Tag: functional area of management

Questions Related to functional area of management

When a dividend is paid at the usual rate, it is designated as a ________.

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

  1. regular dividend payment

  2. stable dividend policy

  3. extra dividend policy

  4. irregular dividend

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Correct Option: A

Corporations encourage irregular dividend payments due to

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

  1. Unsuccessful operations

  2. Earnings are fluctuating

  3. Impossibility to pay dividend regularly

  4. All of the above

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Correct Option: D

Which of the following factors dominate the dividend policy?

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

  1. Ownership considerations

  2. Firm-oriented considerations

  3. Both (a) and (b)

  4. Legal considerations

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Correct Option: B

Which of the following dividend payments lead to a transfer of stock from a speculative class into an investment category?

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

  1. Regular dividend payments

  2. Stable dividend payments

  3. Irregular dividends

  4. Extra dividends

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Correct Option: B

Minimum cash reserves fixed by law is a percentage of _________.

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

  1. capital and reserves

  2. securities held

  3. aggregate deposit of the bank

  4. aggregate loans and advances

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Correct Option: C
Explanation:
The aggregate banking deposit is a calculation which determines if your money is federally insured from loss or can determine how much of your money is at risk with that financial institution.
Therefore, minimum cash reserves are a percentage of the aggregate deposits of the bank, by law. 

Mutually exclusive projects can be more accurately ranked as per:

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

  1. Internal rate of return method

  2. Net Present Value Method

  3. Modified Internal Rate of Returns Method

  4. Accounting or Average Rate of Return Method

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Correct Option: B
Explanation:

Projects with a positive $NPV$ are expected to increase the value of the firm. Thus, the $NPV$ decision rule specifies that all independent projects with a positive $NPV$ should be accepted. When choosing among mutually exclusive projects, the project with the largest (positive) $NPV$ should be selected.

Advantages of Regular dividend payments:
I. It establishes a healthy record for corporation
II. It aids in long-run financing and makes financing easier 
III. It improves the credit base of a corporation
IV. It stabilises the market value of securities
Of these

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

  1. I and II are correct

  2. II and III are correct

  3. I, II and IV are correct

  4. All are correct

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Correct Option: D

_______comprises two decisions, viz., (i) Financial Planning; and (ii) Capital structure decision.

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: B
Explanation:
Financial decision is yet another important function which a financial manger must perform. It is important to make wise decisions about when, where and how should a business acquire funds. Funds can be acquired through many ways and channels. Broadly speaking a correct ratio of an equity and debt has to be maintained. This mix of equity capital and debt is known as a firm’s capital structure.

A firm tends to benefit most when the market value of a company’s share maximizes this not only is a sign of growth for the firm but also maximizes shareholders wealth. On the other hand the use of debt affects the risk and return of a shareholder. It is more risky though it may increase the return on equity funds.

A sound financial structure is said to be one which aims at maximizing shareholders return with minimum risk. In such a scenario the market value of the firm will maximize and hence an optimum capital structure would be achieved. Other than equity and debt there are several other tools which are used in deciding a firm capital structure.

_____is nothing but management of limited financial resources the organization has, to its utmost advantage.

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

  1. Material management

  2. Cash management

  3. Customer management

  4. Financial management

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Correct Option: D
Explanation:

Financial Management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. It means applying general management principles to financial resources of the enterprise.

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.
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.
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.

Financial Management is concerned with -
A.Investment decisions.
B. Labour turnover decisions.
C. Financing decisions.
D.Personnel policy decisions.
E.Dividend decisions.
Select the correct answer from the options given below.

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

  1. D B & C

  2. A C B & E

  3. A and C only

  4. E C & A

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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.