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

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

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

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

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

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

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

• A) Cash outflow
• B) Sometimes considered as cash outflow and sometime as cash inflow
• C) Can not be determined
• D) Cash inflow

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

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

A good cash management system involves properly managing:

• A) Collections, disbursements, cash balances, and capital investment.
• B) Only collections and disbursements.
• C) Collections, disbursements, cash balances, and marketable securities investment.
• D) Only collections, disbursements, and cash balances.

Which of the following is the factor (s) that can affect dividend policy of a company?

• A) Growth of firm
• B) Degree of financial leverage
• C) Earnings of firm
• D) All of the given options

Inventory between various stages of production is known as:

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

What is the risk of using a conservative approach to financing assets?

• A) Frequent refinancing of debt oblige
• B) Borrowing only what is necessary
• C) Uncertain future interest costs
• D) Usually borrowing at a higher cost

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

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

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

Which of the following is NOT an example of derivative?

• A) Future
• B) Option
• C) Pay order
• D) Forward contract

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

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

The proper amount of safety stock, to be maintained, depends on all of the following EXCEPT:

• A) The cost of placing an order
• B) The cost of being out of stock
• C) The uncertainty associated with forecasted demand
• D) The cost of carrying additional inventory

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

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

Cash discounts are offered by the seller to buyer in order to improve which of the following?

• A) Company goodwill
• B) None of the given options
• C) Operating cycle
• D) Credit worthiness

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

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

Proposition II (Ignoring tax) of Modigliani & Miller theorem states:

• A) Cost of equity is positive linear function of its capital structure
• B) Cost of equity is inversely related to its capital structure
• C) Cost of equity is decreasing function of its capital structure
• D) Cost of equity is independent of its capital structure

If a firm’s cost of debt is 15 percent while the after-tax cost of debt is 10.5 percent, the corporate tax rate will be:

• A) 20%
• B) 25%
• C) 30%
• D) 35%

Which of the following firm may be considered as a pure play in the beverages industry in Pakistan?

• A) Shezan
• B) All of the given options
• C) Pepsi
• D) Coca Cola