UGC/NET - Financial Management Online Test

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UGC/NET - Financial Management

Description: Financial management Nature and ScopeCapital Structure and Cost of CapitalValuation Concepts and Valuation of SecuritiesLong-Term and Short-Term Financing InstrumentsCapital Budgeting Decisions
Number of Questions: 15
Created by: Tanya Dwivedi
Tags: Financial management Nature and Scope Capital Structure and Cost of Capital Valuation Concepts and Valuation of Securities Long-Term and Short-Term Financing Instruments Capital Budgeting Decisions

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In a company or firm, shareholder wealth is represented by the

number of employees working in the firm
book value of the firm's assets minus liabilities
salary paid to employees
market price per share of the firm's common stock
none of these

The key function of financial management is

controlling the organisation
recruitment and selection of employees
recording transactions
introducing training and induction programmes
financing the firm

What is the theory of capital structure?

Net operating income approach
Net income approach
Modigliani and Miller approach
The traditional approach
All of the above

Which of the following is not included in the stages of operating cycle according to working capital management?

Introduction of raw material
Sale of finished goods
Finished goods produced
Cash received from debtors and paid to suppliers
None of these

Net working capital is calculated as

Current Assets - Current Liabilities
Fixed Assets - Fixed Liabilities
Both 1 and 2
C.A. - stock - C.L.
None of these

Profitability index is calculated as

Cash outflow / cash inflow
Present value of cash inflow / Initial cash outlay
Profitability / PV
Profit / Investment
None of these

Which of the following methods of capital budgeting ignore(s) time value of money?

NPV
IRR
Pay back period method
Both (1) and (2)
Both (2) and (3)

Market price of shares is determined by

the board of directors
the president and CEO
individuals buying and selling the stock
the stock exchange in which the company is listed
selling behaviour of individuals

ABC Ltd. is expecting an annual EBIT of Rs. 80,000. The company has 3 lakhs in 10% debentures. The cost of equity capital is 12.5%.

Calculate the total value of firm as per net income approach.

2 lakhs
7 lakhs
10 lakhs
380,000
None of these

Stocks and raw material- 30,000 Work in progress- 20,000 Finished goods- 10,000 Cost of goods produced/sold- 400,000 Purchase/consumption of raw material- 200,000

Compute the duration of operating cycle assuming the days to be 360.

Raw material - 54 Work in progress - 18 days Finished goods - 9 days
Raw material - 54 days Work in progress - 18 days Finished goods - 19 days
Raw material - 50 days Work in progress - 20 days Finished goods - 9 days
Raw material - 56 days Work in progress - 34 days Finished goods - 23 days
None of these

Working capital can be classified on the basis of

concept
time
money
both (1) and (2)
both (2) and (3)

Which of the following factors determine(s) the capital structure?

Risk
Cost of capital
Control
(1) and (2)
(1), (2) and (3)

Which of the following is not an assumption of net income approach?

No taxes
The cost of debt is less than the cost of equity.
Business risk remains constant at every level of debt equity mix.
Risk perception of investors is not changed by the use of debt.
None of these

Which of the following is/are considered as modern method(s) of capital budgeting?

Pay back period method
Net present value
IRR
Both (1) and (2)
Both (2) and (3)

A project costs Rs. 200,000 and yields an annual cash inflow of Rs. 40,000 for 8 years.

Calculate the pay back period.

5 years
3 years
1 year
9 years
None of these

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UGC/NET - Financial Management

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