NPTEL Financial Management For Managers Assignment Answer Week 1 2023

NPTEL Financial Management For Managers Assignment Answer

NPTEL Financial Management For Managers Assignment Answer Week 1 2023

1. Market value of a security is decided by

• The investment markets
• The respective companies|
• The government
• Shareholder of the company

Answer :- The investment markets

2. Which of the following securities provides variable income?

• Debentures
• Preference shares
• Bonds
• Equity shares

Answer :- Equity shares

3. What are the earnings per share (EPS) for a company if:
Last year after-tax profits   Rs.1,00,000
common shares outstanding 50,000
 retained earnings at the year end  Rs.12,00,000

• Rs. 1,00,000
• Rs. 0.50
• Rs. 2.00
• Rs. 2.50

Answer :- Rs. 2.00

4. Ownership securities are represented by:

• Stock
• Loan
• Debt
• Debenture

Answer :- Stock

5. If any capital structure is a combination of 40% debt and 60 % equity and tax rate is 30% p.a. how much deduction company get from tax if total value of firm is Rs. 2,50,000, interest rate is 10% p.a and Profit after tax 90000?

• Rs. 3000
• Rs. 9000
• Rs. 6000
• Rs. 10000

Answer :- Rs. 3000

6. Dividend decision basically depends upon:

• Firm Fund requirement
• Manager’s willingness
• Shareholder’s willingness
• Stock market condition

Answer :- Firm Fund requirement

7. Which of the following is not theory of capital structure?

• Net income approach
• Net operating income approach
• Modigliani Miller approach
• Gordon’s model

Answer :- Gordon's model

8. Investors’ choice is a very important aspect for investments in:

• Preference shares
• Equity shares
• Bonds
• All of the above

Answer :- All of the above

9. The valuation of a financial asset is based on determining:

• The current yield to maturity on long term corporate bonds
• The present value of future cash flows
• The capital budgeting process
• None of the above

Answer :- The present value of future cash flows

10. A mixed rate of ———– is payable on debenture

• Dividend
• Commission
• Interest
• Brokerage

Answer :- Interest

11. The long-run objective of financial management is to:

• maximize earnings per share.
• maximize the value of the firm’s common stock.
• maximize return on investment.
• maximize market share.

Answer :- maximize the value of the firm's common stock.

12. financial manager should accept business proposal if:

• Investment future cash generation capacity is less than initial investment.
• Investment future cash generation capacity is equal to initial investment.
• Investment future cash generation capacity is greater than future value of initial investment.
• Investment future cash generation capacity is equal to future value of initial investment.

Answer :- Investment future cash generation capacity is greater than future value of initial investment.

NPTEL Financial Management For Managers Assignment Answer Week 2 2023

1. The following information is available with respect to Unicorn Ltd.: A/S = 0.7, S = Rs. 20,00,000, L/S = 0.40, m = 0.10 and d = 0.4. What is the maximum sales growth rate that can be financed without raising external funds?

• 23%
• 25%
• 26%
• 24%

Answer :- 25%

2. The balance sheet of Anita Ltd. as on March 31, 2020, is as follows:

Liabilities Rs. (Lakhs) Assets Rs. (Lakhs)

Share capital    260 Fixed assets 540

Reserves 140 Inventories 300

Long-term loans 350 Receivables 250

Short-term loans 180 Cash and bank 50

Payables 150

Provisions 60

Total 1,140 Total 1,140

Sales for the year were Rs. 500 lakhs. For the year ending on March 31, 2021, sales are expected to increase by 20%. The profit margin and dividend pay-out ratio are expected to be 10% and 50% respectively. Calculate the external financing requirement (EFR) of the company. 

• Rs.152 lakhs
• Rs. 151 lakhs
• Rs. 156 lakhs
• Rs. 152.50 lakhs

Answer :- Rs. 156 lakhs

3. ABC Ltd. exhibits a return on assets of 14% on an average for the past 5 years. The company generally retains 50% of its income as retained earnings. Calculate the internal growth rate of the company.

• 7.00%
• 6.53%
• 7.50%
• 7.53%

Answer :- .53%

4. Vasudha enterprises earned Rs. 10,00,000 last year, 40% of which was paid out as dividends. The company’s total assets stood at Rs. 50,00,000 and its equity amounted to Rs. 40,00,000. Calculate the sustainable growth rate of the company.

• 17.65%
• 17.50%
• 18.50%
• 17.00%

Answer :- 17.65%

5. Which of the following is not correct statement for Sustainable growth rate?

• The sustainable growth rate of firm can be calculated as the product of the retention rate and the return on equity
• Maximum growth rate a firm can achieve without resorting to new equity or debt capital is called sustainable growth rate
• The sustainable growth rate assumes the debt-equity ratio is constant.
• The sustainable growth rate is the minimum rate of growth that a company sustain with having to finance growth with additional equity or debt.

Answer :- The sustainable growth rate is the minimum rate of growth that a company sustain with having to finance growth with additional equity or debt.

6. strategic planning as a broad concept consists of _______

• short term tactical business management
• strategy formulation and implementation
• production equipment or product quality problems
• none of above

Answer :- strategy formulation and implementation

7. When preparing long-term cash projections, which one of the following should be deducted from operating profit to derive net cash flows from operations?

• Reduction in trade receivables
• Depreciation
• Reduction in inventories
• Reduction in trade payables

Answer :- Reduction in trade payables

8. The following information is available for Signal Corporation: m = 0.05, d = 0.30, A/E = 2.4, A/S q = 1.0. What rate of growth can be sustained with internal equity?

10%
9.17%
10.7%
8.69%

Answer :- 9.17%

9. The following information is available for Olympus Limited : A/S = 0.8, S = Rs.20 million, L/S = 0.40, m = 0.06, = Rs.100 million, and d = 0.4. What is the external funds requirement for the forthcoming year?

• Rs.4.4 million
• Rs.3.8 million
• Rs.4.9 million
• Rs.5.1 million

Answer :- Rs.4.4 million

10. A wide range of sales forecasting methods are available. They may be divided into three broad categories:

• Quantitative techniques, time series projection methods, and causal models
• Qualitative techniques, looking back techniques, and causal models
• Qualitative techniques, time series projection methods, and causal models
• Both b and c

Answer :- Qualitative techniques, time series projection methods, and causal models

11. Which of the following statement is not true:

• The percent of sales method assumes that the future relationship between various elements of costs to sales will be similar to their historical relationship.
• The budgeted expense method calls for estimating the value of each item on the basis of expected developments in the future period.
• The sustainable growth rate is the growth rate that can be sustained with the help of retained earnings matched with debt financing, in line with the debt equity policy of the firm.
• None of above

Answer :- None of above

12. Which of following is not primary source of spontaneous finance?

• Short term debt
• Trade credit
• accruals
• Extending payables

Answer :- Short term debt