's a non-cash expense.
(d) Treated differently depending on the depreciation method.
10 A project's Internal Rate of Return (IRR) is:
(a) The discount rate that makes the NPV zero.
(b) Always higher than the project's cost of capital.
(c) A measure of project risk.
(d) Both (a) and (c).
11 Which of the following statements about capital budgeting is true?
(a) The sole purpose is to maximize profits.
(b) It considers the time value of money.
(c) Only long-term projects are evaluated.
(d) It focuses solely on initial investment costs.
12 When comparing mutually exclusive projects (only one can be chosen):
(a) Choose the project with the highest payback period.
(b) Choose the project with the lowest cost of capital.
(c) Choose the project with the highest NPV.
(d) Choose the project with the highest IRR.
13 Projects with higher risk typically require:
(a) A lower cost of capital for investment.
(b) A shorter payback period for faster capital recovery.
(c) A higher discount rate when calculating NPV.
(d) A lower discount rate when calculating NPV.
14 Which technique determines the number of years it takes for an investment to
recover its initial cost from cash inflows?
(a) Net Present Value (NPV)
(b) Payback Period
(c) Internal Rate of Return (IRR)
(d) Modified Internal Rate of Return (MIRR)
15 Which of the following is NOT a limitation of the payback period method?
(a) Ignores cash flows after the payback period
(b) Doesn't consider the time value of money
(c) Provides information on project profitability
(d) Not suitable for projects with uneven cash flows
16 The profitability index (PI) of a project is greater than 1. This indicates:
(a) The project will incur a loss.
(b) The project's cash inflows are less than its initial cost.
(c) The project is expected to be profitable.
(d) The payback period is longer than the project's life.
17 A company looking to increase production capacity by purchasing additional
machinery is making a/an:
(a) Divestment Decision
(b) Replacement Decision
(c) Expansion Decision
(d) Acquisition Decision
18 Terminal cash flow is used in which capital budgeting technique?
(a) Payback Period
(b) Profitability Index (PI)
(c) Discounted Cash Flow (DCF) valuation
(d) All of the above
19 Which of the following factors can impact the accuracy of terminal cash flow
estimation?
(a) Growth rate of the company and the industry
(b) Discount rate used
(c) Both (a) and (b)
(d) None of the above
20 Compared to NPV, which of the following is a limitation of IRR?
(a) IRR considers the time value of money.
(b) IRR can be difficult to calculate for complex cash flows.
(c) IRR cannot be used to compare projects with different initial investments.
21 A project with a positive NPV is considered:
(a) Unprofitable because future cash flows are discounted.
(b) Likely to be profitable as it creates value after considering the time value of
money.
(c) Equally good as a project with an NPV of zero.
(d) None of the above
22 NPV is generally preferred over the payback period method because:
(a) It considers the time value of money.
(b) It's easier to calculate.
(c) Both (a) and (b) are true.
(d) Neither (a) nor (b) is true.
23 Which of the following factors can impact the NPV of a project?
(a) Discount rate used
(b) Project's initial investment
(c) Magnitude and timing of future cash flows
24 If a project has a discounted payback period greater than its project life, it means:
(a) The project is likely profitable in the long term.
(b) The project will recover its cost within the project's lifespan.
(c) The project may not be a good investment as it takes too long to recover its cost.
(d) The discount rate used is too high.
25 Companies with high growth prospects and limited investment opportunities tend to
favor a:
(a) High dividend payout ratio.
(b) Low dividend payout ratio.
(c) Stable dividend payout ratio regardless of profitability.
(d) Dividend policy that fluctuates based on market conditions.
26 Which of the following statements is MOST CORRECT regarding dividend decisions?
(a) Dividends should be maximized to increase shareholder wealth.
(b) Companies should prioritize reinvesting profits for future growth over dividends.
(c) The decision of whether or not to pay dividends is independent of a company's
capital structure.
(d) Stock repurchases are a superior alternative to dividends for returning capital to
shareholders.
(e) The target capital structure should be the primary factor influencing dividend
