Tuesday, March 1, 2011

Project Finance - 3

Project Finance - 3

Select The Blank
Question
The basic difference between the feasibility study report and ________ is the level of accuracy and degree of detail.
Correct Answer
Detailed Project report


Multiple Choice Single Answer
Question
End use method of Commercial appraisal technique is :-
Correct Answer
A list of industries wherein the product is used is made and quantity and volume is arrived at


True/False
Question
The advantage of secondary sources of data is that it is readily and economically available.
Correct Answer
True


Select The Blank
Question
Depreciation is sometimes treated as ________ funds.
Correct Answer
Source


Multiple Choice Multiple Answer
Question
Casual methods of Demand forecasting consists of :-
Correct Answer
Consumption-level method , Econometric method


Multiple Choice Multiple Answer
Question
Financial and economic aspect of the Visit report consists of :-
Correct Answer
Company's financial year , Impact of Government policies on company operations , Comments on the last published accounts


Multiple Choice Single Answer
Question
The statement which shows the movement of cash into and out of firm's kittie is known as :-
Correct Answer
Cash flow statement


True/False
Question
Name of the finance manager comes under the Project organisation category of the Project report.
Correct Answer
True


Multiple Choice Single Answer
Question
Cost of laying roads comes under :-
Correct Answer
Land and site cost


True/False
Question
Debt Service means payment of installments and interest against an amount borrowed as per terms of loan.
Correct Answer
True


Multiple Choice Single Answer
Question
Infrastructural projects include :-
Correct Answer
Power Generation and Distribution
True/False
Question
The 'BCG Matrix 'analysis various products of the organisation in the terms of Business strength and Industry Attractiveness.
Correct Answer
False


Select The Blank
Question
A Project has a ________ represented by growth, maturity and decay.
Correct Answer
Life cycle


Select The Blank
Question
Position regarding requirement and training of operational staff comes under the ________ category of Project report.
Correct Answer
Project organisation


Multiple Choice Single Answer
Question
Receivables is categorised under :-
Correct Answer
Current assets and liabilities


True/False
Question
Managerial problems in a project are the most pervasive.
Correct Answer
True

Multiple Choice Multiple Answer
Question
Disposition of funds includes :-
Correct Answer
Increase in working capital , Preliminary expenses , Dividend


True/False
Question
A project is unique and no two projects are similar.
Correct Answer True
True/False
Question
The cost factors of the product mixed is also taken into account to arrive at cost at various levels of production and its cost impact of the manufacturing.
Correct Answer
True


Multiple Choice Multiple Answer
Question
The objectives of the funds flow statement is as follows :-
Correct Answer
To indicate the financial strength and weakness of the business , To help to understand the changes in assets as well as asset sources which are not revealed by the income statement , To find out the uses of loans raised by the business

Select The Blank
Question
Under the SPACE Model, Customer loyalty is determined under the ________ dimension.
Correct Answer
Company's competitive advantage

True/False
Question
Cost and time overrun of the project may lead to loss on account of lost market opportunities.
Correct Answer
True



Multiple Choice Single Answer
Question
The ratio which indicates the ability of the company to meet current obligations is termed as :-
Correct Answer
Current ratio

Multiple Choice Multiple Answer
Question
While choosing the location for a project, the following factors should be considered :-
Correct Answer
Proximity to raw materials and markets , Availability of infrastructure , Government policies and other factors

Multiple Choice Multiple Answer
Question
The sources of long term and medium term finance are :-
Correct Answer
Equity shares , Public deposit



Select The Blank
Question
More accurate the estimation of the level of current assets and current liabilities, more accurate will be estimation of the requirement of ________.
Correct Answer
Working capital


True/False
Question
Debt Equity ratio is a 'Solvency ratio'.
Correct Answer
True


Match The Following
Question
Correct Answer

Organisation and Management
Strikes/lay-offs/lockouts etc.

