Tag: financial management

Questions Related to financial management

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

The characteristics of a scrip dividend is/are ______.

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

  1. it is in a form of a promissory note

  2. it bears interest and is accepted as a collateral security

  3. Both (a) and (b)

  4. None of these

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Correct Option: C