policy.
27 What are some of the factors a company should consider when making dividend
decisions?
(a) Shareholder preference for current income or capital appreciation
(b) Company's profitability and future investment opportunities
(c) Company's liquidity and cash flow situation
28 Gordon's Dividend Discount Model (DDM) is a popular method used to estimate the
intrinsic value of a stock. What is one of the key assumptions of the DDM?
(a) The company's dividend payout ratio will remain constant forever.
(b) The company's stock price is equal to the book value of equity.
(c) The company's cost of capital is constantly changing.
(d) The company is debt-free.
(e) The stock market is perfectly efficient.
29 According to Walter's model, which of the following scenarios suggests a 0% dividend
payout ratio (no dividends) would be optimal?
(a) The firm's cost of capital (ke) is less than its investment return rate (r).
(b) The firm's cost of capital (ke) is equal to its investment return rate (r).
(c) The firm's cost of capital (ke) is greater than its investment return rate (r).
(d) The firm has a high debt-to-equity ratio.
30 Walter's model contrasts with the Modigliani-Miller (MM) Dividend Irrelevance
Theory. What is a key difference between these two models?
(a) Walter's model considers the firm's growth opportunities, while MM assumes a
static firm.
(b) Walter's model focuses on dividends, while MM considers stock repurchases.
(c) Walter's model is more complex with multiple variables, while MM is simpler.
31 What is a limitation of the Walter's dividend model?
(a) It assumes a constant dividend growth rate.
(b) It ignores the impact of taxes on dividends.
(c) It does not consider market sentiment towards dividend-paying stocks.
32 According to MM Irrelevance Theory, which of the following statements is MOST
CORRECT?
(a) Investors prefer companies with high dividend payout ratios.
(b) The firm's capital structure (debt-to-equity ratio) influences its value.
(c) Investors can create their own preferred dividend stream by buying and selling
stocks.
(d) Companies should prioritize reinvesting all earnings for future growth.
33 What are some of the key assumptions of the MM Dividend Irrelevance Theory?
(a) Perfect capital markets with no taxes or transaction costs.
(b) All investors have the same level of information and risk tolerance.
(c) Firms have access to a variety of financing options at the same cost of capital.
34 What is a criticism of the MM Dividend Irrelevance Theory?
(a) It does not consider the signaling effect of dividends to investors.
(b) It assumes firms can easily adjust their capital structure.
(c) It ignores the potential for agency problems between managers and shareholders.
35 What is the core formula used in the Gordon Growth Model?
(a) Price = Earnings per Share (EPS) x Price-to-Earnings Ratio (P/E)
(b) Price = Dividend per Share (D1) / (Cost of Capital (ke) - Dividend Growth Rate (g))
(c) Price = Book Value per Share / Debt-to-Equity Ratio
(d) Price = Market Capitalization / Number of Outstanding Shares
36 Which of the following is a key assumption of the Gordon Growth Model?
(a) The stock price is volatile and fluctuates frequently.
(b) The company's dividend payout ratio will increase over time.
(c) The company's cost of capital is constantly changing.
(d) The company's dividends will grow at a constant rate forever.
37 What is a limitation of the Gordon Growth Model?
(a) It requires a high level of financial expertise to use.
(b) It is not applicable to companies that don't pay dividends.
(c) It does not consider the impact of inflation on future dividends.
38 How would an increase in the company's cost of capital (ke) affect the estimated stock
price using the Gordon Model?
(a) The estimated stock price would increase.
(b) The estimated stock price would decrease.
(c) The estimated stock price would not be affected.
(d) It depends on the dividend growth rate.
39 Which of the following is NOT a feature of an appropriate capital structure?
(a) Minimizes the weighted average cost of capital (WACC)
(b) Maximizes the company's debt-to-equity ratio
(c) Manages the trade-off between profitability and risk
(d) Considers the company's industry and growth stage
40 What is the main advantage of using debt financing in a company's capital structure?
(a) Offers greater voting rights to shareholders