Material inputs and utilities
Stock of raw material

Working capital
Sanctioned bank limit

Marketing
Pricing policy


Multiple Choice Multiple Answer
Question
Management qualities includes :-
Correct Answer
Honesty , Financial resources , Initiative


Select The Blank
Question
________ in liabilities involves inflow of funds.
Correct Answer
Increase


Select The Blank
Question
The ________ market is longer the order of the day since this is an era of professionalization and specialised services are available at cost.
Correct Answer
Monopolistic


Multiple Choice Multiple Answer
Question
Time Series Projection Methods of Demand forecasting consists of :-
Correct Answer
Moving Averages method , Trend Projection method


Multiple Choice Single Answer
Question
Borrower's contribution towards Working capital is known as :-
Correct Answer
Margin money


Multiple Choice Single Answer
Question
A project objective which states "What' is to be viewed" is termed as :-
Correct Answer
Strategic perspective

Multiple Choice Single Answer
Question
The basic characteristic of a project is :-
Correct Answer
That it involves current outlay of funds in expectation of future benefits


Select The Blank
Question
Name and designation of the chief executive comes under the ________ category.
Correct Answer
General


Select The Blank
Question
Under ________ method, the forecasts are modified in the light of observed errors.
Correct Answer
Exponential smoothing


Multiple Choice Single Answer
Question
The rate of discount which would equate the present value of investments to the present value of benefits over the life of the project is known as :-
Correct Answer
Internal rate of return


Multiple Choice Multiple Answer
Question
In the Detailed Project Report, Technical aspects includes :-
Correct Answer
Plant capacity , Quality standards , Raw material requirement


True/False
Question
Delay in recruitment of staff may lead to cost and time overrun
Correct Answer
True

Multiple Choice Single Answer
Question
The basic document for facilitating Project financing is the :-
Correct Answer
Detailed Project report



Multiple Choice Multiple Answer
Question
External sources of cash are as follows :-
Correct Answer
Issue of new shares , Long term loans , Short term borrowings


Multiple Choice Multiple Answer
Question
The following are the sources of funds :-
Correct Answer
Operating Profit , Non operating Income


Select The Blank
Question
Retained earnings indicates that whatever profits are earned by the company are not distributed by it by way of ________ but are kept aside for use in future for expansion or other purpose.
Correct Answer
Dividend


Multiple Choice Multiple Answer
Question
Limitations of fund flow statement are :-
Correct Answer
It does not provide any new information but only rearranges the various facts , It does not consider non-fund transactions

Match The Following
Question
Correct Answer

Project appraisal
It is the evaluation of project from technical, market, financial, economic and social perspective before committing funds for investment

Program
It is large in scope, is activity oriented and is not necessarily time bound

Project
It is one-shot, time-limited, goal oriented, major undertaking requiring the commitment of varied skills and resources


Pre-feasibility study
It is a preliminary assessment of the project idea to determine whether or not the investment opportunity is promising

Multiple Choice Single Answer
Question
Psychographic market appraisal answers to :-
Correct Answer
Why they buy?

Project Finance - 2

Multiple Choice Multiple Answer
Question
Financing plans consists of :-
Correct Answer
Internal accruals , Share capital , Term loans


Multiple Choice Multiple Answer
Question
Ratios relating to working capital are :-
Correct Answer
Current ratio , Internal measure , Quick ratio
True/False
Question
Export Market is a technique used for forecasting under Commercial appraisal technique.
Correct Answer
True

Multiple Choice Multiple Answer
Question
The sources of cash are :-
Correct Answer
Cash from operations , Sale of machinery , Issue of new shares


Multiple Choice Single Answer
Question
Past trend method of Commercial appraisal technique is :-
Correct Answer
Adopted as a guide depending on the consumption pattern of the society as a whole


Select The Blank
Question
________ is a current asset
Correct Answer
Book debts


Select The Blank
Question
In the GE's Stop Light Matrix, when ________ situation prevails , Products call for divestment.
Correct Answer
Average Business Strength and Low Industry attractiveness

Select The Blank
Question
Detailed Project Report is generally prepared from a ________ report with additional information.
Correct Answer
Feasibility


Multiple Choice Single Answer
Question
The third phase of the technical appraisal which focuses upon appraising the likely technical gaps consists of :-
Correct Answer
Problems pertaining to the period when the project is in operation


Multiple Choice Single Answer
Question
The acronym for 'LPG' is :-
Correct Answer
Liberalisation, Privatisation and Globalisation


