1. Funds represented by cheques which have been issued, but which have not been debited from bank is technically referred to as: (DEC 2019)
(a) Indenture
(b) Forward Cover
(c) Float
(d) Proxy
2. The Net Working Capital (NWC) of a firm is ₹14 Lakhs. It purchased ₹30 Lakhs worth of raw materials on credit, issued 7% debentures for ₹20 Lakhs, and purchased a machine for ₹18 Lakhs for cash. The new NWC of the firm will be: (DEC 2019)
(a) ₹12 Lakhs
(b) ₹16 Lakhs
(c) ₹15 Lakhs
(d) ₹10 Lakhs
3. ABC analysis is useful for: (DEC 2019)
(a) Analyzing inventory based on their usage and movement
(b) Reduction of total investment in material
(c) Determining the optimal level of safety stock
(d) Analyzing inventory based on their availability
4. Consider the following factors – Gross operating cycle – 80 days; Net operating cycle – 55 days; Raw material holding period – 40 days, Conversion period – 2 days; Finished goods holding period – 20 days; Average collection period will be: (DEC 2019)
(a) 87 days
(b) 37 days
(c) 18 days
(d) 62 days
5. Which of the following will not have an impact on a firm’s treasury position? (DEC 2019)
(a) Dividend payment
(b) Tax payment
(c) Buying fixed assets
(d) Issuing bonus shares
6. Determination of “safety stock” requires a trade-off between: (DEC 2019)
(a) Carrying costs and stock-out cost
(b) Ordering cost and carrying cost
(c) Ordering cost and stock-out cost
(d) Lead time and order point
7. Which of the following is not a valid assumption of EOQ model? (DEC 2019)
(a) Demand forecast is available
(b) Inventory can be replenished immediately
(c) Cost per order is variable
(d) Carrying cost is a fixed percentage
8. Monthly demand for a raw material is 150 units. Ordering cost per order is ₹8 and annual carrying cost per unit is ₹2. Economic Order Quantity (EOQ) under the above circumstances will be: (DEC 2019)
(a) 90
(b) 120
(c) 150
(d) 180
9. Interest coverage ratio of 6 indicates: (DEC 2019)
(a) Sales are 6 times of interest.
(b) Profit after tax is 6 times of interest.
(c) EBIT is 6 times of interest.
(d) Interest is 6 times profit after tax.
10.Debtors turnover ratio reflects: (DEC 2019)
(a) Collection period
(b) Debtors in relation to credit sales
(c) Debtors in relation to total sales
(d) Aging of the debtors
11.Consider the following data and compute the total sales amount:
(i) Closing balance of receivables : ₹30 lakhs
(ii) Opening balance of receivables : ₹20 lakhs
(iii) Average collection period : 25 days
(iv) Credit sales are 73% of sales (assume 365 days in a year) (DEC 2019)
(a) ₹365 lakhs
(b) ₹500 lakhs
(c) ₹550 lakhs
(d) ₹730 lakhs
12.The EOQ for a firm is 7200 units. The minimum order size stipulated by the supplier is 9000 units for utilizing a cash discount on the purchase price. The annual usage of the material in units is 80,000 and the cost per order is ₹100. If the company decides to utilize cash discount, savings in the total ordering cost will be: (DEC 2019)
(a) ₹400
(b) ₹500
(c) ₹600
(d) ₹700
13.Current ratio is 4:1. Net Working Capital is ₹30,000. Find the amount of Liquid assets if value of stock is ₹8,000. (DEC 2019)
(a) ₹10,000
(b) ₹40,000
(c) ₹32,000
(d) ₹2,000
14.Economic Order Quantity (EOQ) determines: (DEC 2019)
(a) The order size that minimize the total inventory cost.
(b) The order size where ordering cost is the lowest.
(c) The order size where the carrying cost is minimum.
(d) The order size which will earn discounts on purchase.
