Question No: 1 ( Marks: 1 ) - Please choose one The Ratios showing the ability

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Question No: 1 ( Marks: 1 ) - Please choose one
The Ratios showing the ability of a firm to pay its bills in short-run are called:
?
Leverage Ratios
?
Liquidity Ratios
?
Profitability Ratios
?
Market Value Ratios
Question No: 2 ( Marks: 1 ) - Please choose one
Evaluating the size, timing and risk of future cash flows is the essence of :
?
Capital Budgeting
?
Capital Structure
?
Inventory Control
?
None of the given options
Question No: 3 ( Marks: 1 ) - Please choose one
Sumi Corporation is dealing in furniture industry. It has an equity multiplier of 1.78 times. The debt to equity ratio would be:
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0.38 times
?
0.58 times
?
0.78 times
?
0.98 times
Question No: 4 ( Marks: 1 ) - Please choose one
________________ involves the sale of used securities from one investor to another.
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Primary Market
?
Secondary Market
?
Tertiary Market
?
None of the given options
Question No: 5 ( Marks: 1 ) - Please choose one
SNT Corporation paid Rs. 28,900 as tax in 2006. If the tax rate was 34%, what was the taxable income of the corporation during 2006?
?
Rs. 90,000
?
Rs. 85,000
?
Rs. 65,000
?
Rs. 77,000
Question No: 6 ( Marks: 1 ) - Please choose one
______________ pays no coupon at all and is offered at a price that is much lower than its stated value.
?
Government Bond
?
Floating Rate Bond
?
Zero Growth Bond
?
None of the given options
Question No: 7 ( Marks: 1 ) - Please choose one
Which of the following statement provides a financial summary of the firm’s operating results during a specified period.
?
Balance Sheet
?
Income Statement
?
Cash Flow Statement
?
Retained Earning Statement
Question No: 8 ( Marks: 1 ) - Please choose one
Depreciation expense does not reflect a cash outflow but still shown as an expense on the income statement to serve as a:
?
Cash inflow
?
Cash outflow
?
Tax Shield
?
Interest Shield
Question No: 9 ( Marks: 1 ) - Please choose one
Investors demand extra yield on a taxable bond as a compensation for the unfavorable tax treatment, known as:
?
Taxability premium
?
Inflation premium
?
Interest Rate Risk Premium
?
None of the given options
Question No: 10 ( Marks: 1 ) - Please choose one
If you invest Rs. 150 in a bank on an interest rate of 14%. How much will you have in your account after 5 years ?
?
Rs. 78
?
Rs.163
?
Rs. 207
?
Rs. 289
Question No: 11 ( Marks: 1 ) - Please choose one
A series of constant, or level, cash flows that occur at the end of each period for some fixed number of periods is called Perpetuity.
?
True
?
False
Question No: 12 ( Marks: 1 ) - Please choose one
A dollar in hand today is worth more than a dollar promised at some time in future.
?
True
?
False
Question No: 13 ( Marks: 1 ) - Please choose one
Profit Margin is calculated by dividing Net Income over Sales.
?
True
?
False
Question No: 14 ( Marks: 1 ) - Please choose one
While making Common Size Statements, Balance sheet items are shown as a percentage of total liabilities.
?
True
?
False
Question No: 15 ( Marks: 1 ) - Please choose one
Present value of all the cash inflows can be calculated by compounding each cash flow separately.
?
True
?
False
Question No: 16 ( Marks: 5 )
Cash Flows for a project are given below:
Period
Cash Flows
1
Rs.8,000
2
Rs.12,000
3
Rs.20,000
4
Rs.35,000
5
Rs.40,000
Compute the Future Value of cash flow stream of project at the end of year 5 with a compound annual interest rate of 14%.
Question No: 17 ( Marks: 5 )
Explain the difference between Simple Interest & Compound Interest with the help of example.
Question No: 18 ( Marks: 5 )
A company has total annual sales (25% on cash basis) of Rs.3,000,000 and a gross profit margin of 20 %. Its current assets are Rs. 500,000; current liabilities are Rs. 340,000; inventories are Rs. 260,000; and cash is Rs. 60,000.
Calculate:
(a) How much average inventory should be carried if management wants the inventory turnover to be 5 times? and
(b) How rapidly (in how many days) must accounts receivable be collected if management wants to have an average of Rs.240,000 invested in receivables? (Assume a 365-day year.)
Question No: 19 ( Marks: 10 )
ST manufacturing company is offering the following bonds for issue. Calculate the value of each bond.
Bond
Par Value
(Rs.)
Coupon Rate
(%)
Years to Maturity
(Years)
Req. Stated Return (%)
A
1,000
7
12
8
B
500
12
15
10
C
100
16
20
12
Note :
>> In case of Bond A, interest payments are made annually
>> In case of Bond B, interest payments are made semi-annually
>> In case of Bond C, interest payments are made quarterly