True/False
Question
Miscellaneous expenditure is written on the asset side of the Balance sheet.
Correct Answer
True



Multiple Choice Multiple Answer
Question
Defaults category of the Project report may be in respect of :-
Correct Answer
Term loans , Principal , Interest



Multiple Choice Multiple Answer
Question
The Key terms used in the BCG Product Portfolio matrix are :-
Correct Answer
Stars , Question marks


Select The Blank
Question
________ tries to have what the customer will want- where, when, in what form and at what price.
Correct Answer
Marketing
Multiple Choice Single Answer
Question
Cost of the Project encompasses :-
Correct Answer
The total of all items of outlay associated with a project


Select The Blank
Question
Cost of fencing comes under the ________ category of the Project report.
Correct Answer
Land and site development


Multiple Choice Multiple Answer
Question
Trend Projection method of demand forecasting consists of :-
Correct Answer
Linear Relationship , Exponential Relationship , Polynomial Relationship

Select The Blank
Question
Inflow of funds may not necessarily result in ________.
Correct Answer
Inflow of cash


True/False
Question
A high debt equity ratio may indicate that the financial stake of the creditors is more than that of the owners.
Correct Answer
True


Multiple Choice Single Answer
Question
Sources of funds include :-
Correct Answer
Increase in secured borrowing




Select The Blank
Question
In the GE's Stop Light Matrix, when ________ situation prevails, Products call for Hold.
Correct Answer
Average Business Strength and Medium Industry Attractiveness



Multiple Choice Multiple Answer
Question
As per the GE's Stop Light Matrix, Products may justify substantial commitment of funds where there is :-
Correct Answer
Strong Business Strength and high Industry attractiveness , Average Business strength and high Industry attractiveness

True/False
Question
Ratios are based only on the information which has been recorded in the financial statements.
Correct Answer
True



True/False
Question
Trend projection method is the important technique for forecasting demand.
Correct Answer
True


Multiple Choice Single Answer
Question
"Fly by night" operator mentality is a :-
Correct Answer
Management quality



Multiple Choice Multiple Answer
Question
The applications of cash are :-
Correct Answer
Purchase of fixed assets , Payment of long term loans


Multiple Choice Single Answer
Question
A Project is a temporary endeavor to achieve some specific objectives within a :-
Correct Answer
Predefined time


Multiple Choice Single Answer
Question
Delays in infrastructure Development by State Agencies may lead to :-
Correct Answer
Cost and time overrun

True/False
Question
Ratio analysis is a technique of planning and control.
Correct Answer
False



Multiple Choice Multiple Answer
Question
General category of the Project report consists of :-
Correct Answer
Name of the Industrial concern , Proposed product , Location of the factory


Multiple Choice Multiple Answer
Question
After the SPACE chart is constructed, we would normally get any one of the following basic strategic postures :-
Correct Answer
Aggressive Posture , Competitive Posture , Defensive Posture


True/False
Question
The emphasis of a finance manager should be on taking a synergistic view of the project rather than looking at it only from the financial aspects.
Correct Answer
True


Multiple Choice Single Answer
Question
BCG Product Portfolio Matrix analyses products on the basis of :-
Correct Answer
Relative Market share and Industry Growth rate


True/False
Question
Change in the project concept itself may lead to cost and time overrun.
Correct Answer
True


Select The Blank
Question
The company having ________, is appropriate for the strategic posture of Conservative under the SPACE approach.
Correct Answer
Limited competitive advantage, belonging to a not so attractive industry but enjoying financial strength and operating in a relatively stable environment


Select The Blank
Question
Details regarding Internal accruals comes under the ________ category of Project report.
Correct Answer
Financing plan



Match The Following
Question
Correct Answer
Increase in current liabilities
Decreases working capital

Increase in liabilities
Inflow of funds

Decrease in liabilities
Outflow of funds

Increase in current assets
Increases working capital


Multiple Choice Multiple Answer
Question
Provision for tax can be treated as :-
Correct Answer
Item of current liabilities , Added back to the profit as per profit and loss account to arrive at operating profits



Multiple Choice Multiple Answer
Question
The data for ratio analysis is obtained from :-
Correct Answer
Profit and Loss Account , Balance Sheet

Multiple Choice Single Answer
Question
The industrial concern earned profits by increasing the sales volume under the :-
Correct Answer
Sales concept



Multiple Choice Single Answer
Question
The entire life of the project is taken into account under :-
Correct Answer
Average rate of return method



Match The Following
Question
Correct Answer

General functional layout
Present the general relationship between equipment buildings and civil works

Location
Broad area such as city, industrial belt etc.

