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The cheapest source of finance is
(a) Debenture
(b) equity share capital
(c) Preference share
(d) retained earning
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A decision to acquire a new and modern plant to upgrade an old one is a
(a) Financing decision
(b) working capital decision
(c) Investment decision
(d) dividend decision
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Other things remaining the same, an increase in the tax rate on corporate profits will
(a) Make debt relatively cheaper
(b) Make debt relatively less cheap home
(c) No impact on the cost of debt
(d) We can't say
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Companies with higher growth paternal are likely to
(a) pay lower dividends
(b) pay higher dividends
(c) dividends are not affected by growth considerations
(d) None of the above
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Financial leverage is called favorable if
(a) Return on investment is lower than cost of debt
(b) Return on investment is higher than cost of debt
(c) Debt is nearly available
(d) If the degree of existing financial leverage is low
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Higher debt equity ratio (Debt/Equity) results in
(a) Lower financial risk
(b) Higher degree of operating risk
(c) Higher degree of financial risk
(d) Higher EPS
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Higher working capital usually results in
(a) Higher current ratio, higher risk and higher profits
(b) Lower current ratio, higher risk and profits
(b) Higher equitably, lower risk and lower profits
(d) Lower equitably, lower risk and higher profits
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Current assets are those assets which get converted into cash
(a) Within six month
(b) within one year
(c) Between one and three year
(d) between three and five year
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Financial planning arrives at
(a) Minimizing the external borrowing by resorting to equity issues
(b) Entering that the firm always have significantly more fund than required so that there is no paucity of funds
(c) Ensuring that the firm paces neither a shortage nor a glut of unusable funds
(d) Doing only what is possible with the funds that the firm has at its disposal
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Higher dividends per share is associated with
(a) high earnings, high cash flows, unusable earnings and higher growth opportunities
(b) high earnings, high cash flows, stable earnings and high growth opportunities
(c) high earnings, high cash flows, stable earnings and lower growth opportunities
(d) high earnings, low cash flows, stable earnings and lower growth opportunities
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A fixed asset should be financed through
(d) a long term liability
(b) a short term liability
(c) a mix of long and short term liabilities
(d) None of the above
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Current assets of a business firm should be financed through
(a) current liability only
(b) long term liability only
(c) partly from both types i.e., long and short term liabilities
(d) None of the above
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What is meant by capital structure?
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Discuss the two objectives of Financial Planning.
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What is 'financial risk'? Why does it arise?
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Define a 'current assets' and give four examples.
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Financial management is based on three broad financial decisions. What are these?
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What is the main objective of financial management? Explain briefly.
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How does working capital affecting both the liquidity as well as profitability of a business.
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What is meant by working capital? How is it calculated? Discuss five important determinants of working capital requirements.
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Capital structure decision is essentially optimization of risk-return relationship. Comment.
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A capital budgeting decision is capable of changing the financial fortune of a business. Do you agree? Why or why not?
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Explain factors affecting the dividend decision.
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Explain the term 'trading on equity'. Why, when and how it can used by a business organization?
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'S' Limited is manufacturing steel at its plant in India. It is enjoying a buoyant demand for its products as economic growth is about 7%-8% and the demand for steel is growing. It is planning to set up a new steel plant to cash on the increased demand it is facing. It is estimated that it will require about? 5,000 crores to set up and about? 500 crores of working capital to start the new plant.
What is the role and objectives of financial management for this company?
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Explain the importance of having a financial plan for company. Give an imaginary plan to support your answer.
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What are the factors which will affect the capital structure of this company?
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Keeping in mind that it is a highly capital intensive sector what factors will affect the fixed and working capital. Give reasons with regard to both in support of your answer.
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