Strategic Finance - 2
Multiple Choice Multiple Answer
Question
Due to diversification employees seek:-
Correct Answer
Higher compensation , Job security , Better opportunities within the firm
Select The Blank
Question
A geographical segment cannot be ________.
Correct Answer
Countries in different zones
Select The Blank
Question
A shareholder expects a higher rate of return as a firm's compensation for ________.
Correct Answer
Increased risk
Multiple Choice Single Answer
Question
Most companies focus only on :-
Correct Answer
Return on investment
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
Multiple Choice Multiple Answer
Question
In the disclosures in financial statements, there are significant restrictions on :-
Correct Answer
The right of ownership , Realisability of investments , The remittance of income & proceeds of disposal
Multiple Choice Single Answer
Question
Equity includes :-
Correct Answer
Development Rebate Reserve
Match The Following
Question
Correct Answer
Free cash flow theory
Enormous conflicts of interest between Stakeholders and shareholders
Net income approach
Cost of debt & equity do not change with a change in leverage ratio
Net operating income approach
The overall capitalization rate remains constant for all levels of financial leverages
Modigliani - Miller Theory
weighted average cost of capital does not change with a change in the proportion of debt to equity in the capital structure
True/False
Question
Organisational changes are similar to mission changes.
Correct Answer
True
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 %
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
True/False
Question
Money becomes less valuable when received at a latter stage instead of in present time.
Correct Answer
True
Select The Blank
Question
The resource theory considers that the competitive position of a firm depends on its ________ Assets.
Correct Answer
Specific
Multiple Choice Multiple Answer
Question
A firm having aggressive policy of investing in current assets will show the following features :-
Correct Answer
Frequent production stoppages , High ROI
True/False
Question
Making decision on dividend is a very crucial area of financial management for a firm.
Correct Answer
True
Multiple Choice Single Answer
Question
Segment reporting comes under :-
Correct Answer
AS 17
True/False
Question
Usually cost data is perfect for ABC Analysis & distribution.
Correct Answer
False
Multiple Choice Single Answer
Question
As per Pecking order theory, which is the costliest means of funding :-
Correct Answer
Equity Shares
Match The Following
Question
Correct Answer
Mechanisms
Performs or provides energy 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 NOI Approach, any capital structure is optimum.
Correct Answer
True
Select The Blank
Question
The ________ often gives the best insight into the borrower's short term credit needs.
Correct Answer
Cash budget
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
Explicit cost and implicit cost are the two parts of cost of debt.
Correct Answer
True
Select The Blank
Question
If a segment is not designated as a ________ it should be included as an unallocated reconciling item.
Correct Answer
Reportable segment
Multiple Choice Single Answer
Question
Research into true human resources accounting began in :-
Correct Answer
1960`s
Select The Blank
Question
Increase in cost of capital means decrease in ________.
Correct Answer
Profitability
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
Multiple Choice Multiple Answer
Question
Accrued expenses represent :-
Correct Answer
Costless financing , An interest free source of financing
Multiple Choice Multiple Answer
Question
The direct costs tier normally only includes the following :-
Correct Answer
The personnel payroll , Supplies , Individual rental equipment
Multiple Choice Single Answer
Question
Fixed price tender offers are accompanied by an abnormal announcement period return of :-
Correct Answer
8 - 10 %
Multiple Choice Single Answer
Question
Many companies claim their main assets are their :-
Correct Answer
People
Multiple Choice Multiple Answer
Question
The main assumptions for stock repurchase models are as follows :-
Correct Answer
The market is efficient , There is perfect competition in the securities market
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
True/False
Question
Opportunity costs and real costs decrease the market value of a firm.
Correct Answer
True
True/False
Question
Retained earnings are the most important internal sources of financing the growth of the firm.
Correct Answer
True
True/False
Question
The chance of bankruptcy is small when the leverage of a firm is small.
