Q. When total current assets exceeds total current liabilities it refers to.
✅ Correct Answer: (D)
Net Working Capital
Financial Management MCQs and Notes
Q. The addition of all current assets investment is known as...
✅ Correct Answer: (B)
Gross Working capital
Q. In MM model MM stands for...
✅ Correct Answer: (D)
Miller and Modigliani
Q. In Walter model formula D stands for
✅ Correct Answer: (A)
Dividend per share
Q. What are the different options other than cash used for distributing profits to shareholders?
✅ Correct Answer: (D)
All of these
Q. Reserves & Surplus are which form of financing?
✅ Correct Answer: (B)
Internal Financing
Q. What is the value of the tax shield if the value of the firm is $5 million, its value if unlevered would be $4.78 million, and the present value of bankruptcy and agency costs is $360,000?
✅ Correct Answer: (D)
$580,000
Q. Two firms that are virtually identical except for their capital structure are selling in the market at different values. According to M&M
✅ Correct Answer: (D)
this will not continue because arbitrage will eventually cause the firms to sell at the same value.
Q. The traditional approach towards the valuation of a company assumes:
✅ Correct Answer: (B)
that there is an optimum capital structure.
Q. A critical assumption of the net operating income (NOI) approach to valuation is:
✅ Correct Answer: (C)
that ko remains constant regardless of changes in leverage.