CBSE Class 12 Business Studies Financial Management Quiz 2

1. ___ involves increasing the proportion of debt and preference shares in total capital.

A Trading on equity B Capital Budgeting C Financing decision D Financial Analysis

2. ___ is the time span between acquisition of goods and realisation of sale proceeds.

A Working capital B Payback Period C Operating Cycle D Account Receivables Period

3. ___ Gross working capital represents the total investment in assets.

A Current B Fixed C Tangible D Intangible

4. ___ capital refers to investment in long-term assets.

A Fixed B Variable C Working D Both (b) and (c)

5. The working capital requirement of a business is not likely to be high when?

A The nature of business is trading B Scale of operation of business is small C It is difficult to procure raw material D The rate of inflation is low

6. Under which of the following circumstances the fixed capital requirement of a business is not likely to be high?

A When the raw material is not easily available B Capital intensive techniques of production are used C The growth prospects of a company a high D When the financial alternatives are easily available

7. Which of the following statements is not true with regard to use of fixed capital?

A It affects the long term growth of the business. B Large amount of funds are involved. C The business risk involved is low. D The investment decisions are irreversible.

8. Under which of the following situations a company is not likely to issue equity capital?

A When the debt service coverage ratio is high. B When the interest coverage ratio is high. C When the cost of debt capital is low. D All of the above

9. If the rate of return on investment for a company is 16%, a situation of unfavourable financial leverage will be said to arise when the rate of interest payable on debt capital is

A More than 16 % B Less than 16 % C Equal to 16% D None of the above

10. The total capital of Uranium Private Limited is ?50 lacs. The amount of debt is ?20 lacs. The company has earned a profit of ^10 lacs during the current financial year. Its return on investment (ROI) for the present year is

A 20% B 40% C 10% D 80%