Strategic Finance -13

Strategic Finance -13

Multiple Choice Multiple Answer
Question The support elements consists of important functions
such as :-
Correct Answer Accounting , Automatic data processing , Payroll

Multiple Choice Single Answer
Question The value of the asset does not include:-
Correct Answer Price per share

Multiple Choice Single Answer
Question The bottom line of ABC Process is :-
Correct Answer To achieve a better method of doing the right business
pf the organisation

Multiple Choice Single Answer
Question When the working capital is less than its peak level :-
Correct Answer The surplus is invested in liquid assets

True/False
Question Articles of association should authorise buy back of
securities as per the Company's Act.
Correct Answer True

Multiple Choice Single Answer
Question During Share repurchase, it is necessary to transfer
certain sum to :-
Correct Answer Capital redemption reserve Account

Multiple Choice Single Answer
Question Comparative analysis is :-
Correct Answer A review to ensure consistency within the activity
model & process flow

Multiple Choice Multiple Answer
Question Exit costs are classified into 3 categories namely :-
Correct Answer Lost efficiency prior to separation , Job vacancy cost
during the new search , Termination pay

Multiple Choice Multiple Answer
Question As a general rule, an asset is :-
Correct Answer A good or a right that a firm owns in a determined
moment , Prepayment adjustments , Capitalized
expenses

Select The Blank
Question During the costing process, we look at ________.
Correct Answer Resource consumption

Select The Blank
Question Credit standards should be relaxed upon the point
where incremental returns ________ incremental
costs.
Correct Answer Equals

True/False
Question Usually cost data is perfect for ABC Analysis &
distribution.
Correct Answer False

True/False
Question An activity model is a tool to assist in understanding &
defining the organisation.
Correct Answer True

Multiple Choice Multiple Answer
Question The acquiring firm for any M & A will require data
about the target firm which will include :-
Correct Answer Quality of management , Production capabilities ,
Profitability

Select The Blank
Question ________ is not a example of segment liability.
Correct Answer Goodwill
Multiple Choice Single Answer
Question The value based approach of HRA Tracking suggests
that the value of human resources depends upon :-
Correct Answer Capacity to generate revenue

Select The Blank
Question ________ are considered most desirable from
shareholders point of view.
Correct Answer Dividends

Multiple Choice Multiple Answer
Question Shareholders returns consists of 2 components :-
Correct Answer Dividend , Capital gains

Multiple Choice Single Answer
Question In the book building method, the company makes an
offer to buy back :-
Correct Answer Its specified number of shares at a specified offer
price range

Multiple Choice Multiple Answer
Question A company is permitted to buy back its shares through
stock exchange in the following situations :-
Correct Answer The company shall complete the verification of
acceptances within 15 days of the payout , The
identity of the company as a purchaser shall appear
on the electronic screen when the order is placed ,
The buy back shall be made only on stock exchanges
with electronic trading facility

Multiple Choice Single Answer
Question Research into true human resources accounting
began in :-
Correct Answer 1960`s

Select The Blank
Question If firms have same technology ________ makes the
difference i.e. firms become more productive .
Correct Answer Solid human resource team

True/False
Question It is necessary to identify all costs that may be related
to an acquisition.
Correct Answer True

Multiple Choice Multiple Answer
Question It is the activity accountant's job to do the following for
the existing organisational structure :-
Correct Answer To define the costs , To refine the costs , To
document the costs

Multiple Choice Multiple Answer
Question Debt reduces :-
Correct Answer Agency cost of free cash flow , Commitment to pay in
time to all lenders , Freedom of decisions

Select The Blank
Question Stock repurchases ________ the debt / equity ratio.
Correct Answer Increases

Select The Blank
Question If total external revenue attributable to reportable
segments constitutes less than ________ of the total
enterprise revenue additional segments should be
identified as reportable segments.
Correct Answer 75 percent


Multiple Choice Multiple Answer
Question A current investment is an investment that is by nature
Correct Answer Readily realisable , Intended to be held for not more
than 1year from the date on which investment is made

Select The Blank
Question If the segment result of a segment includes interest or
dividend income its segment assets will not include
________.
Correct Answer Payables

Multiple Choice Single Answer
Question What is the maximum amount involved in the buy
back of the total paid up capital & free reserves of the
company?
Correct Answer 0.25

Select The Blank
Question Economies of scale arises with increase in volume of
production leading to________.
Correct Answer Reduction in the cost of production

Multiple Choice Multiple Answer
Question The 3 groups of participants in a firm are :-
Correct Answer Suppliers of equity , Debt suppliers , Firm Managers

Multiple Choice Multiple Answer
Question The important aspect of dividend policy is :-
Correct Answer To determine the amount of earnings to be distributed
to shareholders , Amount to be retained in the firm

