Financial Management - Study Mode

[#636] The Debt-Equity ratio of a Company_______________.
Correct Answer

(A) Measure its financial leverage

Explanation

Solution: The Debt-Equity ratio of a Company measure its financial leverage. The debt-to-equity (D/E) ratio is calculated by dividing a company's total liabilities by its shareholder equity.

[#637] Which of the following is not related to overall market variability?
Correct Answer

(A) Financial risk

Explanation

Solution: Financial risk is not related to overall market variability. Financial risk is the risk that a company won't be able to meet its obligations to pay back its debts.

[#638] In proper capital budgeting analysis we evaluate incremental
Correct Answer

(B) cash flow

Explanation

Solution: In proper capital budgeting analysis we evaluate incremental cash flow. Capital budgeting, and investment appraisal, is the planning process used to determine whether an organization's long term investments such as new machinery, replacement of machinery, new plants, new products, and research development projects are worth the funding of cash through the firm's capitalization structure.

[#639] Which of the following statement are true in respect of working capital?
Correct Answer

(D) All the above

Explanation

Solution: Gross Working Capital is the sum of the total current assets, Net working capital represents current assets - current liablities and Net working capital can be negative of the following statement are true in respect of working capital.

[#640] The probability of bankrupt is higher.
Correct Answer

(C) only levered firm

Explanation

Solution: The probability of bankrupt is higher only levered firm.