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UGC/NET - Financial Management

Financial management Nature and ScopeCapital Structure and Cost of CapitalValuation Concepts and Valuation of SecuritiesLong-Term and Short-Term Financing InstrumentsCapital Budgeting Decisions

15 Questions Published
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Questions

Question 1 Multiple Choice (Single Answer)

In a company or firm, shareholder wealth is represented by the

  1. number of employees working in the firm
  2. book value of the firm's assets minus liabilities
  3. salary paid to employees
  4. market price per share of the firm's common stock
  5. none of these
Question 2 Multiple Choice (Single Answer)

The key function of financial management is

  1. controlling the organisation
  2. recruitment and selection of employees
  3. recording transactions
  4. introducing training and induction programmes
  5. financing the firm
Question 3 Multiple Choice (Single Answer)

What is the theory of capital structure?

  1. Net operating income approach
  2. Net income approach
  3. Modigliani and Miller approach
  4. The traditional approach
  5. All of the above
Question 4 Multiple Choice (Single Answer)

Which of the following is not included in the stages of operating cycle according to working capital management?

  1. Introduction of raw material
  2. Sale of finished goods
  3. Finished goods produced
  4. Cash received from debtors and paid to suppliers
  5. None of these
Question 5 Multiple Choice (Single Answer)

Net working capital is calculated as

  1. Current Assets - Current Liabilities
  2. Fixed Assets - Fixed Liabilities
  3. Both 1 and 2
  4. C.A. - stock - C.L.
  5. None of these
Question 6 Multiple Choice (Single Answer)

Profitability index is calculated as

  1. Cash outflow / cash inflow
  2. Present value of cash inflow / Initial cash outlay
  3. Profitability / PV
  4. Profit / Investment
  5. None of these
Question 7 Multiple Choice (Single Answer)

Which of the following methods of capital budgeting ignore(s) time value of money?

  1. NPV
  2. IRR
  3. Pay back period method
  4. Both (1) and (2)
  5. Both (2) and (3)
Question 8 Multiple Choice (Single Answer)

Market price of shares is determined by

  1. the board of directors
  2. the president and CEO
  3. individuals buying and selling the stock
  4. the stock exchange in which the company is listed
  5. selling behaviour of individuals
Question 9 Multiple Choice (Single Answer)

ABC Ltd. is expecting an annual EBIT of Rs. 80,000. The company has 3 lakhs in 10% debentures. The cost of equity capital is 12.5%.

Calculate the total value of firm as per net income approach.

  1. 2 lakhs
  2. 7 lakhs
  3. 10 lakhs
  4. 380,000
  5. None of these
Question 10 Multiple Choice (Single Answer)

Stocks and raw material- 30,000
Work in progress- 20,000
Finished goods- 10,000
Cost of goods produced/sold- 400,000
Purchase/consumption of raw material- 200,000

Compute the duration of operating cycle assuming the days to be 360.

  1. Raw material - 54
    Work in progress - 18 days
    Finished goods - 9 days
  2. Raw material - 54 days
    Work in progress - 18 days
    Finished goods - 19 days
  3. Raw material - 50 days
    Work in progress - 20 days
    Finished goods - 9 days
  4. Raw material - 56 days
    Work in progress - 34 days
    Finished goods - 23 days
  5. None of these
Question 11 Multiple Choice (Single Answer)

Working capital can be classified on the basis of

  1. concept
  2. time
  3. money
  4. both (1) and (2)
  5. both (2) and (3)
Question 12 Multiple Choice (Single Answer)

Which of the following factors determine(s) the capital structure?

  1. Risk
  2. Cost of capital
  3. Control
  4. (1) and (2)
  5. (1), (2) and (3)
Question 13 Multiple Choice (Single Answer)

Which of the following is not an assumption of net income approach?

  1. No taxes
  2. The cost of debt is less than the cost of equity.
  3. Business risk remains constant at every level of debt equity mix.
  4. Risk perception of investors is not changed by the use of debt.
  5. None of these
Question 14 Multiple Choice (Single Answer)

Which of the following is/are considered as modern method(s) of capital budgeting?

  1. Pay back period method
  2. Net present value
  3. IRR
  4. Both (1) and (2)
  5. Both (2) and (3)
Question 15 Multiple Choice (Single Answer)

A project costs Rs. 200,000 and yields an annual cash inflow of Rs. 40,000 for 8 years.

Calculate the pay back period.

  1. 5 years
  2. 3 years
  3. 1 year
  4. 9 years
  5. None of these
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