Welcome to your International Navodaya Chamber of Commerce (INCOC) Platform ! Subject: Financial Management and Strategic ManagementTotal Number of Question: 40Time: 41 MinutesPlease check your email after completion of test for result.All the best... Name Phone No Email State 1. Which of the following ratios measures a firm's ability to meet its short-term obligations? Debt-equity ratio Current ratio Return on equity Gross profit margin None 2. A company's quick ratio is considered satisfactory if it is: Equal to 1 Greater than 1 Less than 1 Equal to 0.5 None 3. Financial planning ensures: Long-term sustainability of operations Effective use of financial resources Compliance with taxation laws Growth in market share None 4. A company’s Debt Service Coverage Ratio (DSCR) measures its ability to: Repay long-term debt Pay interest on debt Generate net income Pay operating expenses None 5. Weighted Average Cost of Capital (WACC) is calculated by: Adding all sources of capital costs Averaging all sources of capital costs Weighting the cost of each source of capital by its proportion in the total capital Subtracting debt cost from equity cost None 6. A company's cost of retained earnings is generally: Equal to the cost of equity Lower than the cost of equity Higher than the cost of equity Equal to the cost of debt None 7. Which of the following techniques ignores the time value of money? Payback period Internal rate of return Net present value Discounted payback period None 8. The Profitability Index is calculated as: Total investment / NPV NPV / Initial investment Present value of future cash flows / Initial investment Total cost / Total profit None 9. Which of the following would make a project more attractive? Higher discount rate Lower cash inflows Higher NPV Longer payback period None 10. Trade credit is considered a: Spontaneous source of finance Permanent source of finance Short-term investment option Non-traditional source of finance None 11. Which of the following is a permanent working capital requirement? Seasonal inventory Credit sales Minimum stock level Accounts payable None 12. Commercial paper is: A secured instrument Issued by large, creditworthy firms Long-term financing instrument Suitable for startup firms None 13. Variance of a portfolio measures: Systematic risk Unsystematic risk Total risk Beta of the portfolio None 14. In CAPM, the risk-free rate represents: Minimum guaranteed returns Average market return Return from diversified portfolio Expected return on equity None 15. The market risk premium is: Market return - Beta Risk-free rate - Market return Market return - Risk-free rate Market return / Risk-free rate None 16. The degree of operating leverage is highest when: Fixed costs are high Variable costs are high Sales volume is low Contribution margin is low None 17. Financial leverage is measured as: EBIT / EPS Contribution margin / Fixed cost EBIT / Interest Total debt / Total equity None 18. The Bird-in-the-Hand theory suggests: Dividends are less important than capital gains Dividends are irrelevant for valuation Investors prefer certain dividends over uncertain capital gains Retained earnings should always be reinvested None 19. A stock split typically: Increases the market price of shares Decreases the market price of shares Has no impact on market price Reduces the company's debt None 20. A firm's P/E ratio reflects: Profitability Liquidity Growth expectations Leverage None 21. When two firms merge and the resulting synergy creates greater value, this is referred to as: Conglomeration Economies of scale Value maximization Economies of scope None 22. A company’s intrinsic value is affected by: Market sentiment Fundamental factors like earnings and growth Speculative trading Historical performance None 23. Purchasing Power Parity (PPP) theory relates to: Exchange rates and interest rates Exchange rates and inflation Interest rates and inflation Exchange rates and trade balance None 24. A currency swap is used to: Reduce exchange rate risk Minimize transaction costs Hedge interest rate risk Diversify portfolio investments None 25. The IRR of a project is: The discount rate at which NPV equals zero Always higher than the WACC The same as the cost of debt Independent of cash flows None 26. A company’s break-even sales will increase if: Fixed costs increase Variable cost per unit decreases Selling price per unit increases Contribution margin increases None 27. The Gordon Growth Model is used to value: Bonds Preferred shares Equity shares with constant growth in dividends Companies with no growth prospects None 28. Which of the following is an example of an aggressive working capital policy? Maintaining low inventory levels Financing all current assets through equity High cash reserves Financing current assets through long-term debt None 29. The future value of ₹10,000 compounded annually at 10% for 3 years is: ₹12,100 ₹13,310 ₹13,000 ₹11,000 None 30. An annuity due differs from an ordinary annuity because: Payments are made at the beginning of each period in an annuity due Payments are made at the end of each period in an annuity due The cash flows are discounted in an annuity due An annuity due has variable payments None 31. If the IRR of a project is greater than the cost of capital: The NPV will be negative The project should be rejected The project will have a positive NPV The project will have zero profitability None 32. Sensitivity analysis in capital budgeting helps in: Calculating the time value of money Understanding how project variables affect NPV Comparing payback periods Reducing the cost of capital None 33. Which of the following policies results in higher risk and higher returns in working capital management? Conservative policy Aggressive policy Moderate policy Fixed policy None 34. Inventory turnover ratio measures: Efficiency of inventory management The proportion of finished goods in inventory The liquidity of a firm The firm's net income None 35. Systematic risk is also referred to as: Unsystematic risk Diversifiable risk Market risk Specific risk None 36. The standard deviation of a portfolio is: A measure of unsystematic risk A measure of total risk A measure of expected return A measure of beta None 37. A company following a stable dividend policy will Pay dividends only when profits are high Maintain consistent dividends regardless of earnings fluctuations Distribute all earnings as dividends Not pay dividends at all None 38. Dividend irrelevance theory states that: Dividend policy affects the value of the firm Investors are indifferent to dividends and capital gains Higher dividends lead to higher stock prices Lower dividends reduce the firm's cost of capital None 39. Equity financing is more expensive than debt financing because: Equity holders are guaranteed returns Debt has tax benefits, while equity does not Equity financing increases financial risk Debt holders have higher risk than equity holders None 40. The financial decision to issue debentures involves: Dividend policy Capital budgeting decisions Financing decisions Working capital management None 1 out of 4 Great job on taking the INCOC Test! 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