Wednesday, March 2, 2011

Strategic Finance - 5

Strategic Finance - 5

Multiple Choice Multiple Answer
Question
The financial framework of a merger decision covers 3 interrelated aspects i.e. :-
Correct Answer
Financing techniques in mergers , Analysis of merger as a capital budgeting decision , Determining the firm's value


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


True/False
Question
optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to fluctuate.
Correct Answer
False


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


True/False
Question
Accounting standards (AS - 13) is now mandatory.
Correct Answer
True


True/False
Question
The accounting records serve as the major source of cost data.
Correct Answer
True


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


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


Select The Blank
Question
In many companies, there is no formal record of________.
Correct Answer
Investment in employees


True/False
Question
The activity model is normally created by an activity Accountant.
Correct Answer
False


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


Select The Blank
Question
The total cost of the activity model allocated by the applied activity drivers to the output of the activity model is called________.
Correct Answer
The cost of the output


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 budgetary records are useful for:-
Correct Answer
Validating accounting costs , Providing a rationale for division of costs , Replacing missing data


Multiple Choice Single Answer
Question
When a company has resorted to buyback of its shares it cannot make a further issue of the same kind of securities within a period of how many months?
Correct Answer
6 months


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
The most popular kind of dividend policy is one that pays a ________.
Correct Answer
Regular, steady dividend


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


Match The Following
Question
Correct Answer

Amount involved in buy back
Not to exceed 25 % of the total paid up capital

Articles of Association
Authorize buy back of securities

Board of Directors
Resolution permitting the buy back of shares

Shares to be bought back
Fully paid up


Multiple Choice Single Answer
Question
A high payout policy means :-
Correct Answer
More current dividends


Match The Following
Question
Correct Answer

Earning per share
Acquisition is considered to be a function of the impact of the merger on the EPS

Book value
Divide net worth by the number of equity shares outstanding

Appraisal value
Provides a list of the reasonableness of results obtained through methods base upon the going concern concept

Market value
Indicate the consensus of the investors


Select The Blank
Question
In the reproduction value method of valuation, the value of assets is taken to be on the basis of ________
Correct Answer
Replacement cost


Select The Blank
Question
The advantage of ________ is that the company is not required to wait for the payment by the bill issuer.
Correct Answer
Bill discounting
Multiple Choice Single Answer
Question
In a growth firm, internal rate is :-
Correct Answer
More than opportunity


Multiple Choice Multiple Answer
Question
Shortage costs are mainly in the form of :-
Correct Answer
Disruption in production schedule , Loss of sales , Loss of customer goodwill


Multiple Choice Multiple Answer
Question
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

Multiple Choice Single Answer
Question
Internal financing means the firm finances all investments through :-
Correct Answer
Retained earnings


Multiple Choice Single Answer
Question
The earning power of the company approach includes :-
Correct Answer
Mainly discounting of all future earnings


Multiple Choice Single Answer
Question
A firm should consider acquisition as a :-
Correct Answer
Capital budget decision


Multiple Choice Single Answer
Question
Firms which have marked seasonality in their operations usually have :-
Correct Answer
Highly fluctuating working capital requirement


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


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 Single Answer
Question
the amount of working capital required to meet long term, minimum needs is called :-
Correct Answer
Permanent working capital


Select The Blank
Question
The costs should be gathered & allocated within the organisation at the ________ structural layer.
Correct Answer
Lowest possible



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
Segment assets are determined after :-
Correct Answer
Deducting related allowances / provisions reported as direct offsets


Multiple Choice Multiple Answer
Question
For M & As, the acquiring firm needs industry data on :-
Correct Answer
Market growth , Nature of competition , Degree of regulation


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


Multiple Choice Multiple Answer
Question
In a merger decision, the value of a firm depends upon:-
Correct Answer
Earnings , Operating characteristics of acquiring firm , Financial characteristics of acquiring firm


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


True/False
Question
Segment result is segment revenue less segment expenses.
Correct Answer
True


Multiple Choice Single Answer
Question
The main factor affecting the profits is :-
Correct Answer
The magnitude of sales of the business


True/False
Question
Retained earnings are the most important internal sources of financing the growth of the firm.
Correct Answer
True


Select The Blank
Question
________ are those operating assets that are employed by a segment in its operating activities.
Correct Answer
Segment assets