Correct Answer
True
Multiple Choice Multiple Answer
Question
Examples of accounting methods used by firm are :-
Correct Answer
FIFO , LIFO , Accrual Accounting
Multiple Choice Single Answer
Question
For the following process the valuation is needed to decide the price at which the deal will be possibly concluded :-
Correct Answer
Mergers & Acquisitions
True/False
Question
Diversification helps in preserving a firm's reputation & goodwill.
Correct Answer
True
Multiple Choice Single Answer
Question
According to Net Income Approach, the average cost of capital declines as the leverage ratio :-
Correct Answer
Increases
True/False
Question
Whether a lease is a finance lease or an operating lease depends on the substance of the transaction rather than its form.
Correct Answer
False
Select The Blank
Question
Forfeiting is mostly used for ________.
Correct Answer
Big ticket items & durable goods
Multiple Choice Multiple Answer
Question
The financial framework of a merger decision covers 3 interrelated aspects i.e. :-
Correct Answer
Determining the firm's value , Financing techniques in mergers , Analysis of merger as a capital budgeting decision
True/False
Question
For determining exchange ratio, the model developed by Conn & Nielson is used.
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
________ are not diversible.
Correct Answer
Market related risks
Multiple Choice Multiple Answer
Question
The financial managers of a company consume a great deal of their time in activities like :-
Correct Answer
Monitoring the investment in inventories , Negotiating favourable credit terms , Administrating Accounts receivables
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Multiple Choice Multiple Answer
Question
The different types of floats are :-
Correct Answer
Postal float , Deposit float , Bank float
Multiple Choice Single Answer
Question
A low payout policy implies :-
Correct Answer
More retention of profits
True/False
Question
optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to fluctuate.
Correct Answer
False
Multiple Choice Single Answer
Question
Companies often need to value its own :-
Correct Answer
Shares
Select The Blank
Question
Postage is an example of ________ cost.
Correct Answer
Non traceable cost
Multiple Choice Single Answer
Question
Value added analysis :-
Correct Answer
Helps to identify potential activities that may be omitted immediately
Multiple Choice Multiple Answer
Question
Intangible assets include :-
Correct Answer
Preliminary expenses , Deferred revenue expenditure , Discount on issues of shares / debenture etc
Multiple Choice Single Answer
Question
The Management of the Company may enter into a negotiated purchase, which is referred to as :-
Correct Answer
Greenfield
Multiple Choice Single Answer
Question
If the segment result of a segment includes interest expense its segment liabilities include :-
Correct Answer
The related interest bearing liabilities
Select The Blank
Question
As per NOI Approach - the overall capitalization rate remains ________ for all levels of financial leverage.
Correct Answer
Constant
Match The Following
Question
Correct Answer
Exit cost
Lost efficiency prior to separation, Job vacancy cost during the new search & termination pay.
Historical costs
Sacrifice necessary to hire & train people
Substitution cost
Exit costs of the leaving employee & recruiting & training of the replacement
Opportunity cost
An asset value when they are the target of an alternative use.
Multiple Choice Single Answer
Question
Suppliers of equity are interested in :-
Correct Answer
High share prices
Multiple Choice Multiple Answer
Question
The 3 groups of participants in a firm are :-
Correct Answer
Suppliers of equity , Debt suppliers , Firm Managers
True/False
Question
It is possible to place a single value for the acquired firm.
Correct Answer
False
Select The Blank
Question
________ is never a part of the output.
Correct Answer
Mechanisms
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
True/False
Question
A transport corporation has a substantial working capital requirement.
Correct Answer
False
Select The Blank
Question
________ know the best about a firm's performance.
Correct Answer
Firm Managers
Multiple Choice Multiple Answer
Question
As per AS 13 Statement, the following are not considered as investments:-
Correct Answer
Shares , Debentures , Other securities held as stock in trade
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
True/False
Question
It is essential that ABC must fit into the strategy of the company.
Correct Answer
True
True/False
Question
Trade credit creates book debts which the firm is expected to collect in the near future.
