Tag: financial management

Quizzes (21) Questions (93)

Questions Related to financial management

Multiple choice functional area of management financial management nature and significance of management organisation of commerce and management business studies

ABC Ltd. has declared $40$% dividend. Which one of the following does it mean?

  1. The company has declared $40$% on net profit as dividend
  2. The company has declared $40$% of profit after tax as dividend
  3. The company will provide dividend $40$% on issued capital
  4. The company will provide dividend $40$% on paid-up capital
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
  • Dividend is that portion of profit which is distributed to shareholders.
  • Paid-up capital means the total amount of called up share capital which is actually paid to the company by the members. Dividend is declared on the paid-up form of capital.
  • Thus the company will provide dividend of 40% on paid-up capital.
Multiple choice functional area of management financial management nature and significance of management organisation of commerce and management business studies

Financial leverage is also referred to as _____________.

  1. Gearing

  2. Trading on equity

  3. Fixed changes leverage

  4. All the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Financial leverage measures the extent to which a firm uses debt to finance its assets. It is synonymous with gearing and trading on equity, as all these terms describe the impact of fixed-cost financing on shareholder returns.

Multiple choice functional area of management financial management nature and significance of management organisation of commerce and management business studies

The note on dividend policy develops an investment approach which involves ______ steps

  1. 3

  2. 4

  3. 5

  4. 6
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Standard financial literature on dividend policy frameworks typically outlines a 4-step approach involving analysis of earnings, determination of payout ratio, consideration of legal/tax constraints, and final board approval.

Multiple choice functional area of management financial management nature and significance of management organisation of commerce and management business studies

The dividend policy of a company is evolved within the framework of ___________.

  1. corporate law

  2. taxation

  3. managerial considerations

  4. All the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Dividend policy is influenced by a complex interplay of corporate law (legal limits), taxation (tax implications for shareholders), and managerial considerations (growth needs and cash flow).

Multiple choice functional area of management financial management nature and significance of management organisation of commerce and management business studies

The following are the managerial considerations influencing dividend policy
(1) Availability of cash
(2) Restrictions by the Financial Institutions
(3) Management Control
(4) Dividend policy as a financing decision
Of these

  1. 1 and 3 are correct

  2. 2 and 4 are correct

  3. 1, 2 and 4 are correct

  4. All are correct
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

All listed factors (availability of cash, restrictions by financial institutions, management control, and dividend policy as a financing decision) are critical managerial considerations when determining dividend payouts.

Multiple choice functional area of management financial management nature and significance of management organisation of commerce and management business studies

The word 'dividend' includes the following besides cash

  1. Distribution of rights to acquire shares in another company is distribution of dividend

  2. Where dividend is paid in the form of shares in another company, the dividend must be values at the market value of shares

  3. Bonus shares issued by capitalising profits are not dividend

  4. All the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Under tax law and accounting standards, the definition of dividend is broad and can include various forms of distributions beyond simple cash, including rights to shares or specific property distributions.

Multiple choice functional area of management financial management nature and significance of management organisation of commerce and management business studies

'Dividend' is defined under the fol1lowing section if Income Tax Act, 196

  1. Section 2(20)

  2. Section 2(22)

  3. Section 5(22)

  4. Section 5(33)
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Section 2(22) of the Income Tax Act, 1961 defines 'dividend' for taxation purposes, encompassing various forms of corporate distributions beyond just cash payouts.

Multiple choice functional area of management financial management nature and significance of management organisation of commerce and management business studies

Property dividends are distributed under ___________.

  1. normal conditions

  2. exceptional conditions

  3. Both (a) and (b)

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Property dividends are rare and typically occur under exceptional circumstances, such as when a company needs to dispose of assets or lacks sufficient cash to pay a standard dividend.

Multiple choice functional area of management financial management nature and significance of management organisation of commerce and management business studies

The characteristics of a scrip dividend is/are ______.

  1. it is in a form of a promissory note

  2. it bears interest and is accepted as a collateral security

  3. Both (a) and (b)

  4. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A scrip dividend is essentially a promise to pay cash at a future date; it functions like a promissory note, often bears interest, and can be used as collateral.