Business Finance MCQs

From the following techniques of capital budgeting decision, indicate the correct combination of discounting techniques.
1. Profitability index
2. Net present value
3. Accounting rate of return
4. Internal rate of return

Match the following.

List-I	List-II
a. Gross working capital	1. Difference of current assets and current liabilities
b. Net working capital	2. It is referred to as "hardcore working capital"
c. Permanent working capital	3. It is the excess of working capital over permanent working capital
d. Variable working capital	4. Total current assets

Which of the following are the main features of a 'bought out deal' in the context of corporate funding?
(i) It is a method of offering securities to the public through a sponsor or underwriter.
(ii) A bank, financial institution, or an individual can never not be a sponsor.
(iii) The securines are listed in one or more stock exchanges within a time-frame mutually agreed upon by the company and the sponsor.
(iv) The bought out deals facilitate better investor protection.
(v) As the sponsor may occupy a large number of shares, it may trouble the company.

Assertion (A): The important aspect of dividend policy is to determine the amount of earnings to be distributed to shareholders, and the amount to be retained in the firm.
Reason (R): Dividend policy of the firm has its effect on both the long-term financing and the wealth of shareholders.

Match the following.

List-I	List-II
a. Qualitative	1. . . . . . . . . involves raising funds on the security of the company's.
b. Gross working capital	2. Gross working capital is the . . . . . . . . approach.
c. Commercial Banks	3. Total of current assets is called as . . . . . . . .
d. Factoring	4. . . . . . . . . are also principal sources of working capital.

Read the following statements:
1. Working capital is the amount of funds necessary to cover the cost of operating the enterprise.
2. Circulating capital means current assets of a company that are changed in the ordinary course of business from one form to another.

Match the following.

List-I (Term)	List-II (Source)
a. Long-term	1. Factoring Bank
b. Medium-term	2. Debentures
c. Short-term	3. Lease financing

Assertion (a): When two or more investment proposals are mutually exclusive, ranking the proposals on the basis of IRR, NPV and PI methods may givecontradictory results.
Reason (R): The contradictory results in the ranking are due to differing dimensions relating to the scale of investments, cash flow patterns and project lives.
Indicate the correct answer:

Indicate the correct combination of discounting techniques from the following techniques of capital budgeting decision.
I. Profitability Index
II. Net Present Value
III. Accounting Rate of Return
IV. Internal Rate of Return