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 Multiple Answer
Question
Accounting numbers are not influenced by :-
Correct Answer
Dividend policy , Time span of money , Financial and business risk





Strategic Finance - 4


Select The Blank
Question
Total risk reduces if operations of combining firms are ________.
Correct Answer
Negatively correlated


Multiple Choice Single Answer
Question
The Public announcement of share buy back has to be made at least :-
Correct Answer
7 Days prior to the commencement of buy back


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
Operating economies occur due to indivisibilities of resources like :-
Correct Answer
People , Equipment , Overheads


Select The Blank
Question
The amount to be invested by any single investor in a commercial paper shall not be less than Rs. ________.
Correct Answer
25 lacs


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


Multiple Choice Single Answer
Question
The development aspect of training in firms focus on :-
Correct Answer
Promotion to higher job levels


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
AS 17 is mandatory for all commercial, industrial & business reporting enterprises whose turnover for the accounting period :-
Correct Answer
Exceeds 50 crores


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


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 Single Answer
Question
When a change in the method of depreciation is made :-
Correct Answer
Depreciation is recalculated in accordance with the new method



Multiple Choice Multiple Answer
Question
One of the advantages of trade credit is its flexibility i.e. the firm does not :-
Correct Answer
Have to sign a note , Pledge collateral , Adhere to strict payment schedule


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



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



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


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



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


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
The depreciable assets are assets which are expected to be used :-
Correct Answer
During more than 1 accounting period



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

Multiple Choice Multiple Answer
Question
The existence of significant influence by an investor is usually evidenced in the following ways :-
Correct Answer
Participation in policy making processes , Material transactions between the investor & the investee , Interchange of managerial personnel

Multiple Choice Multiple Answer
Question
The important steps involved in the analysis of mergers & acquisitions are:-
Correct Answer
Planning , Searching & screening , Financial evaluation

Match The Following
Question
Correct Answer

Unsecured loans
Form of debt not backed by the pledge of specific assets

Line of credit
Does not constitute any legal commitments on the part of the bank

Revolving credit agreements
While the commitment is in force the bank must extend credit whenever the borrower wishes to borrow

Transaction loan
The cash flow ability of the borrower to pay the loan is usually of paramount importance


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



True/False
Question
Dividends increase the current returns for shareholders.
Correct Answer
True



True/False
Question
Book value is based on the balance sheet value of owner's equity.
Correct Answer
True


Select The Blank
Question
the commercial paper may be issued in the multiples of ________.
Correct Answer
5 lakhs


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
Another meaning of bear hug is ________.
Correct Answer
Hostile takeover



Multiple Choice Single Answer
Question
Funds borrowed for a period of 1 year or less is called :-
Correct Answer
Short term finance



Multiple Choice Multiple Answer
Question
Financial statements classify the following into separate categories :-
Correct Answer
Fixed assets , Investments , Current assets


Multiple Choice Single Answer
Question
Any addition or extension to an existing asset which retains a separate identify & is capable of being used after the existing asset is disposed of :-
Correct Answer
Is depreciated independently


Multiple Choice Single Answer
Question
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



Multiple Choice Single Answer
Question
What is a very important factor in any kind of merger?
Correct Answer
Exchange ratio


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


True/False
Question
Sometimes the mechanisms may appear to be inputs for an activity.
Correct Answer
True


Multiple Choice Multiple Answer
Question
Accrued expenses represent :-
Correct Answer
Costless financing , An interest free source of financing



True/False
Question
The intellectual assets of a company are often worth 3 or 4 times the tangible book value.
Correct Answer
True


Match The Following
Question
Correct Answer

Terminal warehouse receipt
Inventory is stored with a public or terminal warehousing company

Floating lien
Loose arrangement as the lender may find it difficult to police
Chattel mortgage
Well suited for financial good inventories of capital goods

Trust receipt
Specifically identified by serial number or other means


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


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

True/False
Question
AS 13 statement does not deal with operating or finance leases.
Correct Answer
True


Select The Blank
Question
The number of bidding centers shall not be less than ________ for buy back through book building.
Correct Answer
30

Select The Blank
Question
Market approach is used for companies whose shares are ________ on the Stock market.
Correct Answer
Listed

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