Management Consultancy

1. This pertains to the uncertainty inherent in projections of future returns on assets and very
important determinant of capital structure.
A. Sales Price Variability
B. Input Price Variability
C. Demand
D. Business Risk
2. This pertains to the ability of the firm raise capital on reasonable terms under the adverse
condition.
A. Sales
B. Capital Structure
C. Capital Rationing
D. Financial Flexibility
3. This refers to some finance managers aggressiveness or inclination to use more debt in an effort
to boost profit.
A. Financial Flexibility
B. Business Risk
C. Capital Budgeting
D. Managerial Aggressiveness
4. _____________ is the degree to which a firm uses fixed cost in its production processes.
A. Capital Structure
B. Capital Budgeting
C. Financial Leverage
D. Operating Leverage
5. Refers to the firm’s use of fixed charge securities such as debt and preference share in it’s
capital structure.
A. Contribution Margin
B. Optimal Capital Structure
C. Financial Risk
D. Financial Leverage
6. It is suggest that some optimal capital structure exists which simultaneously maximizes a firm’s
stock price and minimizes its cost of capital.
A. Capital Rationing
B. Input Price Variability
C. Financial Risk
D. Capital Structure Theory
7. The source of long term capital is limited there may be a need for management place a
constraint or absolute limit on the size of the firm’s capital budget during a particular period.
A. Financial Flexibility
B. Managerial Aggressiveness
C. Cost of Capital
 D. Capital Rationing
8. Refers to the mix of all assets which appear on the right hand side of company’s statement of
financial position.
A. Sales Price Variability
B. Capital Budgeting
C. Business Risk
D. Financial Structure
9. Antinamoran Company is a new firm just starting operations. The firm will produce backpacks
which will sell for P22.00 per piece. Fixed cost are P500,000.00 per year and variable cost are
P2.00 per unit of production. The company expects to sell 50,000 backpacks per year, and it’s
effective tax rate is 40%. What is earning before interest and taxes?
A. 1,000,000
B. 1,100,000
C. 200,000
D. 500,000
10. The Miningger Company have an ordinary shares, 7.8M outstanding is now selling for P65 and
the expected dividend at the end of the current year is 55% of the EPS and the earning per share
is P7.80. What is the earning available for capital investment ?
A. 7,800,000
B. 57,720,000
C. 31,746,000
D. 25,974,000