MGT 201 Financial Management - 3
MGT 201 Financial Management - Chapter 5
- 1.Mark all incorrect Statements (Mark all)
- A.
Long Term Liabilities: Also, called Discretionary Financing
- B.
Current Assets Generally grow in proportion to Sales
- C.
Fixed Assets Do not always grow in proportion to Sales
- D.
Current Liabilities also called Spontaneous Financing
- E.
Discretionary Financing grow in proportion to Sales
- 2.Mark the long term assets (mark all correct options)
- A.
Marketable securities
- B.
Accounts receivable
- C.
Prepaid expenses
- D.
Inventory
- E.
None
- 3.Changes in sales may not affect (mark all options)
- A.
Marketable securities
- B.
Accounts receivable
- C.
Prepaid expenses
- D.
Inventory
- 4.Current liabilities include (mark all correct options)
- A.
Accounts payable
- B.
Short term portion of long term liabilities
- C.
Loan taken from bank for 2 years
- D.
Accrued expenses
- 5.Which formula is correct for the estimation of current assets for the next year
- A.
[Current assets for the current year/Current sales] x Estimated sales for the next year
- B.
[Current sales/Current assets for the current year/] x Estimated sales for the next year
- C.
[Current assets for the current year/Current sales] x Last year sales
- D.
None
- 6.The amount of profit which would be reinvested in the business
- A.
Retained earnings
- B.
Net profit
- C.
Total invested profit
- D.
None
- 7.Expected Estimated retained earnings= estimated sales x profit margin x plowback ratio
- A.
True
- B.
False
- 8._________ = 1 - pay out ratio
- A.
Pay out ratio
- B.
Plow back ratio
- C.
Profit margin ratio
- D.
Retained earning
- 9.__________ =dividend/net income
- A.
Retained earning
- B.
Earning per share
- C.
Pay out ratio
- D.
Profit margin ratio
- 10.Which formula is used to calculate the Profit margin
- A.
Profit margin=net income/sales
- B.
Profit margin=Net sales/net income
- C.
Profit margin= Total income/sales
- D.
Profit margin= Total sales - total expenses
- 11.Estimated discretionary financing can be calculated from the following follwoing formula
- A.
Estimated total assets –estimated total liabilities- estimated total equity
- B.
Estimated total assets –estimated total liabilities +estimated total equity
- C.
Estimated total liabilities- estimated total equity - estimated total assets
- D.
None
- 12.G (Desired Growth Rate) = return on equity x (1- pay out ratio)
- A.
True
- B.
False
- 13.Return on equity is
- A.
Total equity / Net income
- B.
Net income/ total equity
- C.
Net profit / total equity
- D.
Net income / owner's equity
- 14.Which is not Drawback of Percent of Sales Method
- A.
It is only a rough approximation
- B.
Change in fixed assets during the foretasted period will not yield very accurate answer
- C.
Lumpy assets are not taken into account
- D.
None
- 15.Mark all the correct options for for lumpy assets (mark all correct options)
- A.
Not all assets can be purchased or acquired in bits and pieces
- B.
Assests that cannot be acquired in small increments
- C.
Must be obtained in large, discrete units
- D.
Buying of half a plant one year, and another half several years later is example of lumpy assets
- 16.An annuity is a series of fixed payments, which might be over a fixed number of years
- A.
True
- B.
False
- 17.An ordinary annuity, also known as deferred annuity
- A.
True
- B.
False
- 18.An annuity due consists of a series of equal payments at the beginning of each period.
- A.
True
- B.
False
- 19.If we have to calculate the future value of the annuity on a monthly basis, we would use the
- A.
=CCF X {[(1+i/m)^nxm -1]/ (i/m)}
- B.
=CCF X {[(1+i/m)^nxm -1]/ i}
- C.
=CCF X {[(1+i)^n -1]/ (i)}
- D.
None
- 20.If we have to calculate the future value of the annuity on a monthly basis, we would use the
- A.
=CCF X {[(1+i/m)^nxm -1]/ (i/m)}
- B.
=CCF X {[(1+i/m)^nxm -1]/ i}
- C.
=CCF X {[(1+i)^n -1]/ (i)}
- D.
None
- 21.To calculate the intrinsic value of the annuity.
- A.
First calculate the future value of annuity and then Present value
- B.
First Calculate Present value of annuity then Future value
- C.
Calculate only future value of annuity
- D.
None
- 22.The present value of annuity can also be called the intrinsic value of the annuity.
- A.
True
- B.
False
- 23.PV = CCF / i is the formula for Perpetuity calculation
- A.
True
- B.
False
- 24.How much money do you need to deposit in the Bank Account offering 10% pa so that the Account will pay you Rs 200,000 of interest income every year forever
- A.
200,000
- B.
2,000,000
- C.
20,000,000
- D.
None
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