The ______ approach of financial management provides

1 analytical framework for financial problems.

A. Classical C. Modern
B. Traditional
C. Modern
D. Empirical

The ______approach of financial management fully ignores the

2 internal decision-making.
A. Business finance B. Traditional
B. Traditional
C. Modern
D. two sided

3 The basic current liabilities are _____

d. Expenditure of
a. accounts payable and bills payable
acquire capital
b. bank overdraft
c. outstanding expenses.
d. All of the above

Project whose cash flows are more than capital invested for
4 required rate of return then net present value will be
a. Negative c. Positive
b. Zero
c. Positive
d. Independent

In capital Budgeting, a technique which is not based upon

5 discounted cash flow
d. Accounting rate of
a. Net present value method
return
b. Internal rate of return
c. Profitable index
d. Accounting rate of return

6 There are two concepts of working capital – gross and ____

a. Zero b. Net
b. Net
c. Cumulative
d. Distinctive
 7 _______ is the main goal of financial management.
A. profit maximization D. wealth maximization
B. fund transfer
C. maximum returns
D. wealth maximization

The internal rate of return criterion for project acceptance,

under theoretically infinite funds is: accept all projects which
8 have
b. IRR greater than
a. IRR equal to the cost of capital
the cost of capital
b. IRR greater than the cost of capital
c. IRR less than the cost of capital
d. None of the above

____ Maximization objective ignores timing of benefit i.e time

9 value of money.
A. Profit A. Profit
B. Wealth
C. Value
D. Both A & B

Where capital availability is unlimited and the projects are not

mutually exclusive, for the same cost of capital, following
10 criterion is used
a. Net present value d. Any of the above
b. Internal Rate of Return
c. Profitability Index
d. Any of the above

In working capital management calculation of Creditor is based

11 on
a. Total sales c. Total credit sales
b. Cash Sales
c. Total credit sales
d. Total cost of Raw material

In working capital “assume 50% of raw material required in the

beginning of manufacturing; other conversion costs are 50
12 percent” stats……..
b. 50% Raw Material +
a. 100% Raw Material + 100% Labour + 100% Overheads 50% Labour + 50%
Overheads
b. 50% Raw Material + 50% Labour + 50% Overheads
c. 100% Raw Material + 50% Labour + 50% Overheads
d. 50% Raw Material + 100% Labour + 100% Overheads

13 Total cost of production is used in calculation of _____

 a. Raw material d. Finished Goods
b. Debtors
c. Creditors
d. Finished Goods

The values of the future net incomes discounted by the cost of

14 capital are called
a. Average cost of Capital d. Net Present Value
b. Discounted Capital cost
c. Net Capital Cost
d. Net Present Value

Time value of money supports the comparison of cash flows

15 recorded at different time period by
a. Discounting all cash
a. Discounting all cash flows to a common point of time flows to a common
point of time
b. Compounding all cash flows to a common point of time
c. Using either a or b
d. None of the above

Which of the following capital budgeting techniques takes into

account the incremental accounting income rather than cash
16 flows:
c. Accounting Rate of
a. Net Present Value
Return
b. Internal Rate of Return
c. Accounting Rate of Return
d. Pay Back Period
17 The Internal Rate of Return is defined as
a. the discount rate which causes the payback to equal one year. d. the discount rate
b. the discount rate which causes the NPV to equal zero. which causes the
c. the ROE when the NPV equals 0. NPV to equal
d. The ROE associated with project maximization zero.

