Classical

Financial Management - Financial Management Multiple Choice Questions

41:  

The term "capital structure" refers to:

A.

long-term debt, preferred stock, and common stock equity.

B.

current assets and current liabilities.

C.

total assets minus liabilities.

D.

shareholders' equity.

 
 

Option: A

Explanation :

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42:  

The ______ method provides correct rankings of mutually exclusive projects, when the firm is not subject to capital rationing.

A.

net present value

B.

internal rate of return

C.

payback period

D.

profitability index

 
 

Option: A

Explanation :

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43:  

Price Ratio Method is

A.

Earning Yield Method

B.

Growth Method

C.

Dividend Yield Method

D.

Asset Method

 
 

Option: A

Explanation :

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44:  

Which is Walter formula, for dividend policy?

A.

Vc = D + Ra/Rc (E - D)/Rc

B.

Vc = D + Ra/Rc/Rc

C.

Vc = D + Rc/E - D

D.

Vc = E - D/Rc

 
 

Option: A

Explanation :

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45:  

Operating leverage can be computed by

A.

%change in EBIT/% change in Sales

B.

EBIT/Fixed Cost x Capital Employed

C.

Sales/EBIT

D.

Fixed Cost/EBIT

 
 

Option: A

Explanation :

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