15.The annual cash requirement of A Ltd. is ₹25 lakh. Cost of conversion of marketable securities per lot is ₹2,500. The company can earn 5% annual yield on itssecurities. Whatwill be the economic lot size according to the Baumol Model? (DEC 2020)
(a) ₹1,00,000
(b) ₹2,50,000
(c) ₹5,00,000
(d) ₹4,75,000
16.The following details are available in respect of a firm: Annual requirement of inventory 20,000 units. Cost per unit (other than carrying and ordering cost) is ₹10, Carrying cost are likely to be 10% per year, Cost of placing an order is ₹500 per order. The economic ordering quantity is: (DEC 2020)
(a) 4472 Units
(b) 4274 Units
(c) 5270 Units
(d) 4760 Units
17.What will be the operating cycle period if raw materials are in store for 2 months,processing time 2 ½ months finished goods remain in store for 15 days, debtors are allowed60 days’ credit and credit received from suppliers of raw material is 1month: (DEC 2020)
(a) 7 months
(b) 6 months
(c) 6 ½ months
(d) 5 months
18.Current assets are twice the current liabilities. If the net working capital is `60,000,current assets would be: (DEC 2020)
(a) ₹60,000
(b) ₹1,00,000
(c) ₹1,20,000
(d) ₹1,10,000
19.Concept of Maximum Permissible Bank financial was introduced by: (DEC 2020)
(a) Kannan Committee
(b) Chore Committee
(c) Nayak Committee
(d) Tandon Committee
20.Reorder level + Reorder Quantity – (Minimum Consumption × Minimum delivery period)determines which stock level: (DEC 2020)
(a) Reorder level
(b) Maximum level
(c) Minimum level
(d) Average level
21.Efficiency of a credit control system does not get influenced by: (DEC 2020)
(a) Timely billing
(b) Accurate billing
(c) Compliance with the specified credit policy
(d) Cash discount availed by the customers
22.JP Limited has earned 10% return on total assets of ₹18,00,000 and has a net profit ratio of 8%. Find out sales of the company. (DEC 2020)
(a) ₹14,40,000
(b) ₹25,00,000
(c) ₹27,50,000
(d) ₹22,50,000
23.What do you understand by the term ‘factoring’ with respect to management of accountsreceivable? (AUG 2021)
(A) Use of accounts receivables as prime collateral for a secured loan
(B) Pledging of accounts receivables to a lender
(C) Outright sale of accounts receivables to a financial agency
(D) Encashing accounts receivable before closure of accounts
(A) 0.40% discount will be granted if the customer pays within 90 days
(B) 20% discount will be granted if the customer pays within 4 days, and if he doesnot avail the offer he must make payment within 90 days
(C) Net 90% discount will be granted if the customer pays 4 times the amount due within 20days
(D) 4% discount will be granted if the customer pays within 20 days, otherwise he mustmake payment within 90 days
26.According to William J. Baumol’s economic order quantity model with respect to cash management, optimum cash level is that level of cash where: (AUG 2021)
(A) Carrying costs are maximum and transactions costs are minimum
(B) Carrying costs and transactions costs are minimum
(C) Carrying costs and transactions costs are maximum
(D) Carrying costs are minimum and transactions costs are maximum
27.Determine the economic order quantity from the following figures: (AUG 2021)
(i) Annual requirement of inventory 1,00,000 units
(ii) Cost per unit (other than carrying and ordering cost) ₹20
(iii) Carrying cost are likely to be 10% per year
(iv) Cost of placing order ₹1,000 per order
(A) 10,000 Units
(B) 1,000 Units
(C) 2,000 Units
(D) 5,000 Units
28.Net Operating Cycle (NOC) can be defined as sum of: (AUG 2021)
(A) Raw Material, W.I.P. and Finished Goods Conversion period
(B) Raw Material, W.I.P., Finished Goods and Receivables Conversion period
(C) Inventory Plus Receivables Conversion period minus Deferral period
(D) None of the above
29.Net working capital is equal to: (AUG 2021)
(A) Fixed Assets-Current Assets
(B) Current Assets-Current Liabilities
(C) Current Assets-Cash
(D) Long Term Loans-Short Term Loans
30.Find out the average size of receivables if the goods are sold for ₹10,00,000 on a net 60 credit term with an assumption that 25% of the customers do not pay within the prescribed time. (DEC 2021)
(A) ₹2,50,000
(B) ₹2,00,000
(C) ₹2,08,333
(D) ₹2,18,333
31.Which of the following statements is not true? (DEC 2021)
(A) Management of working capital is an essential task of the finance manager
(B) Fluctuating working capital is needed to meet the seasonal requirements of thebusiness
(C) A conservative current asset financing policy relies more on short term bank financingand less on long term sources.
(D) An aggressive current asset financing policy relies heavily on short term bank finance.
32.A company would like to have liquid resources for transaction purposes, as aprecautionary measure and for ………………….. (DEC 2021)
(A) Finance opportunities
(B) Resource utilization
(C) Speculative opportunities
(D) Accumulation of future reserves
33.ABC Ltd. has borrowed capital of ₹100 lakh and rate of interest is 12%. Owners capital ₹400 lakh and EBIT for the year is 10% against the sales of ₹1200 lakh.Applicable tax rateis 50%. Determine the percentage of return on investment toowners fund. (DEC 2021)
(A) 12.50%
(B) 13.25%
(C) 13.50%
(D) 14.50%
34.A company has sales of ₹20 crore and 40% of the sales is on credit. Expenses on credit collection is 1.50%. The company targets to reduce collection expenses by 40%. Calculate the expected saving target of the company. (DEC 2021)
(A) ₹4.80 lakh
(B) ₹7.20 lakh
(C) ₹4.50 lakh
(D) ₹7.80 lakh
35.The monthly requirement of raw material of A Ltd. is 1200 units, ordering cost is `400 per order and carrying cost is 13% of unit value of ₹150. EOQ units are: (DEC 2021)
(A) 767 Units
(B) 769 Units
(C) 762 Units
(D) 765 Units
36.Negative working capital implies that: (DEC 2021)
(A) Current Assets > Current Liabilities
(B) Current Assets = Current Liabilities
(C) Current Assets < Current Liabilities
(D) Current Assets > Fixed Assets
37.A company has Raw material holding period – 27 days; Conversion period – 25 days;Finished goods holding period – 28 days; Period of accounts receivables – 20 days; Period of accounts payable – three fourth of accounts receivables; operating cycleperiod will be: (DEC 2021)
(A) 65 days
(B) 75 days
(C) 80 days
(D) 85 days