One of the main objectives of the cash flow statement is to determine:

• A) Management of company’s cash outflow and inflow
• B) Profits or losses of company
• C) Total assets of the company
• D) Debt and equity ratio of the company

The primary purpose of the liquidity ratios is to determine:

• A) How well a firm is able to pay off short-term obligations?
• B) How much working capital is tied up in inventory?
• C) How much earnings are paid to shareholders?
• D) How much cash is generated from operations?

The industries which are most affected by recessions and economic adversity are termed as:

• A) Cyclical industries
• B) Defensive industries
• C) Interest-sensitive industries
• D) Growth industries

What does the abbreviation SIC stands for?

• A) Social Innovation Collections
• B) Southeastern Illinois Compendium
• C) Standard Industrial Classification
• D) Symbolic Industry Consortium

A company is currently paying dividend of Rs. 12 to shareholders and the dividend growth rate is 5%. What will be the amount of dividend for next year?

• A) D1 = 12* (1-0.05) = 11.4
• B) D1 = 12 / (1+0.05) = 12.63
• C) D1 = 12 / (1- 0.05) = 12.6
• D) D1 = 12* (1+0.05) = 12.6

Which of the following is NOT an asset?

• A) Cash
• B) Supplies
• C) Equipment
• D) Accounts payable

Which of the following moves inversely to each other?

• A) Coupon rates and leverage ratios
• B) Interest rates and debt to equity ratios
• C) Discount rates and P/E ratios
• D) Interest rates and activity ratios

All of the following are the characteristics of Earning per share EXCEPT?

• A) Earnings per share is a ratio, which is used for share price evaluation
• B) Earnings per share relate income with ownership
• C) It is calculated by dividing Net income over number of shares outstanding
• D) It is based on future forecasted data

In which of the following cases, it is most feasible to take a buying decision?

• A) Where the intrinsic value is equivalent to the current market price
• B) Where the intrinsic value is lesser than the current market price
• C) Where the current market price is double the intrinsic value
• D) Where the intrinsic value is greater than the current market price

Which of the following is a non-cash item for company?

• A) Interest payment
• B) Depreciation
• C) Purchase of raw material on cash
• D) Dividend payment

What does Return on Assets (ROA) show the analyst?

• A) Book value per share
• B) The ability of the company to use its assets to produce profits
• C) The accounting rate of return that stockholders earn on their portion of the total capital
• D) The riskiness of the company

Which of the following is the point of difference between cash flow statement and income statement?

• A) Cash items
• B) Non-cash items
• C) Purchases
• D) All of the given options

Which of the following is TRUE regarding price per earning ratio?

• A) P/E=Market price per share/dividend per share
• B) P/E=Earnings available to common stockholders/outstanding shares
• C) P/E=Market price per share/earning per share
• D) P/E=Dividend per share/earning per share

Which of the following terms is used synonymously for the interest coverage ratio?

• A) Price to book value ratio
• B) Times interest earned ratio
• C) Leverage ratio
• D) Price to sales ratio

Which of the following is an intangible asset with an identifiable useful life?

• A) Patent
• B) Furniture
• C) Building
• D) Timber

In which of the following approaches of stock valuation, the capitalization of expected income is done?

• A) Present value approach
• B) Integrated eclectic approach
• C) Communicative approach
• D) Multiple of earnings approach

Which of the following take place at the pioneering stage of the industry life cycle?

• A) Sales growth decline as products obsolete
• B) Firm operations get more stable
• C) Rapid growth in demand occur
• D) Costs get stable rather than decreasing

Which of the following industry is sensitive to business cycle and price changes?

• A) Growth industry
• B) Defensive industry
• C) Cyclical industry
• D) Interest sensitive industry

In which of the following approaches of stock valuation, valuation is relative to financial performance measure?

• A) Communicative approach
• B) Present value approach
• C) Multiple of earnings approach
• D) Integrated eclectic approach

Balance sheet is also known as:

• A) Statement of cash flows
• B) Statement of Income
• C) None of the given options
• D) Statement of Financial Position