Financial Management Question Bank
Q. What are the factors to be considered to estimate the requirement of fixed capital by a business enterprise?
Q. Under which situation the EPS of a company falls with increased use of debt? Explain with the help of an example.
Q. A company wants to establish a new unit in which a machinery worth Rs.10 lakhs is involved. Identify the type of decision involved in financial management.
Q. A decision is taken to raise money for long term capital needs of the business from certain sources. What is this decision called?
Q. A decision is taken to distribute certain parts of the profit to shareholders after paying tax. What is this decision called?
Q. Name the source of finance carrying two fixed obligations viz., interest and redemption.
Q. In case of inflation, does an enterprise need more or less of the working capital?
Q. Identify the decision taken in financial management which affects the liquidity as well as the profitability of business.
Q. State why the working capital needs for a service industry are different from that of a manufacturing industry.
Q. To avoid the problem of shortage and surplus of funds what is required in financial management? Name the concept and explain its any three points of importance.
Q. How does loan components or debentures in the capital structure act as lever to raise the return on equity share capital?
Q. Explain how the shareholders are likely to gain with the loan component in capital employed with example.
Q. The directors of a manufacturing company are thinking of issuing ₹ 20 lakhs additional debentures for expansion of their production capacity. This will lead to an increase in debt-equity ratio from 2:1 to 3:1. What are the risks involved in it?
Q. A businessman who wants to start a manufacturing concern, approaches you to suggest him whether the following manufacturing concern would require large or small working capital:(a) Bread (b) Coolers (c)Sugar (d) Motorcar (e) Furniture manufactured against specific orders (f) Locomotives.
Q. A manufacturing company raised funds worth ₹ 10,00,000 and they used funds for purchasing fixed assets. Later, it was found that they did not have sufficient money to purchase raw material and to pay creditors and other expenses. Do you think this decision is a wise decision?
Q. Investors generally view increase in dividend declared as a positive note, and stock prices react positively to it but on the other side Companies Act places certain restrictions on payouts as dividend. These restrictions are adhered to while declaring the dividend. Why are such restrictions imposed?
Q. Identify the factor affecting dividend decision under which investor considers the increase in dividend as a good decision.
Financial Management Question Bank
Write the values followed or ignored in the following cases:(Not in CBSE pattern now)
Q. A company having earned heavy profits with less scope of expansion in future has decided to pay a very less dividends.
Q. A company wants to show higher profit and for this: Depreciation was charged at lower rates, whereas Goodwill, Patents, Trademarks and other intangible assets were shown at higher value.
Q. A wholesaler of onion comes to know that due to less production the prices of onion will increase heavily. He stores the onion and during rising prices, earn heavy profits by selling the stored onion. From the earned profits he provides some money to the people of his region willing to send their girls to school who otherwise go to houses for earning by cleaning.
Q. A manufacturing company raised finance worth ₹ 5,00,000 from shareholders' funds and borrowed funds, out of this amount ₹ 1,00,000 is used by the finance manager for his personal use.