Tag: financing

Questions Related to financing

Financial planning usually begins with the preparation of a _______ forecast.

commerce business finance financial planning financing financial management

  1. purchase

  2. sales

  3. cash

  4. budget

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Correct Option: B
Explanation:
Financial planning usually begins with the preparation of a sales forecast.
It starts with an estimate of the sales which are likely to happen in the next five years. Based on these, the financial statements are prepared keeping in mind the requirement of funds for investment in the fixed capital and working capital. Then the expected profits during the period are estimated so that an idea can be made of how much of the fund requirements can be met internally i.e. through retained earnings. This results in an estimation of the requirement for external funds. Further, the sources from which the external funds requirement can be met are identified and cash budgets are made, incorporating these factors.

Financial planning helps in coordinating _________ business functions.

commerce business finance financial planning financing financial management

  1. one

  2. two

  3. various

  4. three

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Correct Option: C
Explanation:
Financial planning is an important part of overall planning of any business enterprise. It aims at enabling the company to tackle the uncertainty in respect of the availability and timing of the funds and helps in smooth functioning of an organisation.

Financial planning tries to link the ______ with the ______.

commerce business finance financial planning financing financial management

  1. future, present

  2. present, past

  3. present, future

  4. past, future

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Correct Option: C
Explanation:

Financial Planning is the process of estimating the capital required and determining it’s competition. It is the process of framing financial policies in relation to procurement, investment and administration of funds of an enterprise. Financial planning relates present financial requirement with future requirement by anticipating the sales and growth plans of the company.

_________ plan of action prepared under financial planning reduces waste, duplication of efforts, and gaps in planning.

commerce business finance financial planning financing financial management

  1. Detailed

  2. Short

  3. General

  4. Basic

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Correct Option: A
Explanation:
Financial plan is a comprehensive evaluation of an individual's current pay and future financial state by using current known variables to predict future income, asset values and withdrawal plans.
Therefore detailed plan of action is prepared under financial planning reduce waste, duplication of efforts, and gaps in planning.

Working capital is _______________.

commerce business finance financial planning financing financial management

  1. net current assets

  2. net working capital

  3. gross cash inflow

  4. Either (a) or (b)

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Correct Option: D

Working capital is _________.

commerce business finance financial planning financing financial management

  1. gross cash inflow

  2. net cash inflow

  3. gross cash outflow

  4. net cash outflow

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Correct Option: B,D

Working capital is the difference between

commerce business finance financial planning financing financial management

  1. Inflow and outflow of funds

  2. Inflow and outflow of savings

  3. Internal and external capital sources

  4. Gross cash flow and net cash flow

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Correct Option: A

Financial leverage is

commerce business finance financial planning financing financial management

  1. The process of using debt capital to increase the rate of return on equity

  2. The utilisation of current assets to effect disproportionate changes in income

  3. Both (a) and (b)

  4. A relationship between preference share capital and securities

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Correct Option: A

If on account of inadequacy of profits, a company wants to pay dividends out of previous year's reserves, it has to follow the rules made by

commerce business finance financial planning financing financial management

  1. Central Government

  2. State Government

  3. Articles of Association

  4. Memorandum of Association

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Correct Option: A

Choose the correct answer:
(a) Working capital management is an integral part of overall corporate management
(b) There are four tests of working capital policy

commerce business finance financial planning financing financial management

  1. Both (a) and (b) are true

  2. (a) is true, (b) is false

  3. (a) is false, (b) is true

  4. Both (a) and (b) are false

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Correct Option: A