True/False
Question Baumul`s Model is similar to EOQ model in inventory
management.
Correct Answer True

True/False
Question To `gather costs', means capturing all relevant
expenses that pertain to the selected model and
processes.
Correct Answer True

Multiple Choice Single Answer
Question When the seller asks for the payment beforemaking
the delivery in order to avoid all risks it is known as :-
Correct Answer Cash before delivery

True/False
Question When a company is able to assess an individual's
worth, it helps in increasing its own worth.
Correct Answer True
Multiple Choice Single Answer
Question The depreciation rates or the useful lives of the assets
are disclosed only :-
Correct Answer If they are different from the principle rates specified in
the statute

Select The Blank
Question Depreciation is ________ of an asset.
Correct Answer Loss of value

Multiple Choice Single Answer
Question usually the `controlling block' tends to be between :-
Correct Answer 20 & 40 percent

True/False
Question Money becomes less valuable when received at a
latter stage instead of in present time.
Correct Answer True

True/False
Question Diversification helps in preserving a firm's reputation &
goodwill.
Correct Answer True

Multiple Choice Single Answer
Question Decrease in leverage results in increasing the :-
Correct Answer Overall cost of capital

Multiple Choice Multiple Answer
Question The limitations of value of assets approach include :-
Correct Answer Book value of the assets is directly dependent on the
accounting policies followed by the company , There
are no standard procedures for valuation of intangible
assets , No importance to the market value of the
asset


True/False
Question The chance of bankruptcy is small when the leverage
of a firm is small.
Correct Answer True


Strategic Finance - 12

True/False
Question It is easy to find a risk free security.
Correct Answer False

Multiple Choice Single Answer
Question As per the study conducted by RBI, Current assets
constitute :-
Correct Answer More than 50 % of the total assets

Multiple Choice Multiple Answer
Question 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

Select The Blank
Question Business risk & financial risk do not have any
influence on ________.
Correct Answer Accounting numbers

Multiple Choice Multiple Answer
Question The characteristics of working capital are :-
Correct Answer It is continually required for a going concern ,
Quantum of working capital fluctuates depending on
the level of activity , It is impacted by numerous
transactions on a continuous basis

Multiple Choice Single Answer
Question Profitability of a company depends upon :-
Correct Answer Cost of capital
Multiple Choice Multiple Answer
Question If a firm diversifies managerial teams formed can be
shifted from unproductive activities to productive ones
which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm

Select The Blank
Question Conglomerate mergers are also called ________.
Correct Answer Concentric mergers

True/False
Question The buyback shall be made only on stock exchanges
with electronic trading facility.
Correct Answer True

True/False
Question Appraisal value of a firm can be acquired from an
independent appraisal agency.
Correct Answer True

True/False
Question firms use credit policy as a marketing tool for
expanding sales.
Correct Answer True

Multiple Choice Single Answer
Question Tender offers are used primarily for :-
Correct Answer Large Equity repurchases

Multiple Choice Single Answer
Question Which is an example out of the following to which
special consideration apply for depreciation :-
Correct Answer Regenerative natural resources

Multiple Choice Single Answer
Question Which of the following is NOT A Characteristic of
declining firm :-
Correct Answer The optimum payout ratio for a declining firm is not
100 %

Multiple Choice Single Answer
Question According to Net Income Approach, the average cost
of capital declines as the leverage ratio :-
Correct Answer Increases

Multiple Choice Multiple Answer
Question Personnel services expenses is made up of:-
Correct Answer Personnel salaries , Cost of facilities , Training &
development budgets

Multiple Choice Multiple Answer
Question 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

Select The Blank
Question Mature companies with stable earnings generally pay
out ________.
Correct Answer A high proportion of earnings

Multiple Choice Single Answer
Question Segment result represents :-
Correct Answer Operating profit or loss

Multiple Choice Single Answer
Question Best practices, a tool for review process is similar to :-
Correct Answer Bench marking

True/False
Question Making decision on dividend is a very crucial area of
financial management for a firm.
Correct Answer True

Match The Following
Question- Correct Answer

Mechanisms -Performs or providesenergy to an activity


Inputs -Information or material used to produce the
output of an activity


Controls- Information or material that constrains an
activity

Outputs -Information or material produced by an activity


True/False
Question According to NI Approach, decrease in leverage
decreases the overall cost of capital and increases the
firm's value.
Correct Answer False

Match The Following
Question- Correct Answer

Lien- The bank has a right to retain the goods belonging to the
company until the debts due to the bank are paid

Hypothecation -A charge against property for an amount of debt
Pledge- Duty of the bank to take care of movable goods

Mortgage -Pertains to immovable properties


Multiple Choice Single Answer
Question Investment decisions are mainly concerned with :-
Correct Answer Assets