Correct Answer
True
Select The Blank
Question
At times managers invest in projects that improve the company's ________.
Correct Answer
Prestige or power
Select The Blank
Question
Business risk & financial risk do not have any influence on ________.
Correct Answer
Accounting numbers
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
True/False
Question
A change in the method of depreciation is treated as a change in an accounting policy and is disclosed accordingly.
Correct Answer True
Select The Blank
Question
________ is not a characteristic of financial conglomerates.
Correct Answer
Provide ineffective competitive process
Select The Blank
Question
There is a ________ relationship between the number of employees & the use of operating supplies.
Correct Answer
Natural
Multiple Choice Single Answer
Question
If a firm opts for restrictive policy then the investments in current assets is :-
Correct Answer
Low
Match The Following
Question
Correct Answer
AS 17
Segment reporting
AS 19
Leases
AS 6
Depreciation accounting
AS 10
Accounting for fixed assets
True/False
Question
To `gather costs', means capturing all relevant expenses that pertain to the selected model and processes.
Correct Answer
True
Select The Blank
Question
Investors can reduce the company related risk by diversification of their investments in ________.
Correct Answer
Shares of a large number of companies
Multiple Choice Multiple Answer
Question
For ABC Analysis the available cost data :-
Correct Answer
Has to be adjusted for change , Has to be corrected for undocumented element costs , Has to be combined with different types of data from alternate sources
Multiple Choice Multiple Answer
Question
The external staffing performance indicators include :-
Correct Answer
Compensation per Re. Profit , Personnel services head count , Profit per head
Select The Blank
Question
HLL the largest FMCG company has a turnover of Rs. ________.
Correct Answer
118 Bn
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
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
Select The Blank
Question
In today's fast moving world, the quickest way to get information on a firm is through ________.
Correct Answer
Internet
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
Segment liabilities do not include :-
Correct Answer
Borrowings & other liabilities that are incurred for financing rather than operating purpose
Multiple Choice Single Answer
Question
Which of the following company is reaping high market valuation due to showing human resources as an asset in its balance sheet information?
Correct Answer
Infosys
True/False
Question
In market value approach, interested parties never manipulate the stock markets.
Correct Answer
False
Multiple Choice Single Answer
Question
The stock value for a company will be considered to be fair value for ordinary transactions if the shares are :-
Correct Answer
Listed
True/False
Question
Planning helps an acquiring firm to identify the units it should drop & it should add.
Correct Answer
True
Multiple Choice Single Answer
Question
For paying dividends, firms will have a given amount of :-
Correct Answer
Cash available
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
Earning power of the company approach tries to value the ________.
Correct Answer
Current value of the assets
Strategic Finance - 1
Multiple Choice Single Answer
Question
One of the selective developments that has taken place in recent times is companies are going in for :-
Correct Answer
Activity based costing and management
True/False
Question
Diversification helps in preserving a firm's reputation & goodwill.
Correct Answer
True
True/False
Question
Cash dividends are taxable at ordinary tax rates.
Correct Answer
True
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
As per AS 13 Statement, the following are not considered as investments:-
Correct Answer
Shares , Debentures , Other securities held as stock in trade
Match The Following
Question
Correct Answer
Opportunity cost
An asset value when they are the target of an alternative use.
Exit cost
Lost efficiency prior to separation, Job vacancy cost during the new search & termination pay.
Historical costs
Sacrifice necessary to hire & train people
Substitution cost
Exit costs of the leaving employee & recruiting & training of the replacement
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
Multiple Choice Single Answer
Question
Equity includes :-
Correct Answer
Development Rebate Reserve
Match The Following
Question
Correct Answer
Free cash flow theory
-Enormous conflicts of interest between Stakeholders and shareholders
Net income approach
-Cost of debt & equity do not change with a change in leverage ratio
Net operating income approach
-The overall capitalization rate remains constant for all levels of financial leverages
Modigliani - Miller Theory
-weighted average cost of capital does not change with a change in the proportion of debt to equity in the capital structure
Select The Blank
Question
If a segment is not designated as a ________ it should be included as an unallocated reconciling item.
