Tag: nature and significance of management

Questions Related to nature and significance of management

Financial Management is concerned with

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. Investment decisions

  2. Financing decisions

  3. Dividend decisions

  4. All of above

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Correct Option: D
Explanation:
  1. Investment decisions includes investment in fixed assets (called as capital budgeting). Investment in current assets are also a part of investment decisions called as working capital decisions.
  2. Financial decisions - They relate to the raising of finance from various resources which will depend upon decision on type of source, period of financing, cost of financing and the returns thereby.
  3. Dividend decision - The finance manager has to take decision with regards to the net profit distribution. Net profits are generally divided into two:
  • Dividend for shareholders- Dividend and the rate of it has to be decided.
  • Retained profits- Amount of retained profits has to be finalized which will depend upon expansion and diversification plans of the enterprise.

ABC Ltd. has declared $40$% dividend. Which one of the following does it mean?

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. The company has declared $40$% on net profit as dividend

  2. The company has declared $40$% of profit after tax as dividend

  3. The company will provide dividend $40$% on issued capital

  4. The company will provide dividend $40$% on paid-up capital

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Correct Option: D
Explanation:
  • Dividend is that portion of profit which is distributed to shareholders.
  • Paid-up capital means the total amount of called up share capital which is actually paid to the company by the members. Dividend is declared on the paid-up form of capital.
  • Thus the company will provide dividend of 40% on paid-up capital.

Financial leverage is also referred to as _____________.

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. Gearing

  2. Trading on equity

  3. Fixed changes leverage

  4. All the above

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Correct Option: D

The note on dividend policy develops an investment approach which involves ______ steps

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. 3

  2. 4

  3. 5

  4. 6

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Correct Option: B

The dividend policy of a company is evolved within the framework of ___________.

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. corporate law

  2. taxation

  3. managerial considerations

  4. All the above

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Correct Option: D

The following are the managerial considerations influencing dividend policy
(1) Availability of cash
(2) Restrictions by the Financial Institutions
(3) Management Control
(4) Dividend policy as a financing decision
Of these

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. 1 and 3 are correct

  2. 2 and 4 are correct

  3. 1, 2 and 4 are correct

  4. All are correct

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Correct Option: D

The word 'dividend' includes the following besides cash

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. Distribution of rights to acquire shares in another company is distribution of dividend

  2. Where dividend is paid in the form of shares in another company, the dividend must be values at the market value of shares

  3. Bonus shares issued by capitalising profits are not dividend

  4. All the above

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Correct Option: D

'Dividend' is defined under the fol1lowing section if Income Tax Act, 196

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. Section 2(20)

  2. Section 2(22)

  3. Section 5(22)

  4. Section 5(33)

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Correct Option: B

Property dividends are distributed under ___________.

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. normal conditions

  2. exceptional conditions

  3. Both (a) and (b)

  4. None of the above

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Correct Option: B

The dividend policy directly affect its _________.

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. wealth

  2. cost of capital

  3. profit

  4. output

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Correct Option: B