Site
Specific piece of land where the project would be set up

Plant layout
Physical layout of the factory


Multiple Choice Single Answer
Question
Geographic market appraisal answers to :-
Correct Answer
Where do the customers live?


True/False
Question
In the BCG Matrix, the key term of Cash Cows require further commitment of funds.
Correct Answer
False


True/False
Question
For computing Interest coverage ratio, Profit after Interest and taxes are taken into account.
Correct Answer
False
Select The Blank
Question
A smaller unit into which the overall requirement of capital of a company is sub-divided is termed as ________.
Correct Answer
Share


Select The Blank
Question
Commission outstanding is ________ of funds.
Correct Answer
Application


Project Finance - 1
LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Select The Blank
Question
The basic difference between the feasibility study report and ________ is the level of accuracy and degree of detail.
Correct Answer
Detailed Project report

True/False
Question
The cost factors of the product mixed is also taken into account to arrive at cost at various levels of production and its cost impact of the manufacturing.
Correct Answer
True

Select The Blank
Question
________ is a current asset
Correct Answer
Book debts



Multiple Choice Single Answer
Question
The formula for Break Even Point is :-
Correct Answer
Fixed cost / ( Sales Price - Variables)


True/False
Question
Banks and Financial Institutions, world-wide, are now financing projects with strategies and terms that would have been hard to believe/imagine just a few years back.
Correct Answer
True


Multiple Choice Single Answer
Question
Liabilities side of Balance sheet includes :-
Correct Answer
Unsecured loans



Multiple Choice Single Answer
Question
Net Working Capital means :-
Correct Answer
Current assets less Current liabilities


Multiple Choice Multiple Answer
Question
Trend Projection method of demand forecasting consists of :-
Correct Answer
Linear Relationship , Exponential Relationship , Polynomial Relationship


True/False
Question
It is mandatory for each unit to obtain necessary clearance from Pollution Control Authorities before setting up any project.
Correct Answer
True


True/False
Question
Debt Service Coverage Ratio is one of the most important ratios calculated by the bankers or financial institutions giving long term finance to the organisation.
Correct Answer
True


Select The Blank
Question
Sometimes the term ________ is interpreted as cash equivalent i.e. cash and marketable securities.
Correct Answer
Fund


Multiple Choice Multiple Answer
Question
The applications of cash are :-
Correct Answer
Purchase of fixed assets , Payment of long term loans

Select The Blank
Question
________ tries to have what the customer will want- where, when, in what form and at what price.
Correct Answer
Marketing



Multiple Choice Multiple Answer
Question
Time Series Projection Methods of Demand forecasting consists of :-
Correct Answer
Trend Projection method , Moving Averages method


Multiple Choice Single Answer
Question
Disposal of fixed assets is categorised under :-
Correct Answer Miscellaneous
Multiple Choice Multiple Answer
Question
Financial and economic aspect of the Visit report consists of :-
Correct Answer
Company's financial year , Impact of Government policies on company operations , Comments on the last published accounts

Match The Following
Question
Correct Answer

Project organisation
Finance manager


General category of Project report
Location of factory


Cost aspect of the project report
Consultancy fees


Financing plan
Unsecured loans


Multiple Choice Multiple Answer
Question
In the Detailed Project Report, Marketing aspects includes :-
Correct Answer
Demand forecasting , Promotion , Distribution


Multiple Choice Multiple Answer
Question
Marketing category of the Project report consists of :-
Correct Answer
Pricing policy , Target market , Market potential
Multiple Choice Multiple Answer
Question
Sources of funds includes :-
Correct Answer
Depreciation , Preliminary expenses written off , Increase in secured borrowing