Correct Answer
Reportable segment
True/False
Question
For determining exchange ratio, the model developed by Conn & Nielson is used.
Correct Answer
True
Select The Blank
Question
In presenting the reconciliation segment result should be reconciled to ________.
Correct Answer
Enterprise net profit or loss
Select The Blank
Question
Identify disclosure on human resources as a societal concern & prepare international regulations comes under ________
Correct Answer
The compulsory method
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
True/False
Question
It is essential that ABC must fit into the strategy of the company.
Correct Answer
True
Select The Blank
Question
HLL the largest FMCG company has a turnover of Rs. ________.
Correct Answer
118 Bn
Select The Blank
Question
There is a ________ relationship between the number of employees & the use of operating supplies.
Correct Answer
Natural
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
Multiple Choice Multiple Answer
Question
The main characteristics of CAPM are :-
Correct Answer
It is an equilibrium Model , It describes the pricing of assets as well as derivatives , Expected security return = Riskless return + beta x (expected market risk premium)
True/False
Question
Current accounting system is able to provide actual value of employee capabilities & knowledge.
Correct Answer
False
Multiple Choice Single Answer
Question
In respect of depreciable assets, which do not have material value, depreciation is often allocated :-
Correct Answer
Fully in the accounting period for which they are acquired
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
Multiple Choice Multiple Answer
Question
Due to diversification employees seek:-
Correct Answer
Job security , Better opportunities within the firm , Higher compensation
Select The Blank
Question
The ________ cost tier has the advantage of being the simplest to calculate and justify.
Correct Answer
Direct
Multiple Choice Multiple Answer
Question
To gather costs means to do the following actions to support the costing of the activities :-
Correct Answer
To capture , To construct , To synthesize the correct cost figures
True/False
Question
Odd lots purchase is not a method of buy back of shares.
Correct Answer
False
Multiple Choice Multiple Answer
Question
The overhead expenses include :-
Correct Answer
Utilities , Maintenance , Security
Multiple Choice Single Answer
Question
In a matching approach policy, :-
Correct Answer
There is a small risk if shortage of funds
Multiple Choice Single Answer
Question
The most important internal sources of financing the growth of the firm is through :-
Correct Answer
Retained earnings
True/False
Question
The intellectual assets of a company are often worth 3 or 4 times the tangible book value.
Correct Answer
True
Multiple Choice Multiple Answer
Question
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
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
Significant influence is the power to :-
Correct Answer
Participate in the operating policy decisions , Participate in the financial decisions
True/False
Question
An activity model is a tool to assist in understanding & defining the organisation.
Correct Answer
True
True/False
Question
Decisions related to working capital are repetitive & frequent.
Correct Answer
True
Select The Blank
Question
________ is not a characteristic of financial conglomerates.
Correct Answer
Provide ineffective competitive process
Multiple Choice Single Answer
Question
In the past, costing mainly focused on :-
Correct Answer
Manufacturing costs
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
Multiple Choice Multiple Answer
Question
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
Multiple Choice Single Answer
Question
Segment liabilities do not include :-
Correct Answer
Borrowings & other liabilities that are incurred for financing rather than operating purpose
Multiple Choice Single Answer
Question
The difference between current assets & current liabilities is known as :-
Correct Answer
Net working capital
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
Select The Blank
Question
Non value added activities helps ________.
Correct Answer
To analyse the activities more carefully
Multiple Choice Single Answer
Question
In value of assets method the following is also to be included as they are also of value to the company :-
Correct Answer
Non trading assets
Multiple Choice Single Answer
Question
Best practices, a tool for review process is similar to :-
Correct Answer
Bench marking
Select The Blank
Question
HLL is ________ % of subsidiary of Unilever PLC.
Correct Answer
0.516
Select The Blank
Question
traditionally avails are provided by ________.
Correct Answer
Banks
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