(b) Reduces the overall cost of capital (WACC) due to tax benefits
(c) Increases the dividend payout ratio for shareholders
(d) Provides more flexibility in raising additional capital
41 A company with a stable and predictable cash flow is more likely to have a higher
proportion of:
(a) Equity financing in its capital structure
(b) Debt financing in its capital structure
(c) Retained earnings in its capital structure
(d) Short-term financing in its capital structure
42 Which of the following factors can influence a company's optimal capital structure?
(a) The company's credit rating and access to debt markets
(b) The level of interest rates prevailing in the market
(c) The expected profitability and risk of future investments
43 What is the main characteristic of a horizontal capital structure?
(a) It maximizes the company's debt-to-equity ratio.
(b) It prioritizes debt financing over equity financing.
(c) It relies solely on equity (common stock and retained earnings) for funding.
(d) It is the most common capital structure for large corporations.
44 What are some potential advantages of a horizontal capital structure?
(a) Lower risk of financial distress due to no debt obligations.
(b) Greater financial flexibility to pursue growth opportunities.
(c) Potential for higher stock valuations due to lower perceived risk.
45 What are some potential drawbacks of a horizontal capital structure?
(a) Limited access to capital for large-scale projects.
(b) Potentially higher cost of capital compared to using debt.
(c) Reduced potential for earnings per share (EPS) growth.
46 Which layer forms the base of a traditional capital structure pyramid?
(a) Common Stock
(b) Preferred Stock
(c) Debt (Bonds, Loans)
(d) Retained Earnings
47 What is a potential drawback of a capital structure heavily reliant on debt (inverted
pyramid)?
(a) Increased voting rights for shareholders
(b) Lower overall cost of capital (WACC)
(c) Reduced risk of financial distress
(d) Increased financial risk and potential for bankruptcy
48 What is the primary goal of a well-designed capital structure?
(a) Maximize the company's debt-to-equity ratio
(b) Minimize the cost of capital (WACC)
(c) Increase dividend payouts to shareholders
(d) Invest all retained earnings back into the company
49 What financing method forms the largest portion of an inverted pyramid capital
structure?
(a) Retained earnings
(b) Common Stock
(c) Debt (Bonds, Loans)
(d) Short-Term Liabilities
50 What is a potential risk associated with an inverted pyramid capital structure?
(a) Increased voting rights for shareholders
(b) Lower potential return on equity (ROE) for shareholders
(c) Reduced risk of financial distress
(d) Difficulty meeting debt obligations and potential bankruptcy
1 List out the factors affecting Capital Budgeting Process.
2 Different types of Capital Budgeting Decisions.
3 List out various techniques for evaluation of projects
4 List out the various theories of Dividend Decisions and Capital Structure
5 Capital structure vs Financial Structure.
6 Discuss the Pay back period method.
7 Discuss capital structure and optimum capital structure.
8 Explain Net Income Approach.
9 Explain Net Operating Income Approach
10 Differentiate IRR and Modified IRR
1 Discuss Dividend theories with suitable examples.
2 Explain the concept of capital Structure and Financial Structure point with examples.
3 Discuss the conceptual explanation of Discounted and Non-Discounted techniques
with its implications.
4 Discuss the Discounted cash flow techniques.
5 Discuss about Non-Discounted cash flow techniques.
6 Discuss factors affecting the capital structure.
7 Explain various theories of Capital Structure.
8 Explain various types of capital structure.
9 A Company is contemplating to purchase a machine. Machines A is available costing
Rs 5,00,000. In comparing the profitability of the machines, a discounted rate of 10%
is to be used. Earnings after taxation are expected as follows:
Year Machine ‘A’(Rs)
I 1,50,000
II 2,00,000
III 2,50,000
IV 1,50,000
V 1,00,000
Compute Pay Back period
10 A Company is contemplating to purchase a machine. Machines A is available costing
Rs 5,00,000. In comparing the profitability of the machines, a discounted rate of 10%
is to be used. Earnings after taxation are expected as follows:
Year Machine ‘A’(Rs)
I 1,50,000
II 2,00,000
III 2,50,000
IV 1,50,000
V 1,00,000
Compute ARR assuming Straight Line Method of Depreciation.
MODULE 4

