class 12 test
DESCRIPTION
Sample TestTRANSCRIPT
BUSINESS FINANCE
Time : 1 hr
Objective type questions
The cheapest source of finance is
a.
debenture
b.
equity share capital
c.
preference share
d.
retained earning
A decision to acquire a new and modern plant to upgrade an old one is a
financing decision
working capital decision
investment decision
dividend decision
Other things remaining the same, an increase in the tax rate on corporate profits will
make debt relatively cheaper
make debt relatively less cheap home
no impact on the cost of debt
we can’t say
Companies with higher growth paternal are likely to
pay lower dividends
pay higher dividends
dividends are not affected by growth considerations
none of the above
5. Higher working capital usually results in
higher current ratio, higer risk and higher profits
lower current ratio, higher risk and profits
higher equitably, lower risk and lower profits
lower equitably, lower risk and higher profits
6. 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
7. Financial planning arrives at
minimising the external borrowing by resorting to equity issues
entering that the firm always have sinthicicanlty more fund than required so that there is no pancity of funds
ensuring that the firm paces neither a shortage nor a glut of unusable funds
doing only what is possible with the funds that the firms has at its disposal
8. Higher dividends per share is associated with
high earnings, high cash flows, unusable earnings and higher growth opportunities
high earnings, high cash flows, stable earnings and high growth opportunities
high earnings, high cash flows, stable earnings and lower growth opportunities
high earnings, low cash flows, stable earnings and lower growth opportunities
9. A fixed asset should be financed through
a. a long-term liability b. a short-term liability
c. a mix of long and short-term liabilities
10. 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
Short answer questions 3 X 3 = 9
What is ‘Financial Risk?’ Why does it arise?
Define a ‘Current Assets’ and gave four examples?
Financial management is based on three broad financial decisions. What are these?
Long answer questions 2X 4=8
What is meant by working capital. How is it calculated. Discuss five important determinants of working capital requirements.
Explain factors affecting the dividend decision.