Which of the following serves as a starting point for preparing functional budgets of a firm?

• A) Cash budget
• B) Production cost budget
• C) Sales budget
• D) Master budget

Which of the following is the correct definition for "spread" in cash management?

• A) The difference between upper limit and lower limit of cash balances
• B) The difference between optimal cash balance and ending cash balance
• C) The difference between optimal cash balance and Nominal Cash balance
• D) The difference between opining cash balance and ending cash balance.

All statements are correct regarding Jus in time inventory system EXCEPT:

• A) It helps in reducing inventory cost
• B) Inventory is maintained at zero level
• C) Goods are ordered on daily basis
• D) It feasible for all types of businesses

What is the first step to determine optimal cash balance using Miller Orr Model?

• A) Determining the lower limit of cash balance
• B) Calculating cash flow variations
• C) Observing interest rates
• D) Calculating the upper limit of cash balance

With respect to a Cash flow statement, which of the following would be considered as a cash outflow?

• A) Can not be determined
• B) Increase in Inventory
• C) Decrease in Inventory
• D) Decrease in marketable securities

Suppose a company follows constant dividend policy. If profit of the company decreases, dividend per share will __________.

• A) Remain same
• B) Reduce to zero
• C) Increase
• D) Decrease

Company A has a stable dividend policy whereas company B has a constant dividend policy, if the profits of both companies decrease, which company’s shareholders will receive less dividend?

• A) Company B’s shareholders
• B) Both companies’ shareholders
• C) Company A’s shareholders
• D) Both companies’ shareholders will receive same dividend

Which of the following describes the hedging approach to financing?

• A) Maturity dates of financing instruments are spread over a period of time so that they mature in a steady, predictable fashion
• B) Each asset is offset with a financing instrument of the same approximate maturity.
• C) Each asset is offset with a put or call option.
• D) The firm takes out insurance to protect itself against uneven cash flows.

According to the static theory of capital structure, a firm should borrow to the extent where:

• A) Business risk is equal to financial risk
• B) Return on equity is equal to earnings per share
• C) Tax shield benefit is equal to costs attached with debt financing
• D) Earnings before interest and taxes are equal to interest expense

ABC Limited has to place 45 orders per year to meet annual demand of 25,000 kg raw material. What will be stock cycle for ABC Limited?

• A) 555 days
• B) 8 days
• C) 10 days
• D) 600 days

Company A has a stable dividend policy whereas company B has a constant dividend policy, if the profits of both companies increase, which company’s shareholders will receive more dividends?

• A) Both companies’ shareholders
• B) Company A’s shareholders
• C) Both companies’ shareholders will receive same dividend
• D) Company B’s shareholders

Inventory between various stages of production is known as:

• A) Raw materials inventory
• B) Work in Process inventory
• C) Balanced goods inventory
• D) Finished goods inventory

Which of the following is the first step in the financial planning process ?

• A) Choosing a course of action
• B) Providing feedback
• C) Identifying objectives and targets
• D) Evaluating different alternative

In which of the following situation, a company has the ability to pay off its short-term obligations easily?

• A) None of the given option
• B) If the company has a negative working capital
• C) If current assets are less than current liabilities
• D) If the company has a positive working capital

With respect to Cash flow statement, “Decrease in current liability” would be considered as a:

• A) Cash inflow
• B) Sometimes as cash inflow and sometimes as cash outflow
• C) Cannot be determined
• D) Cash outflow

Suppose a company has the policy to pay 2% of its earnings as dividends (constant dividend policy). If profit of the company increases, dividend per share will __________.

• A) Reduce to half
• B) Decrease
• C) Remain same
• D) Increase

A dividend payment made in the form of additional shares, rather than a cash payout is known as:

• A) Cum Dividend
• B) Ex Dividend
• C) Extra Dividend
• D) Stock Dividend

In which of the following dividend policy, the amount of dividend is relatively fixed?

• A) Stable dividend policy
• B) Hybrid Dividend policy
• C) Constant payout ratio policy
• D) Residual Dividend policy

Which of the following statement is TRUE regarding permanent working capital?

• A) Permanent working capital varies with seasonal requirements.
• B) Permanent working capital is the constant component of working capital
• C) Permanent working capital is zero in off season.
• D) Permanent working capital excludes cash.

Which of following are two most likely motives in explaining why firms hold cash?

• A) Transactions motive and the precautionary motive.
• B) Speculative motive and the precautionary motive
• C) Precautionary motive and the managerial entrenchment motive.
• D) Transactions motive and the speculative motive.