Financial Management - Study Mode

[#846] Which of the following is a function of the finance manager?
Correct Answer

Mobilizing funds

Explanation

Solution: Mobilizing funds, Risk returns trade off, Deployment of funds and Control over the uses of funds are the function of the finance manager.

[#847] Which of the following represents the rate at which a company can grow from internal sources?
Correct Answer

(B) sustainable growth rate

Explanation

Solution: Sustainable growth rate represents the rate at which a company can grow from internal sources. The sustainable growth rate (SGR) is the maximum rate of growth that a company can sustain without having to finance growth with additional equity or debt.

[#848] Which of the following techniques of project appraisal does not consider the time value of money?
Correct Answer

(D) Accounting Rate of Return

Explanation

Solution: Accounting Rate of Return techniques of project appraisal does not consider the time value of money. Under this method, the asset's expected accounting rate of return (ARR) is computed by dividing the expected incremental net operating income by the initial investment and then compared to the management's desired rate of return to accept or reject a proposal.

[#849] The sustainable growth rate of a firm can be calculated as the product of the_________.
Correct Answer

(C) retention rate and the return on equity

Explanation

Solution: The sustainable growth rate of a firm can be calculated as the product of the retention rate and the return on equity. The sustainable growth rate (SGR) is the maximum rate of growth that a company can sustain without having to finance growth with additional equity or debt.

[#850] Under trading means.
Correct Answer

(D) Low turnover of working capital

Explanation

Solution: Under trading means low turnover of working capital. Under-trading is the reverse of over-trading. It means keeping funds idle and not using them properly. This is due to the under employment of assets of the business, leading to the fall of sales and results in financial crises.