Multiple Choice Multiple Answer
Question 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


Select The Blank
Question Buy back through book building the process should be
made through ________.
Correct Answer An electronically linked transparent facility

Multiple Choice Multiple Answer
Question The internal staffing performance indicators are :-
Correct Answer Sales per employee , Recovery rate , Utilization %

Multiple Choice Multiple Answer
Question The 3 main types of accounting records followed by
an organisation are :-
Correct Answer Organisational accounting , Budgetary accounting ,
Cost accounting

Select The Blank
Question An asset is included in segment assets, if and only if
the related depreciation or amortisation is included in
________.
Correct Answer Segment expense

Select The Blank
Question A company shall buyback its shares through the stock
exchange by making a public announcement at least
________ days prior to the commencement of
buyback.
Correct Answer Seven

Multiple Choice Single Answer
Question Which of the following systems identifies each of the
organizational elements of the traditional bureaucratic
structure and applies the identifiable costs of that
element accordingly?
Correct Answer Organization element accounting

Multiple Choice Single Answer
Question Short term sources of funds include :-
Correct Answer Current Liabilities

True/False
Question Tender offers us an alternative approach to acquire
another firm.
Correct Answer True

Select The Blank
Question Segment assets are ________.
Correct Answer Directly attributable to the segment

True/False
Question Management of working capital refers to the
management of total assets and liabilities of a
company.
Correct Answer False

Multiple Choice Multiple Answer
Question If a company is following multiple accounting system,
the activity accountant will have to match data across
:-
Correct Answer Codes , Time periods , Systems

Multiple Choice Single Answer
Question If competition is weak, a firm :-
Correct Answer Can manage with a smaller inventory of finished
goods

Select The Blank
Question When a firm invests in human resources by
acquisition & training, it anticipates a ________
Correct Answer Future generation of profits & services

Select The Blank
Question Horizontal mergers involves firms________.
Correct Answer That operate & compete in a similar kind of business

Multiple Choice Single Answer
Question The following of total cost of assets over its useful life
is called depreciation :-
Correct Answer Distribution

Multiple Choice Multiple Answer
Question The different types of floats are :-
Correct Answer Postal float , Deposit float , Bank float

Select The Blank
Question Segment expense includes ________.
Correct Answer The relevant portion of enterprise revenue that can be
allocated on a reasonable basis to a segment

Multiple Choice Multiple Answer
Question Due to diversification employees seek:-
Correct Answer Job security , Better opportunities within the firm ,
Higher compensation

True/False
Question Short term financing is meant for funding working
capital of a company.
Correct Answer True

Multiple Choice Single Answer
Question Deferred payment plan is also known as:-
Correct Answer Earn out plan

Multiple Choice Single Answer
Question Estimation for determining the useful life of an asset is
required :-
Correct Answer On some reasonable basis






Strategic Finance - 11

Multiple Choice Single Answer
Question The Buy back of shares shall not be made from
Correct Answer The promoters or persons in control of the company

Multiple Choice Multiple Answer
Question Operating economies of scale are achieved through
the following mergers :-
Correct Answer Horizontal , Vertical , Conglomerate

Multiple Choice Single Answer
Question Free Reserves is a component of :-
Correct Answer Equity

Select The Blank
Question Capital gains are taxed at ________.
Correct Answer Preferentially lower rate

Select The Blank
Question Forward or backward integration is a characteristic of
________.
Correct Answer Vertical Mergers

True/False
Question Valuation of current investments on overall basis is
not considered appropriate.
Correct Answer True

Multiple Choice Multiple Answer
Question The main categories of organisational elements are :-
Correct Answer Managerial , Support , Operational

Multiple Choice Single Answer
Question A firm can manage with small inventory if the supply is
:-
Correct Answer Prompt & adequate

Multiple Choice Multiple Answer
Question Accounting standard 19 for leases statement is
applied in accounting for all leases other than :-
Correct Answer Lease agreements to explore for or use natural
resources , Licensing agreements for items such as
motion picture films , Lease agreements to use land

Multiple Choice Single Answer
Question Equity includes :-
Correct Answer Development Rebate Reserve

Select The Blank
Question ________ is not a example of segment asset.
Correct Answer Customer advances

Multiple Choice Single Answer
Question Book value is relevant to determine the firm's value
because of the following reasons except:-
Correct Answer It cannot be used as a starting point to be compared &
complimented by other analysis

Multiple Choice Single Answer
Question As per Pecking order theory, which is the costliest
means of funding :-
Correct Answer Equity Shares

Multiple Choice Single Answer
Question Many companies claim their main assets are their :-
Correct Answer People

