Tag: functional area of management

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

Companies with higher growth potential are likely to ______________.

  1. pay lower dividends

  2. Pay higher dividends

  3. Dividends are not affected by growth consideration

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

Generally a company with higher growth paternal are likely to pay lower dividends. This is because the companies wants to invest that money in earning higher income and growing at a higher rate which is in the benefit for the long term rather than paying dividend which will only benefit the company for a short term.

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

A decision to acquire a new and modern plant to upgrade an old one is a______________.

  1. Financing decision

  2. Working capital decision

  3. Investment decision

  4. Dividend decision
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
Investment Decision:
Investment decisions includes investment in fixed assets (called as capital budgeting). Investment in current assets are also a part of investment decisions called as working capital decisions.
It includes Decisions relating to the disposal and acquiring and upgrading new assets.
Multiple choice functional area of management financial management nature and significance of management organisation of commerce and management business studies

Higher dividends per share is associated with  ______________.

  1. High Earning, High Cash Flows, Unusable Earnings and Growth Opportunities

  2. High Earning, High Cash Flows, Stable Earnings and Growth Opportunities

  3. High Earning, High Cash Flows, Stable Earnings and Lower Growth Opportunities

  4. High Earning, Low Cash Flows, Stable Earnings and Lower Growth Opportunities
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

There are two primary causes for increases in a company’s dividend per share payout.

 The first is simply an increase in the company's net profits out of which dividends are paid. 
The second is a shift in the company’s growth strategy that leads the company to decide to expend less of its earnings in seeking growth and expansion, thus leaving a larger share of profits available to be returned to equity investors in the form of dividends.

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

Which of the following methods does a firm adopt to avoid dividend payments?

  1. Share splitting

  2. Declaring bonus shares

  3. Rights issue

  4. All of the above

  5. Both (A) and (B) above
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

Share splitting and bonus shares are methods used to adjust the capital structure or provide value to shareholders without paying out cash dividends. Both are common corporate strategies to manage liquidity and shareholder expectations.

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

Degree of total leverage can be applied in measuring change in ______________________,

  1. EBIT to a percentage change in quantity

  2. EPS to a percentage change in EBIT

  3. EPS to a percentage change in quantity

  4. DFL to a percentage change in DOL

  5. Quantity to a percentage change in EBIT
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Degree of total leverage is combination of the operating and financial leverages. Thus it is a measure of the output and EPS of the company.
DOL = percentage change in EBIT/percentage change in output.
DFL = percentage change in EPS/percentage change in EBIT
Hence, DTL = DOL X DFL = Change in EPS / change in output.

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

Short-term financial instruments in the descending order if their liquidity
(i) Call loans 
(ii) Cash loans 
(iii) Treasury bills 
(iv) Commercial bills   

  1. i, iii, iv ,ii

  2. ii, i, iii, iv

  3. iv, i iii, ii

  4. iii, ii, iv, iii

  5. ii, i, iv, iii
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Cash loans are most liquid as they represent actual cash. Call loans are next as they can be recalled on demand. Treasury bills are highly liquid government securities. Commercial bills are least liquid among these short-term instruments.

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

A true and usual method of paying dividend is _______.

  1. stock dividend

  2. cash dividend

  3. profit dividend

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

Cash dividends are the most standard and common form of dividend payment, where the company distributes a portion of its earnings directly to shareholders in the form of cash.

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

________ is a person or association of persons in whose favor the letter of credit is opened.

  1. Applicant

  2. Issuing bank

  3. Beneficiary

  4. Advising bank

  5. None of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A letter of credit is defied as an arrangement by means of which a bank acting at the request of a customer, undertakes to pay a third party a predetermined amount by a given date, according to agreed stipulations and against presentation of stipulated documents. A beneficiary is an exporter in whose favour the letter of credit is opened.

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

Any firm that goes bankrupt gradually will face one or more of the following symptoms _______________.

  1. Persistent cash loses

  2. Failure of pay taxes

  3. Cost overruns

  4. All of the above

  5. Both (A) and (C) above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Persistent cash losses, failure to pay taxes, cost overruns, low capacity utilization, accumulation of finished goods, etc.are the symptoms of bankruptcy.

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

For a weak unit which of the following should hold good _____________.

  1. Accumulated losses greater or equal to $50\%$ of its peak net worth during immediately preceding our accounting years

  2. A current ratio of less than 1:1

  3. Suffering losses in the previous accounting year

  4. All of the above

  5. Both (A) and (C) above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A non-small scale industrial unit is defined as weak if the accumulated losses at the end of any accounting year, resulting in the erosion of fifty percent or more of its peak net worth during the immediately preceding four accounting years.