SCDL

Program Name:
Subject:
Assessment Name:
Weightage:
Total Marks:
Duration:

C-PGDBA
Financial Management
FM - Exam
70
70
80 mins

Online Examination:
Online examination is a Computer based examination.
Online examination comprises of Total 29 Questions - Out of 70 marks.
Duration of online examination will be of 1 Hour 20 minutes (80 minutes).

Section - I Instructions:
- It is compulsory and has total 3 Subjective Questions.
- Students are required to solve any 2 Subjective Type Questions. Each question is of 5 marks.
- Section I is out of 10 Marks.
Please refer following instructions regarding Subjective examination:
- While attempting subjective examination Text formatting facility will be disabled such as use of bullets,
making the text bold, underlining the text etc. Only normal character on the key board will be available.
- Special characters available on the keyboard will be allowed.
- Students can not attempt more than 2 questions out of given 3.
- A blank (space typed) or any entry in the space provided will be considered as question is answered.
- Hand written answers are not allowed. Subjective test can be answered by using key board.
- No brail support shall be provided, but writer assistance shall be allowed. The student has to intimate it to
SCDL well in advance by completing applicable formalities.
- Answers for both the questions should not exceed more than 110 words. The maximum word limit per
answer is 55 words (for Subjective part).

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1) Why is the goal of wealth maximization considered as superior to the goal of profit maximization?
(5)
Wealth maximization goal suggests that any financial action which generates a positive, discounted net
cashflow stream is desirable. Profit is an ambiguous term and so difficult to measure. Measurement of
benefits in terms of cash flows avoids ambiguity. Wealth maximization considers the time value of money,
which is especially important in inflationary conditions.
2) How does the taxation policy of the government affect the dividend policy of a company?
(5)
A company can pay dividend out of profit after tax. It is an appropriation of distributable profits. As such,
the company does not get any tax advantage by paying the dividend. Instead it also has to pay dividend
distribution tax made applicable by the government. As far as the shareholders are concerned they do not
have to pay any specific tax on dividend they receive.
3) Explain in brief the two key theories of capitalization.
(5)
Cost theory: Considers the amount of capitalization based on cost of various assets required to set up the
organisation. It lays stress on the current outlay rather than on future earnings from such investment.
Earnings theory: Considers the amount of capitalization based on expected future earnings of the
company, by capitalizing the future earnings at the appropriate capitalization rate.

Section 1 is complete.
Please click on "Next" button to proceed.

Section - II Instructions:
- It comprises of Objective Questions Only.
- Total 60 marks are allotted for objective type questions.
- The objective questions are of following type and carries marks as given under.
Multiple Choice Multiple Response
Multiple Choice Single Response
True or False
Select a Blank
Match the Column
Total Questions
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: 4 Questions - 16 Marks (Each 4 marks)

: 9 Questions - 18 Marks (Each 2 marks)
: 5 Questions - 5 Marks (Each 1 mark)
: 5 Questions - 5 Marks (Each 1 mark)
: 4 Questions - 16 Marks (Each 4 marks)
: 27

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Total Marks

: 60

1) The form of organisation where the personal assets of the owners are at stake, if the assets of the firm are
insufficient to meet the liabilities is
(2)
1] Limited liability organisation
2] Unlimited liability organisation
3] Organisation based on control
4] Venture Capital Company
2) A private limited company and a public limited company are similar in terms of
(2)
1] Limited liability
2] Minimum number of share holders
3] Transferability of shares
4] Invitation to public for subscription for any shares
3) The 'going concern concept' is the underlying basis for
(2)
1] Consolidating the accounts of subsidiary companies with those of parent company
2] Disclosing the market value of securities
3] Disclosing the sales and other operating information in the income statement
4] Depreciating fixed assets over their useful lives
4) The analysis of different sources and application of cash enables the management to make reliable cash
flow projections for the immediate future.
(1)
1] True
2] False
5) In the case of overcapitalisation, :BLANK is the worst affected class.
(1)
1] Company
2] Shareholders
3] Consumers
4] Society
6) Own capital of the company includes
(2)
1] Shares
2] Debentures
3] Term loan
4] Creditors
7) The operating profit earned by the company is in the form of contribution duly reduced by the :BLANK .
(1)
1] Sales revenue
2] Variable operating cost
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3] Fixed operating cost