Advantages of maintaining cash budgets would not include one

18 of the following:
a. Surplus cash can be
a. Surplus cash can be put to more profitable uses if expected put to more profitable
to occur uses if expected to
occur
b. Time is available to investigate the possible future sources
of finance
c. Debtors can be paid more quickly
d. Overdrafts can be negotiated in advance of when t

19 Which of the following is a cash outflow?

a. Purchased of goods a. Cash drawings
 b. Commission received
c. Sale of Machinery
d. Dividend received

To financial analysts, "Gross working capital" means the same

20 thing as __________.
d. Total of all current
a. Total assets
Assets
b. Fixed assets
c. Current assets
d. Total of all current Assets

Which of the following is not an explanation for rising profit

21 occurring at the same time as a cash shortage?
a. Disposal of the fixed assets for the profit
b. Rapid expansion of sales and output
c. Repayment of loan
d. Purchase of new premises

A system where stocks are not held until they are needed is
22 known as:
a. Economic order
a. Economic order quantity
quantity
b. Production budgeting
c. Just in time
d. Total quality management

The amount of current assets required to meet a firm's long-

term minimum needs is referred to as __________ working
23 capital.
a. Permanent a. Permanent
b. Temporary
c. Gross
d. Net

24 The cash discount is given to customers for:

a. Early payment a. Early payment
b. Bulk payment
c. Frequent purchase
d. Good business relation

25 Which of the following statements are false?

a. Cash flows and accounting profit are same.
b. Cash flows and profit before depreciation but after tax
c. Net Present value method is based on cashflows.
d. Average rate of return method is based on cash flows.
26 Which of the following is not a capital budgeting decision?
a. Expansion Programme d. Inventory control.
b. Acquisition of long term assets
c. Replacement of long term assets
d. Inventory control.

Which of the following variable is not known in Internal rate of

27 return method of Capital Budgeting?
a. Amount of Cash inflows d. Discount rate
b. life of the Project
c. Amount of Cash outflows
d. Discount rate

the rate of discount at which NPV of a project becomes zero is

28 also known as:
b. Internal Rate of
a. Average Rate of Return
Return
b. Internal Rate of Return
c. Alternative Rate of Return
d. None of the above

In cashflows, when a company invests in fixed assets and short-

29 term financial investments results in
a. Increased Equity c. Decreased Cash
d. Increased liabilities
c. Decreased Cash
d. Increased Cash

30 Investment in current assets should be _____

a. Just adequate a. Just adequate
b. More
c. Less
d. Maximum

Present value of future cash flows is Rs 12000 and an initial cost

31 is Rs 4000 then profitability index will be
a. 3 a. 3
b. 3.19
c. 0.31
d. 5450

An initial cost is Rs 12000 and probability index is 11.2 then

32 present value of cash flows will be
a. 1,00,000 c. 1,34,400
b. 1,12,000
c. 1,34,400
d. 1,20,000
 An investor deposits ₹ 100 in a bank account for 5 years at 8%
interest. Find out the amount which he will have in his account
33 if interest is compounded annually
a. 146.93 a. 146.93
b. 148.02
d. 148.59
d. 149.18

if the discount rate is 10%, compute the present value of the

34 cashflow of ₹ 100 at end of year 4.
a. 90.91 b. 68.3
b. 68.3
c. 137.22
d. None of the above

Mr. X deposits ₹ 4000 at the end of every year for 5 years in his
savings account paying 10% compound annually. He wants to
determine how much sum of money he will have at the end of
35 the 5th year?
a. 24,420 b. 11052
b. 22,104
c. 20,100
d. 19,904

An investor deposits ₹ 100 in a bank account for 5 years at 8%

interest. Find out amount which he will have in his account if
36 interest is compounded semi-annually (6-monthly)
a. 146.93 b. 148.02
b. 148.02
d. 148.59
d. 149.18

A company is initial investment of ₹ 10,000 and cash inflow of ₹

2000, ₹ 4000 and ₹ 12,000 for first, second and third year
37 respectively. Find out the payback period.
a. 2.33 a. 2.33
b. 1.33
c. 1
d. None of the above

how long it will take to double your money if it grows at 6%

38 annually?
a. 10 b. 6
b. 12
c. 14
d. 8
 Cost of Raw materials and finished goods per unit is ₹50 and 70 respectively and , average
raw material in stock: one month and finished goods storage period is 2 months, you are
39 required to calculate finished good inventory for 50,000 units of output
a. 3,03,333.33 d. 5,83,333.33
b. 4,03,333.33
c. 2,03,333.33
d. 5,83,333.33