1 What is working capital?
a) Total assets of a company
b) Difference between current assets and current liabilities
c) Long-term investments
d) Fixed assets
2 Which of the following is NOT a component of current assets?
a) Cash
b) Accounts receivable
c) Inventory
d) Equipment
3 What does a positive working capital indicate?
a) The company is unable to pay its short-term obligations
b) The company has more current liabilities than current assets
c) The company can meet its short-term obligations
d) The company has no liquidity
4 Which ratio is used to measure a company's short-term liquidity?
a) Debt-to-equity ratio
b) Current ratio
c) Return on assets
d) Profit margin
5 What is the formula for the working capital ratio?
a) Current assets / Current liabilities
b) Current liabilities / Current assets
c) Total assets / Total liabilities
d) Net income / Total assets
6 Which of the following is NOT a strategy to improve working capital?
a) Reducing inventory levels
b) Extending accounts payable terms
c) Increasing long-term debt
d) Collecting receivables faster
7 What does negative working capital typically indicate?
a) The company is highly profitable
b) The company may have difficulty meeting short-term obligations
c) The company has excess cash
d) The company has no debt
8 Which industry typically operates with negative working capital?
a) Manufacturing
b) Retail
c) Fast-food restaurants
d) Construction
9 What is the cash conversion cycle?
a) The time it takes to convert inventory to cash
b) The time between paying suppliers and receiving payment from customers
c) The time it takes to manufacture a product
d) The time between ordering inventory and selling it
10 Which of the following is NOT a way to finance working capital?
a) Short-term bank loans
b) Trade credit
c) Factoring
d) Issuing bonds
11 Which of the following is NOT a component of Working Capital Management?
a) Inventory Management
b) Debtors Management
c) Fixed Asset Management
d) Creditors Management
12 What does WC Management determine?
a) Level and Composition of Fixed Assets
b) Level and Composition of Current Assets
c) CA to FA Ratio
d) Both b and c
13 Which Working Capital Policy involves greater risk of insolvency?
a) Conservative Policy
b) Aggressive Policy
c) Moderate Policy
d) Matching Policy
14 In which policy are Working Capital needs primarily financed by long-term sources?
c) Moderate Policy
d) Hedging Policy
15 Which policy has the highest CA to FA ratio?
c) Moderate Policy
d) Matching Policy
16 The Moderate Policy is also known as:
c) Matching or Hedging Policy
d) None of the above
17 Which of the following is NOT typically included in Current Assets in a Working Capital
Estimation Statement?
a) Stock
b) Debtors
c) Prepaid wages/Expenses
d) Fixed Assets
18 What does MPBF stand for in the context of the Tandon Committee?
a) Minimum Permissible Bank Finance
b) Maximum Possible Bank Funding
c) Maximum Permissible Bank Finance
d) Minimum Possible Bank Funding
19 According to Method-1 of the Tandon Committee, how is MPBF calculated?

