Other Factors Affecting Capital Structure

Q.

What Are the Objectives of Financial Management?

Q.

What are the objectives of International Financial Management?

Q.

Financial leverage is called favourable if

(a) Return on investment is lower than the cost of debt

(b) ROI is higher than the cost of debt

(c) Debt is easily available

(d) If the degree of existing financial leverage is low

Q.

Other things remaining the same, an increase in the tax rate on corporate profits will:

1. make the debt relatively cheaper

2. None of these

3. make the debt relatively the dearer

4. have no impact on the cost of debt

Q.

Other things remaining the same, an increase in the tax rate on corporate profit will

(a) make the debt relatively cheaper

(b) make the debt relatively the dearer

(c) have no impact on the cost of debt

(d) we can't say

Q.

Financial leverage is called favourable if

1. return on investment is lower than cost of debt

2. return on investment is higher than cost of debt

3. debt is nearly available

4. If the degree of existing financial leverage is low

Q.

The long run objective of financial management is to

Q.

What are the main objectives of financial management? Briefly explain.

Q.

Financial leverage is called favourable if:

1. ROI is higher than the cost of debt

2. Debt is easily available

3. Return on Investment is lower than the cost of debt

4. If the degree of existing financial leverage is low

Q.

Debt Service Coverage Ratio is EBIT-Tax+depreciation divided by Interest + Principal + Dividends. State true or false.

1. True

2. False

Q.

What Is Financial Risk Management?

Q.

Financial management is concerned with managerial activities relating to __________

Q.

The primary aim of financial management is to ______.

1. Wealth maximisation concept

2. Maximisation of the market value of equity shares

3. Maximise shareholder’s wealth

4. All of the above

Q. Risk arising due to high fixed operating cost is known as risk.

1. Business
2. Financial
3. Administrative
4. Management

Q.

Higher business risk means higher fixed operating costs, eg: rent, salaries, etc. State true or false.

1. True

2. False

Q.

The inability of a business to meet its fixed financial obligations, like payment of interest, is known as _____.

Q.

___ aims to reduce the cost of funds procured, keeping the risk under control and achieving effective deployment of such funds.

1. Financial Planning

2. Capital Structure

3. Financial Management

4. None of the above

Q. Explain the following money market instrument "Treasury Bill".

Q.

Financial Management aims at _____

Q.

___ is an important determinant of a company's ability to trading on equity.

1. ICR

2. ROI

3. DSCR

4. All of the above

Q. Explain 'Treasury Bill' and 'Call Money' as money market instruments.

Q. State the objective of 'Financial Management'.

Q.

Financial leverage is called favourable if

(a) Return on investment is lower than the cost of debt

(b) Rol is higher than the cost of debt

(c) Debt is easily available

(d) If the degree of existing financial leverage is low

Q. Risk on the company due to non-payment of fixed financial charges is known as risk.

1. Business
2. Financial
3. Administrative
4. Management

Q.

DSCR is a measure of the cash flow available to pay current debt obligations. State true and false.

1. True

2. False

Q.

Financial leverage is the amount of total debt in the capital. It is calculated as:

1. Debt equity ratio = Debt/Equity

2. Proportion of debt in the total capital = Debt/Debt+Equity

3. Both A and B

4. None of these

Q. What is meant by 'Financial Risk'?

Q. Which one is not an important objective of Financial Management?

1. Wealth Maximisation
2. Profit Maximisation
3. Value Maximisation
4. Maximisation of social benefits

Q. Explain any two instruments used in money market.

Q. _________is the one to go through minimum income risk:.

1. Manager
2. Entrepreneur
3. Both a and b
4. None of them