Match The Following
Question
Correct Answer

Moving into new areas/product lines
Diversification Projects

Suppliers' credit
Short term finance


Deferred credit
Long term finance


Setting up new units
New Projects


Multiple Choice Single Answer
Question
BCG Product Portfolio Matrix analyses products on the basis of :-
Correct Answer
Relative Market share and Industry Growth rate


Multiple Choice Single Answer
Question
Sewerage and drainage cost of the project is categorised under :-
Correct Answer
Building cost



Multiple Choice Multiple Answer
Question
General category of the Project report consists of :-
Correct Answer
Name of the Industrial concern , Proposed product , Location of the factory


True/False
Question
The ratios of one organisation compared with the ratios of the same organisation is termed as inter-firm comparison.
Correct Answer
False


Select The Blank
Question
In the GE's Stop Light Matrix, when ________ situation prevails , Products call for divestment.
Correct Answer
Average Business Strength and Low Industry attractiveness


Multiple Choice Multiple Answer
Question
Provision for tax can be treated as :-
Correct Answer
Item of current liabilities , Added back to the profit as per profit and loss account to arrive at operating profits

Multiple Choice Single Answer
Question
The cost of Plant and Machinery may be adjusted for a possible increase known as :-
Correct Answer
Escalation



Multiple Choice Single Answer
Question
Ratio analysis is a widely used tool of :-
Correct Answer
Financial analysis
True/False
Question
The advantage of secondary sources of data is that it is readily and economically available.
Correct Answer
True


True/False
Question
Debt Equity ratio is a 'Solvency ratio'.
Correct Answer
True

Select The Blank
Question
Excessive expenditures on foreign technicians leads to ________.
Correct Answer
Cost and time overrun


Multiple Choice Multiple Answer
Question
Financing plans consists of :-
Correct Answer
Share capital , Term loans , Internal accruals

Select The Blank
Question
Retained earnings is a source of ________ finance.
Correct Answer
Internal


Select The Blank
Question
In order to meet the cost of large project, the technique of ________ has been developed so that the financial commitment and risks associated with a project are shared between the project sponsor and the lending institutions.
Correct Answer
Limited recourse financing





True/False
Question
A high debt equity ratio may indicate that the financial stake of the creditors is more than that of the owners.
Correct Answer
True


Multiple Choice Single Answer
Question
The third phase of the technical appraisal which focuses upon appraising the likely technical gaps consists of :-
Correct Answer
Problems pertaining to the period when the project is in operation

Select The Blank
Question
More accurate the estimation of the level of current assets and current liabilities, more accurate will be estimation of the requirement of ________.
Correct Answer
Working capital



True/False
Question
Ratio analysis is a technique of planning and control.
Correct Answer
False


True/False
Question
Cost and time overrun of the project may lead to loss on account of lost market opportunities.
Correct Answer
True


Multiple Choice Multiple Answer
Question
While choosing the location for a project, the following factors should be considered :-
Correct Answer
Proximity to raw materials and markets , Availability of infrastructure , Government policies and other factors



Multiple Choice Single Answer
Question
In the Cash flow statement, the sources of funds include :-
Correct Answer
Development rebate reserve

Select The Blank
Question
Name and designation of the chief executive comes under the ________ category.
Correct Answer
General



Multiple Choice Multiple Answer
Question
As per the GE's Stop Light Matrix, Products may justify substantial commitment of funds where there is :-
Correct Answer
Strong Business Strength and high Industry attractiveness , Average Business strength and high Industry attractiveness



Multiple Choice Single Answer
Question
The BCG product Portfolio Matrix, General Electric Stop Light Matrix and Strategic Position and Action Evaluation Model are considered to be highly relevant as :-
Correct Answer
Portfolio Planning Tools

Select The Blank
Question
Position regarding requirement and training of operational staff comes under the ________ category of Project report.
Correct Answer
Project organization
Multiple Choice Single Answer
Question
The emphasis of the Banks and Financial institutions particularly in India has shifted from 'Sanctions', 'Disbursements' and 'Security-orientation' to 'Recovery/Recycling' and :-
Correct Answer
Activity orientation

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