Saturday, October 22, 2011

Finance Quiz - 4

1. The stock dividends are more expensive to administer as compared to cash dividends.

[A] True

[B] False

2. The factor need not factor all the debts of the client.

[A] True

[B] False

3. Proprietary ratio indicates the relationship between the owner’s funds and

[A] Total assets

[B] Sales

[C] Profits

[D] External liabilities

4. If the company pays the dividend out of retained profits, then the amount to be drawn from the reserve shall not exceed an amount equal to ___ of its paid up capital and free reserves.

[A] 5%

[B] 10%

[C] 15%

[D] 20%

5. Variable working capital is

[A] The minimum working capital required to be maintained in the business on permanent or uninterrupted basis

[B] The maximum working capital required to be maintained in the business on permanent or uninterrupted basis

[C] The working capital required over and above the permanent working capital

[D] The working capital which will be definitely financed by the bank

6. The disadvantage of a Partnership firm is

[A] Separate legal existence

[B] Unlimited liability

[C] Separate property

[D] Fund raising is easy

7. Current assets are also referred to as

[A] Investments

[B] Working capital

[C] Fixed assets

[D] Shareholder’s equity

8. Overdraft is given by the bank for a very short period of time, at the end of which the company is supposed to repay the same.

[A] True

[B] False

9. Following lenient dividend policy without bothering much about building up the reserves may be the cause for under capitalization.

[A] True

[B] False

10. The assumptions of capital structure theories is that operating earnings are not expected to grow.

[A] True

[B] False

11. Delinquency cost in connection with accounts receivables involves

[A] Blocking up of funds for an extended period

[B] Cost of bad debts

[C] Additional expenses on the creation and maintenance of a credit department

[D] Cost on the use of additional capital to support credit sales

12. Which one of these is basically interested in the solvency position of the organization.

[A] Commercial bankers

[B] Financial institutions lending long term finance

[C] Government authorities

[D] Lenders of short term finance

13. The basic objective of __________ management is to reduce the operating cash requirement to the minimum possible extent without affecting the routine transactions.

[A] Asset

[B] Fund

[C] Sales

[D] Cash

14. Under no circumstances, __________ term requirement of funds should be met out of short term sources of fund.

[A] Short

[B] Medium

[C] Long

[D] Middle

15. Generally standard liquid ratio is supposed to be

[A] 1:1

[B] 2:1

[C] 2:3

[D] 1:2