a) 75% * (CA-CL)
b) (75%CA) - (CL)
c) [(75 %(CA-Core CA)-CL]
d) 100% * (CA-CL)
20 In the calculation of MPBF, what should be excluded from Current Liabilities?
a) Creditors for raw material
b) Provision for taxation
c) Outstanding expenses
d) Bank borrowings
21 What does EOQ stand for in inventory management?
a) Economic Order Quantity
b) Efficient Order Quantity
c) Excess Order Quantity
d) Equal Order Quantity
22 Which of the following is NOT a factor affecting EOQ?
a) Annual Consumption
b) Ordering cost
c) Carrying cost
d) Selling price
23 What does the formula √(2AO)/C represent?
a) Reorder Level
b) Economic Order Quantity
c) Maximum Level
d) Safety Stock
24 Which of the following is NOT an assumption of the EOQ model?
a) Annual Usage is known and constant
b) Ordering cost is known and constant
c) Lead time is zero
d) Demand is variable
25 What is the Reorder Level (ROL) formula?
a) (Maximum Usage * Maximum Period)
b) (Minimum Usage * Minimum Period)
c) (Normal Usage * Normal Period)
d) (Average Usage * Average Period)
26 Which level of stock is defined as the largest quantity of material which may be held in
storage at any time?
a) Reorder Level
b) Maximum Level
c) Minimum Level
d) Danger Level
27 How is Average Stock Level calculated?
a) (Minimum Level + Maximum Level) / 2
b) (Reorder Level + Maximum Level) / 2
c) (Minimum Level + Reorder Level) / 2
d) (Maximum Level + Danger Level) / 2
28 What does the Inventory Turnover Ratio measure?
a) Efficiency of converting inventory into sales
b) Profitability of inventory
c) Obsolescence of inventory
d) Value of inventory
29 How is the Inventory Turnover Ratio calculated?
a) (Average stock / Cost of Goods Sold)
b) (Cost of Goods Sold / Average stock)
c) (Net Sales / Average stock)
d) (Gross Profit / Average stock)
30 What does a high Inventory Turnover Ratio indicate?
a) Slow moving stock
b) Fast moving stock
c) Obsolete stock
d) Overvalued stock
31 Which of the following is NOT a component of receivable management?
a) Framing of Credit Policy
b) Credit evaluation of customers
c) Credit Control
d) Inventory Management
32 What does the "C" in the "Five C's of Credit" stand for?
a) Capacity
b) Conditions
c) Character
d) Collateral
33 The main goal of a credit policy is to:
a) Maximize sales volume
b) Maximize the value of the firm
c) Minimize bad debts
d) Minimize the collection period
34 What do the terms "3/10 net 30" mean?
a) 3% cash discount if payment is made within 10 days, otherwise full payment by the
end of 30 days from the date of sale
b) 10% cash discount if payment is made within 3 days, otherwise full payment by the end
of 30 days from the date of sale
c) 3% cash discount if payment is made within 30 days, otherwise full payment by the end
of 10 days from the date of sale
d) 10% cash discount if payment is made within 30 days, otherwise full payment by the
end of 3 days from the date of sale
35 The Annual Cost of Discount (Annual financing cost) is calculated using which of the
following formulas?
a) (ROD/100%-ROD)*(365/CP-DP)100
b) (ROD/100%+ROD)(365/CP-DP)100
c) (ROD/100%+ROD)(365/CP+DP)100
d) (ROD/100%-ROD)(365/CP+DP)*100
36 What does the term "Opportunity cost of Investment in receivables" refer to?
a) The cost of providing credit to customers
b) The return foregone on funds blocked in debtors
c) The cost of collecting payments from debtors
d) The cost of evaluating credit worthiness of customers
37 Which of the following is NOT included in the calculation of "Opportunity cost of
Investment in receivables"?
a) Bad debt
b) Cash discount
c) Cost of credit sales
d) Required rate of return
38 In the evaluation of a credit policy, what is compared to determine the net
surplus/benefit?
a) Expected Profit After Tax (PAT) and Opportunity Cost
b) Expected Profit Before Tax (PBT) and Opportunity Cost
c) Credit Sales and Opportunity Cost
d) Variable Cost and Opportunity Cost
39 Which of the following is NOT a factor that affects the nature of a credit policy?
a) Investment in receivables
b) Volume of credit sales
c) Collection period
d) Inventory turnover ratio
40 The credit period offered to customers is determined by which of the following factors?
a) Credit standards
b) Credit terms
c) Collection efforts
d) All of the above
41 Which of the following is NOT an objective of cash management?
a) To avoid situations of excessive cash and inadequate cash
b) To determine optimum level of cash
c) To maximize inventory levels
d) To trade-off between liquidity and profitability
42 The motive for holding cash to meet payment obligations arising from expected
transactions is called:
a) Speculative motive
b) Transaction motive
c) Precautionary motive
d) Investment motive
43 What does the cash management cycle measure?
a) The time between receipt of raw materials and sale of finished goods
b) The length of time between payment for raw materials and receipt of revenue from
operations
c) The time taken to convert inventory into cash
d) The period between ordering and receiving inventory
44 How is Cash Turnover calculated?

