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Dividend Decisions Question 1.What are the determinants of Dividend Policy?Answer:Determinants of Dividend Policy: Many factors determine the dividend policy of a company. The factors determining the dividend policy are as follows:(i) Dividend Payout RatioA certain share of earnings to be distributed as dividends has to be worked out. This involves the decision to payout or […]
Financing Decisions Leverages Question 1.What do you understand by Business Risk and Financial Risk? (Nov 2009, 2 marks)Answer:Business RiskIt refers to the risk associated with the firm’s operations. It is uncertainty about the future operating income. That is, how well can the operating income be predicted? It can be measured by standard deviation of basic […]
Financing Decisions Capital Structure Question 1.Answer the following:What is Optimum Capital Structure? Explain. (Nov 2007, 2 marks)ORAnswer the following:Discuss the concept of ‘Optimál Capital Structure.” (Nov 2008, 2 marks)Answer:Capital structure is optimum when the value of the firm is maximum and Cost of capital (debts & equity) is minimum and so market price per share […]
Cost of Capital Question 1.Explain the significance of Cost of Capital. (Nov 2019, 4 marks)AnswerThe cost of capital is important to arrive at correct amount and helps the management or an investor to take an appropriate decision. The correct cost of capital helps in the following decision-making: 1. Evaluation of Investment options The estimated benefits […]
Financial Analysis and Planning Ratio Analysis Question 1.Answer the following:What is quick ratio? What does it signify? (Nov 2008, 2 marks)Answer:Quick ratio also termed as “acid test ratio” is one of the best measures of liquidity.It is worked out as follows:Quick Ratio = Quick Assets Quick liabilities In the above formula:Quick Assets = Current Assets – InventoriesQuick liabilities […]
Types of Financing Question 1.Write short notes on following:Bridge Finance. (May 2006, Nov 2011, Nov 2016, 3, 2, 2 each marks)Answer:Bridge Finance:Meaningbridge finance ¡s a short-term loan taken by a firm from commercial banks to disperse loans sanctioned by financial institutions. Importance or Need for Bridge FinanceBridge finance as the name suggests bridges the time […]
Scope and Objectives of Financial Management Question 1.Explain the two basic functions of Financial Management. (Nov 2002, Nov 2009, 3 marks)Answer:The two basic functions of F.M. are1. Procurement of funds2. Effective use of these funds 1. Procurement of fundProcurement of funds includes: Identification of sources of finance Determination of finance mix Raising of funds Division […]
Computation of Total Income and Tax Payable Question 1.State under which heads the following incomes are taxable: Rental income in case of dealer in property. Dividend on shares in case of a dealer in shares. Salary by a partner from his partnership firm. Rental income of machinery. Winnings from lotteries by a person having the […]
Profits and Gains from Business or Profession Question 1.State with reason, whether the following statements are true, or false with regard to the provisions of the Income-tax Act, 1961 for the Assessment year 2021-22: [Nov. 2008, 2 Marks](a) Rural branches of the Cooperative banks are not allowed to claim provision for bad and doubtful debts.(b) […]
Budget and Budgetary Control 1. Budgetary Control: It is the system of management control and accounting in which all the operations are forecasted and planned in advance to the: extent possible and the actual results compared with the forecasted and planned results. 2. Types of Budget: Capacity wise – Fixed Budget, Flexible Budget, Functions wise […]