Business Finance MCQs

Working capital represents the portion of current assets financed through long-term funds. This indicates
1. net working capital
2. gross working capital

Match the following.

List-I	List-II
a. Payback method	1. Give due weightage to the profitability of project
b. Unadjusted rate of return method	2. Predetermination of earnings is not necessary
c. NPV method	3. It avoids in calculable risk and uncertainty
d. IRR method	4. Its calculation is much simpler

Which of the following statements are true? Indicate the correct answer.
1. Tax shield on depreciation and interest is an important valuable both for lessor and lessee.
2. A lessee may evaluate the lease options as against the buying option.
3. Sale and lease back and leveraged lease are types of financial lease.
4. Lease or financing is a type of capital budgeting decision from the point of view of the lessee.
Select the correct answer

Match List-I with List-II and select the correct answer:

List-I	List-II
a. Modigliani Miller approach	1. Commercial papers
b. Net operating income approach	2. Working capital management
c. Short-term money market instrument	3. Capital structure
d. Factoring	4. Arbitrage

Match the following.

List-I	List-II
a. Equity shares	1. Deposits, raised by business directly from public
b. Inter-corporate Deposits	2. Deposit made by one company with another for a period upto six months
c. Trade Credit	3. Permanent source of capital for a company
d. Public Deposits	4. Facilitates the purchase of raw material without immediate payment

Match the following with the most suitable option.

List-I	List-II
a. Modigliani-Miller Approach	1. Commercial paper
b. Net Operating Income Approach	2. Working capital
c. Short-term money market instruments	3. Capital structure
d. Factoring	4. Arbitrage

Which of the following equations gives the amount of operating cycle where,
R stands for raw material storage period
W for work in progress holding period
F for finished goods storage period
D for receivables (debtors) collection period
C for credit period allowed by suppliers (creditors)?

Benefits from adopting a common European currency include
1. reduced transaction costs.
2. elimination of exchange rate risk.
3. increased price transparency that will promote Europe wide competition.
Select the correct answer by using the options given below

Match List-I with List-II and select the correct answer:

List-I	List-II
a. Payback rate of return	1. Discounted cash flow technique
b. Internal rate of return	2. Cornpounded values of investments and returns
c. Benefit cost ratio	3. Crude method for project evaluation
d. Net terminal value method	4. Varying sized projects evaluation