Multiple Choice Multiple Answer
Question The net income approach is based on following 3
assumptions :-
Correct Answer There are no taxes , Cost of debt is less than equity
capitalization rate , Use of debt doesn't change the
risk perception of investors

True/False
Question Receivables constitutes a substantial portion of
current assets of several firms.
Correct Answer True

True/False
Question Decisions related to working capital are repetitive &
frequent.
Correct Answer True

Multiple Choice Single Answer
Question One of the important assumptions for capital structure
theories is :-
Correct Answer Debt and equity are the 2 kinds of funds used by the
firm

Select The Blank
Question Liquidation value is also known as ________.
Correct Answer Realizable value

True/False
Question It is possible to place a single value for the acquired
firm.
Correct Answer False

Multiple Choice Multiple Answer
Question Implicit claims are non written promises and rights
such as :-
Correct Answer Right to provide service to customers , Job security for
the employees

Select The Blank
Question According to Altman (1984) total costs in percentage
of the market value of a firm range between ________
Correct Answer 12.1 % & 16.7 %

Match The Following
Question- Correct Answer

Availability of funds in
the market
Cost of funds depends on this factor
Flexibility -The extent & the ease with which the funds
can be raised & paid back are very important


Time- Takes less time to take an overdraft from the
bank
Creditworthiness of the If a company has a issuer- good creditworthiness
it is not difficult to raise short term funds


Multiple Choice Multiple Answer
Question A firm with a judicious mixture of debt and equity will
have :-
Correct Answer Lowest cost of capital , High value of firm , Good
market reputation

Select The Blank
Question Implicit & Explicit costs are included in the ________.
Correct Answer Price of a product

Match The Following
Question- Correct Answer

Diversification -Growth through the
combination of firms in unrelated fields of business


Horizontal mergers 2 -Firms operate & compete in a similar kind of business

Vertical mergers -Firms in different stages of production


Conglomerate mergers- Different or unrelated
business activity



Multiple Choice Multiple Answer
Question The main characteristics of operating economies are :-
Correct Answer It is achieved through horizontal, vertical and
conglomerate mergers , It occurs due to indivisibilities
of resources , It is possible in generic management
functions

Multiple Choice Single Answer
Question The following analysis is more targeted on similar
activities or firms that exist in parallel within the activity
model or process flow to ensure that they are being
done the same best way :-
Correct Answer Comparative analysis

Multiple Choice Multiple Answer
Question Every business requires funds on a continual basis for
expenses incurred on for :-
Correct Answer Purchase of raw material , Manufacturing costs ,
Administration

True/False
Question There are few methods of allocating depreciation over
the useful life of an assets.
Correct Answer False

Multiple Choice Single Answer
Question For paying dividends, firms will have a given amount
of :-
Correct Answer Cash available

Multiple Choice Multiple Answer
Question Financial evaluation involves :-
Correct Answer Determining the earnings , Areas of risk , Best way to
finance a merger

True/False
Question A single organisation model serves to keep all
individual initiatives to be targeted into a co-ordinated
plan.
Correct Answer True

True/False
Question The objective of a dividend policy should be to
maximize shareholder's return so that the value of his
investment is maximized.
Correct Answer False

Select The Blank
Question HLL is ________ % of subsidiary of Unilever PLC.
Correct Answer 0.516

Multiple Choice Single Answer
Question In a matching approach policy, :-
Correct Answer There is a small risk if shortage of funds

Select The Blank
Question In case of direct placement of commercial papers it
may be issued for maturities ________ from the date
of issue.
Correct Answer Between 15 days to 1 year

Select The Blank
Question ________ is not a characteristic of financial
conglomerates.
Correct Answer Provide ineffective competitive process

Multiple Choice Single Answer
Question Controlling block is usually acquired from:-
Correct Answer A single seller

Multiple Choice Multiple Answer
Question A firm using a conservative policy for determining the
requirements of current assets :-
Correct Answer Has fewer production stoppages , Ensures quick
deliveries to customers , Stimulates sales

True/False
Question Only firms with a large amount of financial slack can
afford tender offers.
Correct Answer True

Multiple Choice Multiple Answer
Question Changes in the investee`s equity includes those :-
Correct Answer Arising from the revaluation of fixed assets , From
foreign exchange translation differences , From the
adjustment of differences arising on amalgamation

True/False
Question Value based approach of HRA tracking can be divided
into 2 categories - Non - monetary & monetary.
Correct Answer True

Multiple Choice Single Answer
Question Depreciation includes amortization of assets whose
useful life is :-
Correct Answer Predetermined

True/False
Question Human assets accounting is still to become an
accepted trend in the industry.
Correct Answer True

Multiple Choice Single Answer
Question Value implies that something has :-
Correct Answer Worth

Multiple Choice Multiple Answer
Question 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