Thursday, July 2, 2009

Strategic Finance - 17

Question 1 The accounting records serve as the major source of cost data.
Correct Answer True
Question 2 ________ know the best about a firm's performance.
Correct Answer Firm Managers
Question 3 A merger will make sense to the acquiring firm if its shareholders benefit.
Correct Answer True
Question 4 The important steps involved in the analysis of mergers & acquisitions are:-
Correct Answer Planning , Searching & screening , Financial evaluation
Question 5 Developing a consistent framework supported by rewarding mechanisms once it is
introduced & approved at enterprise level is a characteristic of :-
Correct Answer The investing in people method in the united kingdom
Question 6 Dividends increase the current returns for shareholders.
Correct Answer True
Question 7 Internal financing means the firm finances all investments through :-
Correct Answer Retained earnings
Question 8 In a friendly takeover, the acquiring firm makes a financial proposal to the largest
firm's ________.
Correct Answer Management & board
Question 10 Long term financing strategy is used by a firm to meet :-
Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion
of fluctuating working capital requirement
Question 11 Explicit cost and implicit cost are the two parts of cost of debt.
Correct Answer True
Question 12 AS 13 Does not deal with :-
Correct Answer The bases for recognition of interest, dividends & rentals earned on
investments , Operating or finance leases , Investment in mutual funds
Question 13 the amount of working capital required to meet long term, minimum needs is called :-
Correct Answer Permanent working capital
Question 14 A long term investment is an investment other than a current investment.
Correct Answer True
Question 15 Short term financing is meant for funding working capital of a company.
Correct Answer True
Question 16 Share repurchase a form of restructuring comes under :-
Correct Answer Changes in ownership structure
Question 17 Retained earnings are the most important internal sources of financing the growth of
the firm.
Correct Answer True
Question 18 Receivables constitutes a substantial portion of current assets of several firms.
Correct Answer True
Question 19 Investment are the assets held for earning income by way of :-
Correct Answer Dividend , Interest , Rentals
Question 20 Personnel services expenses is made up of:-
Correct Answer Personnel salaries , Cost of facilities , Training & development budgets
Question 21 In many companies, there is no formal record of________.
Correct Answer Investment in employees
Question 22 Value added analysis is a method to determine, if elements within a process flow
provide the :-
Correct Answer Values
Question 24 The Buy back of shares shall not be made from
Correct Answer The promoters or persons in control of the company
Question 25 traditionally avails are provided by ________.
Correct Answer Banks
Question 26 ________ is not a example of segment liability.
Correct Answer Goodwill
Question 27 Examples of accrued expenses are :-
Correct Answer Wages , Income tax , Property tax
Question 28 Liquidation value is also known as ________.
Correct Answer Realizable value
Question 29 Indicators of the value of an investment are obtained by :-
Correct Answer Reference to its market value , The investee`s assets , The expected cash flows
from the investment
Question 30 The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :-
Correct Answer Articles of association should authorize buyback of shares , The shares which
are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total
capital and free reserves should not be more than 2 : 1
Question 31 optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to
Correct Answer False
Question 32 Cost accounted for per activity is classified under ________.
Correct Answer Traceable cost
Question 33 The following categories of personnel are taken into account to calculate the actual
manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel
Question 34 The cost of facilities is usually included & distributed as ________.
Correct Answer Depreciation
Question 35 In value of assets approach the value of which of the following should be deducted to
calculate the net assets available to the equity shareholders :-
Correct Answer Outstanding preference shares
Question 36 usually the `controlling block' tends to be between :-
Correct Answer 20 & 40 percent
Question 37 When competition is high in the market, it is :-
Correct Answer Essential to maintain a larger inventory of finished goods
Question 38 Segment expense includes ________.
Correct Answer The relevant portion of enterprise revenue that can be allocated on a
reasonable basis to a segment
Question 39 Credit standards should be relaxed upon the point where incremental returns
________ incremental costs.
Correct Answer Equals
Question 40 Management of working capital refers to the management of total assets and
liabilities of a company.
Correct Answer False
Question 41 The employer in offering the job contract assumes a range of legal obligations such as
Correct Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
contributions to social security payments
Question 42 The most important internal sources of financing the growth of the firm is through :-
Correct Answer Retained earnings
Question 43 When a change in the method of depreciation is made :-
Correct Answer Depreciation is recalculated in accordance with the new method
Question 44 Shortcomings of accounting numbers consist of the following :-
Correct Answer Firms use different kind of accounting methods , Business risk and financial
risk do not have any influence on accounting numbers
Question 45 Profitability of a company depends upon :-
Correct Answer Cost of capital
Question 46 A normal firm shows the following characteristics :-
Correct Answer No unique optimum payout ratio , Market value per share unaffected by the
payout ratio , All dividend policies are similar
Question 47 As per residual theory of dividends the focus is on ________.
Correct Answer Growth

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