a) Cash Cycle / 365 Days
b) 365 Days / Cash Cycle
c) Total operating annual outlay / Cash Cycle
d) Cash Cycle * 365 Days
45 Which model for determining optimum cash balance assumes that demand for cash is
certain?
a) Miller-Orr Model
b) Baumol's Model
c) Stochastic Model
d) EOQ Model
46 In Baumol's Model, what is the relationship between lot size and transaction cost?
a) Positive
b) Negative
c) No relationship
d) Variable
47 The Miller-Orr Model is also known as:

a) Deterministic Model
b) Baumol's Model
c) Stochastic Model
d) Certain Demand Model
48 In the Miller-Orr Model, at which level are marketable securities purchased to bring down
cash balance?
a) Lower Level
b) Upper Level
c) Return Point
d) Average Level
49 How is the Return Point (z) calculated in the Miller-Orr Model?
a) (Lower Limit) + Z
b) (Upper Limit) - Z
c) (Lower Limit) + (3*Z)
d) (Lower Limit) + (4/3 *Z)
50 Which of the following is NOT a factor considered in the Miller-Orr Model?
a) Transaction cost per transaction
b) Holding cost or Opportunity cost foregone on marketable securities
c) Degree of fluctuations in cash balance or Standard deviation
d) Annual cash requirements
1 Explain the concept of working capital and differentiate between gross working capital
and net working capital.
2 Describe the operating cycle in a manufacturing company and its significance in working
capital management.
3 Discuss the various factors that influence the working capital requirements of a business.
4 Compare and contrast the conservative, aggressive, and moderate working capital
policies.
5 Explain the concept of Economic Order Quantity (EOQ) and its importance in inventory
management.
6 Describe the various stock levels (Reorder Level, Maximum Level, Minimum Level, and
Safety Stock) and their significance in inventory control.
7 Discuss the key components of a credit policy and their impact on receivable
management.
8 Explain the concept of "Opportunity cost of Investment in receivables" and its relevance in
credit policy evaluation.
9 Describe the three motives for holding cash (Transaction, Speculative, and Precautionary)
and their implications for cash management.
10 Compare and contrast Baumol's Model and the Miller-Orr Model for determining
optimum cash balance.
1 Provide a comprehensive overview of working capital management, including its meaning,
types, and importance. Discuss the various components of working capital and explain
how the operating cycle affects working capital requirements.
2 Explain the concept of inventory management as a crucial component of working capital.
Discuss the Economic Order Quantity (EOQ) model in detail, including its assumptions,
formula, and limitations.
3 Analyze the importance of receivable management in working capital decisions. Discuss
the key components of a credit policy and how they affect a firm's sales and profitability.
Explain the concept of "Opportunity cost of Investment in receivables" and its role in
credit policy evaluation.
4 Explain the cash management cycle and its impact on a firm's liquidity. Compare and
contrast Baumol's Model and the Miller-Orr Model for determining optimum cash
balance, discussing their assumptions, formulas, and applications.
5 Provide a comprehensive analysis of the interrelationships between various components
of working capital (inventory, receivables, and cash) and their collective impact on a firm's
liquidity and profitability.
6 From the following information extracted from the books of a manufacturing company,
compute the operating cycle in days and the amount of working capital required assuming
total operating cost is equal to cost of sales
Average Total of Debtors Outstanding 48,000
Raw Material Consumption 4,40,000
Total Production Cost 10,00,000
Total Cost of Sales 10,50,000
Sales for the year 16,00,000
Value of Average Stock maintained:
Raw Material 32,000
Work-in-progress 35,000
Finished Goods 26,000
Average period of credit allowed by suppliers in days 16.
7 From the given information for Atalanta manufacturing company, prepare an estimate of
the requirement of working capital.
Production 90,000 units
Selling Price per unit Rs 5/-
Raw Materials 60% of selling price
Direct Wages 10% of selling price
Overheads 20% of selling price
Materials in hand 2 months requirements
Production time 1 month
Finished goods in stores 3 months
Credit for material 2 months
Credit allowed to customers 3 months
Average cash balance Rs 30,000/-
Wages and overheads are paid at the beginning of the month following. In production all
the required materials are charged in the initial stage and wages and overheads accrue
evenly.
8 Compute Inventory Turnover Ratio and stock velocity period assuming 360 days in a year.
9 DP ltd offers standard credit terms of 60 days. Its cost of short term borrowings is 16%
p.a. Determine whether 2.5% discount should be offered for payment of 7 days to
customers who normally pay after 60 days, 80 days and 105 days.
10 Unnati ltd has current sales of Rs2000000. The Company is planning to introduce cash
discount policy of 2/10 net 30. And as a result, Company management is expecting a
average collection period to go down by 10 days and 80% sales opt for cash discount
facility. If the company’s required rate of return in receivables is 20%. Should it introduce
the new discount policy using Total Approach? Assume 360 days in a year.

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Financial Management

Multiple choice questions

Multiple choice questions

a) Face value of the bond

Compute the value of equity for existing and revised situation.

Multiple choice questions

Multiple choice questions

19 According to Method-1 of the Tandon Committee, how is MPBF calculated?

44 How is Cash Turnover calculated?

47 The Miller-Orr Model is also known as:

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