Tag: financing

Quizzes (12) Questions (42)

Questions Related to financing

Multiple choice commerce business finance financial planning financing financial management

Financial planning usually begins with the preparation of a _______ forecast.

  1. purchase

  2. sales

  3. cash

  4. budget
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
Financial planning usually begins with the preparation of a sales forecast.
It starts with an estimate of the sales which are likely to happen in the next five years. Based on these, the financial statements are prepared keeping in mind the requirement of funds for investment in the fixed capital and working capital. Then the expected profits during the period are estimated so that an idea can be made of how much of the fund requirements can be met internally i.e. through retained earnings. This results in an estimation of the requirement for external funds. Further, the sources from which the external funds requirement can be met are identified and cash budgets are made, incorporating these factors.
Multiple choice commerce business finance financial planning financing financial management

Financial planning helps in coordinating _________ business functions.

  1. one

  2. two

  3. various

  4. three
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
Financial planning is an important part of overall planning of any business enterprise. It aims at enabling the company to tackle the uncertainty in respect of the availability and timing of the funds and helps in smooth functioning of an organisation.
Multiple choice commerce business finance financial planning financing financial management

Financial planning tries to link the ______ with the ______.

  1. future, present

  2. present, past

  3. present, future

  4. past, future
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Financial Planning is the process of estimating the capital required and determining it’s competition. It is the process of framing financial policies in relation to procurement, investment and administration of funds of an enterprise. Financial planning relates present financial requirement with future requirement by anticipating the sales and growth plans of the company.

Multiple choice commerce business finance financial planning financing financial management

_________ plan of action prepared under financial planning reduces waste, duplication of efforts, and gaps in planning.

  1. Detailed

  2. Short

  3. General

  4. Basic
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
Financial plan is a comprehensive evaluation of an individual's current pay and future financial state by using current known variables to predict future income, asset values and withdrawal plans.
Therefore detailed plan of action is prepared under financial planning reduce waste, duplication of efforts, and gaps in planning.
Multiple choice commerce business finance financial planning financing financial management

Working capital is the difference between

  1. Inflow and outflow of funds

  2. Inflow and outflow of savings

  3. Internal and external capital sources

  4. Gross cash flow and net cash flow
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Working capital management involves balancing the inflow and outflow of funds to ensure the company can meet its short-term obligations.

Multiple choice commerce business finance financial planning financing financial management

Financial leverage is

  1. The process of using debt capital to increase the rate of return on equity

  2. The utilisation of current assets to effect disproportionate changes in income

  3. Both (a) and (b)

  4. A relationship between preference share capital and securities
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Financial leverage refers to the use of debt (borrowed capital) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing.

Multiple choice commerce business finance financial planning financing financial management

If on account of inadequacy of profits, a company wants to pay dividends out of previous year's reserves, it has to follow the rules made by

  1. Central Government

  2. State Government

  3. Articles of Association

  4. Memorandum of Association
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Under the Companies Act, if a company intends to declare dividends out of reserves due to inadequate profits, it must comply with specific rules and regulations prescribed by the Central Government.

Multiple choice commerce business finance financial planning financing financial management

Choose the correct answer:
(a) Working capital management is an integral part of overall corporate management
(b) There are four tests of working capital policy

  1. Both (a) and (b) are true

  2. (a) is true, (b) is false

  3. (a) is false, (b) is true

  4. Both (a) and (b) are false
Reveal answer Fill a bubble to check yourself
A Correct answer