MGT201 Financial Management Quiz 1 Spring 2014

) Calculate Earning per Share from the following information: Net income = Rs. 25,00,000 No. of Common Shares Outstanding = 25,000 Dividends = Rs. 15,00,000 Authorized capital= 40,000 shares
Select correct option:
Rs.100 per share
Rs.62.50 per share
Rs.60 per share
Rs.37.50 per share

2) All of the following are the financial statements used for the purpose of reporting and analysis EXCEPT:
Select correct option:
Balance Sheet
Income Statement
Statement of Retained Earnings
None of the given options

3) If an investment offers 10% interest compounded monthly, then its effective interest rate will be:
Select correct option:
10.05%
10.47%
10.83%
10.96%

4) Suppose you expect that in year 2011, the Sales Revenue of your Business will grow from Rs. 500,000 to Rs. 700,000. What will be the estimated amount of Inventory in year 2011 if it were Rs. 100,000 last year?
Select correct option:
Rs. 100,000
Rs. 120,000
Rs. 140,000
Rs. 160,000

5) The DuPont Approach breaks down the earning power on shareholders’ book value (ROE) as follows: ROE = __________.
Select correct option:
Net profit margin × Total asset turnover × Equity multiplier
Total asset turnover × Gross profit margin × Debt ratio
Total asset turnover × Net profit margin
Total asset turnover × Gross profit margin × Equity multiplier

6) ________ are also known as Spontaneous Financing.
Select correct option:
Current liabilities
Current assets
Fixed assets
Long-term liabilities

7) Which of the following is the percentage of interest charged at each compounding time?
Select correct option:
Nominal interest Rate
Effective interest Rate
Annual percentage rate
Periodic interest rate

8) Abnormal or downward sloping yield curve implies that:
Select correct option:
Short term rates are lower than long term interest rates
Short term rates are higher than long term interest rates
Short term rates are same as long term interest rates
None of the given options

9) Which of the following is a major disadvantage of the corporate form of organization?
Select correct option:
Limited liability of shareholders
Inability to raise large sums of additional capital
Limited life of the business
Double taxation on profits

10) An annuity due is always worth _____ a comparable annuity.
Select correct option:
Less than
More than
Equal to
Less than or equal to

11) What is the present value of Rs.8,000 to be paid at the end of three years if interest rate is 11%?
Select correct option:
Rs.6,015
Rs.4,872
Rs.6,725
Rs.1,842

12) Identidy, which of the following is a financial asset for the corporation:
Select correct option:
Inventory
Stocks
Patents
Delivery trucks

13) For Company A, plow back ratio is 30%. What will be its Pay-out ratio?
Select correct option:
3.33%
30%
31%
70%

14) Which of the following statements is TRUE regarding Permanent Accounts?
Select correct option:
Accounts that are found on Income Statement
Accounts that are found on Statement of Retained Earnings
Accounts that are found on Balance Sheet
All of the given options

15) The ____________ presents a company’s financial position at the end of a specified date.
Select correct option:
Income statement
Balance sheet
Statement of shareholders’ equity
Statement of cash Flows

16) Which type of responsibilities are primarily assigned to Controller and Treasurer respectively?
Select correct option:
Operational; financial management
Financial management; accounting
Accounting; financial management
Financial management; operations

17) Which group of ratios shows the extent to which the firm is financed with debt?
Select correct option:
Liquidity ratios
Debt ratios
Coverage ratios
Profitability ratios

18) Which of the following refers to the risk associated with interest rate uncertainty?
Select correct option:
Default risk premium
Sovereign Risk Premium
Market risk premium
Maturity risk premium

19) Which of the following is the risk of investing funds in another country?
Select correct option:
Default risk premium
Sovereign Risk Premium
Market risk premium
Maturity risk premium

20) Which of the following is NOT a cash outflow for the firm?
Select correct option:
Depreciation
Dividends
Interest
Taxes

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