4] Semi-variable operating cost
8) The technique which tries to find out the present value of Re 1 if received or spent after n years, provided
that the interest rate of I can be earned on investment is termed as
(2)
1] Compounding
2] Discounting
3] Average
4] Marginal
9) In case of mortgage, the party in whose favour the interest is transferred is called :BLANK .
(1)
1] Mortgager
2] Receiver
3] Mortgagee
4] Transferee
10) Match the Following
(4)
1]
Hypothecation
2] Pledge
3] Lien
4] Mortgage

1] Neither the property nor the possession of the goods is transferred to the bank
2] Possession of the goods is with the bank
3] Bank has a right to retain the goods belonging to the company until the debt due to the
bank is paid
4] Mode of security pertains to immovable properties like land and building
5] Type of assistance may be considered by the bank to take care of specific needs of the
company when it receives some export order
6] Non fund based lending

11) The most frequently used method of short term forecasting is the Receipt and Payment method.
(1)
1] True
2] False
12) If Profit maximization is accepted as the only goal of finance function, it is criticised on the grounds of
(4)
1] Profits go hand in hand with risks
2] Profit is an ambiguous concept
3] It ignores time pattern of returns
4] It considers time value of money
13) Objectives of finance function are
(4)
1] Profit Maximisation
2] Auditing
3] Wealth Maximisation
4] Reconciliation
14) The duties of the Finance Controller include :BLANK .
(1)
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1] cost management
2] distribution of dividend
3] Annual Reporting
4] Banking relations
15) The maximum rate of interest payable on the capital of a partner is 10% .
(1)
1] True
2] False
16) Private limited company needs certificate of commencement of business to commence business .
(1)
1] True
2] False
17) The fixed assets are shown in Balance sheet at
(2)
1] Purchase Price
2] Cost less accumulated depreciation
3] Cost Price
4] Cost plus depreciation
18) Total assets / Owners fund =:BLANK Ratio .
(1)
1] Proprietor Ratio
2] Market Price to Book Value Ratio
3] Price Earning Ratio
4] Debt Equity ratio
19) Effects of undercapitalisation are
(4)
1] Adverse effect on market value of shares
2] Favourable effect on market value of shares
3] High Earning Per Share
4] Increase in selling price of the finished goods
20) The characteristics of Debentures are
(4)
1] the debenture holders are not the owners
2] the debentures are the long term source of funds
3] the dividend is paid in proportion to the profit
4] the rate of interest is predetermined
21) Match the Following
(4)
1] Composite cost
2] Component cost
3] Marginal cost
4] Explicit Cost

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1] weighted average cost of capital of the various individual components

2] cost of individual items of capital
3] incremental cost attached with new funds raised by the company
4] Cost attached to the source of capital

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5] Capital
6] Investments
22) Credit rating symbol for Fixed Deposits of High risk by CRISIL is
(2)
1] FA
2] FB
3] FC
4] FD
23) Advantage of Net present value is
(2)
1] It ignores Time Value of Money
2] It considers cash inflows throughout the life of the project
3] It ignores Income Tax
4] It is easy to use.
24) Overdraft is given by the bank for a very short period of time, at the end of which the company is
supposed to repay the same
(1)
1] True
2] False
25) Match the Following
(4)
1] Spontaneous sources
2] Intercorporate deposit
3] Commercial Paper
4] Banks

1] Trade credit
2] funds borrowed by one company from another company
3] Unsecured promissory note
4] Cash Credit
5] Paid up Capital
6] Reserves and Surplus

26) Perpetual Inventory System means

(2)
1] continuous verification of goods in transit
2] continuous verification of work in process
3] continuous verification of physical stock
4] On going verification of labours handling machine
27) Match the Following
(4)
1] Economic Order
quantity
2] Maximum level
3] Minimum level
4] Re-order level

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1] Total variable cost of managing the inventory is lowest

2] above which the actual stock should not exceed
3] below which the actual stock should not reduce
4] material stock at which it is necessary to take steps for placing an order for
further lots of material
5] Affects the profitability adversely
6] Affects production of the company

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Section 2 is complete.
Please click on "Next" button to proceed.

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