Tag: functional area of management

Questions Related to functional area of management

Higher amount of debt means __________ interest rate in future.

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

  1. higher

  2. lower

  3. similar

  4. equal

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Correct Option: A
Explanation:

more the debt will increase more will be intrest rate in future.

Which of the following is not a factor affecting financing decision?

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

  1. Cost

  2. Risk

  3. Investment

  4. Cash flow position of the business

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Correct Option: C
Explanation:

Factors affecting financing decision:-

(i) Cost
(ii) Cash flow position
(iii) Level of fixed operating cost
(iv) Control considerations
(v) Risk

India has signed a loan agreement of how much amount with the World Bank for strengthening the public financial management in Rajasthan project?

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

  1. $\$ 25.0$ million

  2. $\$ 31.0$ million

  3. $\$ 21.7$ million

  4. $\$ 23.8$ million

Show answer
Correct Option: C
Explanation:

India has signed a loan agreement with the World Bank (WB) for $21.7 million for strengthening the public financial management in Rajasthan project in New Delhi on May 29, 2018. The objective of the project is to contribute to improved budget execution, enhanced accountability and greater efficiency in revenue administration in Rajasthan. 

It involves strengthening of the Public Financial Management Framework; strengthening of expenditure and revenue systems; and project management and capacity building among others. The project size is approximately $31 million, of which $21.7 million will be financed by the World Bank, and remaining amount will be funded out of the state budget. The project duration is 5 years.

Financial Management is concerned with

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

  1. Investment decisions

  2. Financing decisions

  3. Dividend decisions

  4. All of above

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Correct Option: D
Explanation:
  1. 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.
  2. Financial decisions - They relate to the raising of finance from various resources which will depend upon decision on type of source, period of financing, cost of financing and the returns thereby.
  3. Dividend decision - The finance manager has to take decision with regards to the net profit distribution. Net profits are generally divided into two:
  • Dividend for shareholders- Dividend and the rate of it has to be decided.
  • Retained profits- Amount of retained profits has to be finalized which will depend upon expansion and diversification plans of the enterprise.

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

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

  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

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Correct Option: D
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.

Financial leverage is also referred to as _____________.

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

  1. Gearing

  2. Trading on equity

  3. Fixed changes leverage

  4. All the above

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Correct Option: D

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

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

  1. 3

  2. 4

  3. 5

  4. 6

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Correct Option: B

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

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

  1. corporate law

  2. taxation

  3. managerial considerations

  4. All the above

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Correct Option: D

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

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

  1. 1 and 3 are correct

  2. 2 and 4 are correct

  3. 1, 2 and 4 are correct

  4. All are correct

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Correct Option: D

The word 'dividend' includes the following besides cash

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

  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

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Correct Option: D