In inventory management, the interest foregone on money invested in inventory is considered as:

• A) Stock out cost
• B) Reorder cost
• C) Safety cost
• D) Holding cost

Terms of sales in a credit policy includes decision (s) regarding:

• A) Credit period
• B) Credit discount
• C) All of the given options
• D) Credit instrument

According to the hedging approach to financing, seasonal variations in current assets should be financed with:

• A) Long-term debt
• B) Common stock.
• C) Retained earnings.
• D) Short-term debt.

Total credit cost curve consists of which of the following?

• A) Total of opportunity cost of credit policy and the bad debts
• B) Total of production cost and the cost of credit policy
• C) Total of ordering cost and the opportunity cost of credit policy
• D) Total of carrying cost and the opportunity cost of credit policy

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

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

Cash management involves all of the following except:

• A) Wise investment of temporarily surplus cash.
• B) Raising cash through the sale of new stock and bonds.
• C) Efficient disbursement of cash.
• D) Efficient collection of cash.

Which of the following statement is CORRECT regarding residual dividend policy?

• A) Shareholders are paid dividend from capital
• B) Shareholders are paid fixed dividend every year
• C) Dividend are paid after meeting all the financial needs of the firm
• D) The management sets a fixed payout ratio

According to dividend irrelevance theory, the present value of dividends:

• A) Varies with no change in amount and timing of dividend
• B) Decreases with decrease in amount and timing of dividend
• C) Remains same with changes in amount and timing of dividend
• D) Increases with increase in amount and timing of dividend

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

• A) Increase in current assets
• B) Can not be determined
• C) Increase in current liability
• D) Decrease in current liability

According to the Miller Orr Model, upper limit for cash balance is equal to:

• A) Spread – Lower limit
• B) Lower limit – Spread
• C) Optimal limit + Lower limit
• D) Lower limit + Spread

A firm is holding cash to take advantage of any temporary business opportunity. This is an example of the ________ motive for holding cash.

• A) Precautionary
• B) Transaction
• C) Capital needs
• D) Speculative

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

• A) Temporary working capital should be financed with bonds or common stock
• B) Temporary working capital is the constant component of working capital
• C) Temporary working capital excludes inventories
• D) Temporary working capital varies with seasonal requirements

Mr. Ahmed bought shares of a company A on 5th June, 2019. The ex-dividend date was 4th June, 2019 while record date at which shareholders’ record was maintained was 6th June, 2019. Would Mr. Ahmed receive the dividend?

• A) No, because Mr. Ahmed purchased shares before record date
• B) Yes, because Mr. Ahmed purchased shares before record date
• C) Yes, because Mr. Ahmed purchased shares after ex-dividend date.
• D) No, because Mr. Ahmed purchased shares after ex-dividend date.

For the year 2012, Company A has current assets of Rs. 1,500,000 and current liabilities of Rs. 1,850,000. What will be working capital for year 2012?

• A) None of the given options
• B) +350,000
• C) -350,000
• D) 2,000,000

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

• A) Controlling
• B) Implementing the plan
• C) Providing feedback
• D) Taking corrective measures

Which of the following would be consistent with a more aggressive (i.e., a high risk profitability) approach to financing working capital?

• A) Financing permanent inventory buildup with long-term funds.
• B) Financing short-term needs with short-term funds.
• C) Financing seasonal needs with short-term funds.
• D) Financing some long-term needs with short-term funds

Safety stocks are advantageous because of uncertainties in which of the following?

• A) Usage rates
• B) Demand
• C) All of the given options
• D) Delivery time

Suppose that a firm sells goods on terms of 2/15, net 20. On August 1, 2008 you buy goods from the company with an invoice value of Rs.30,000. You can avail the cash discount if you make the payment on or before:

• A) August 15, 2008
• B) August 21, 2008
• C) August 16, 2008
• D) August 20, 2008

Keeping all other things constant, an increase in storage cost will result in ________ in the EOQ (Economic Order Quantity).

• A) An increase
• B) No change
• C) A decrease
• D) Cannot be told without additional information

Which of the following is most relevant to a company’s ability to pay off its short-term obligation?

• A) Net working capital
• B) Profitability
• C) Operating Cycle
• D) Dividend Policy