Question Option1

Unit 1
Rate of interest is 11 % and the rate of risk is 9%.The normal rate of return is 11%
Normal profit is Average profit earned
Increase in working capital     Added to cash flow
EPS is calculated on the basis of NPAT
DCF method consider Time value of money
Any non trading income included in the profit should be Eliminated
Average Profit is Rs. 19,617 and normal profit is Rs. 10,000. The Super Profit is Rs. 9,167
While calculating capital employed Tangible trading assets
Under net asset method value of a shares depend on Net assets available to
In relative valuation multiples may be Revenue
Future cash flow is discounted at Cost of Capital
EVA is calculated on the basis of NPAT
Super profit is Excess of average profit
Goodwill as per purchase of average profit method Super profit
Goodwill is obtaining Future benefit
Value of partly paid equity share is equal to Value of fully paid Shar
Free cash flow to equity shareholders in what remains After settlement of deb
Quoted share are those that are Listed on the stock exc
EVA is calculated to find out contribution of the organization to Wealth of shareholders
Fair value of a share is equal to Intrinsic value only
Goodwill is not a Fictitious asset

Equity shares of Rs.10 each is Rs.22,00,000. 15% Pref. Shares of Rs.100 each is
Rs.18,00,000. Total is Re. 40,00,000. Average Net Profit is Rs. 10,50,000. NRR 20%.
Find goodwill at 3 years purchase of super profit 6,30,000

Equity shares of Rs.10 each is Rs.22,00,000. 15% Pref. Shares of Rs.100 each is
Rs.18,00,000. Total is Re. 40,00,000. Average Net Profit is Rs. 10,50,000. NRR 20%.
Find the intrinsic value per share 10.9

Equity shares of Rs.10 each is Rs.22,00,000. 15% Pref. Shares of Rs.100 each is
Rs.18,00,000. Total is Re. 40,00,000. Average Net Profit is Rs. 10,50,000. NRR 20%.
Find yield value per share 17.73

Equity shares of Rs.10 each is Rs.22,00,000. 15% Pref. Shares of Rs.100 each is
Rs.18,00,000. Total is Re. 40,00,000. Average Net Profit is Rs. 10,50,000. NRR 20%.
Find fair value per share Rs.14.32

Unit 2
____refers to the mutual consolidation of two or more entities to form a new enterp Merger
The purchase of the business of an enterprise by another enterprise is known as ____Merger
An ______ is the purchase of by one company of a substantial part of the assets or th Merger
_____mergers refer to two firms operating in same industry or producing ideal produhorizontal
The main objectives of_____mergers are to benefit from economies of scale, reduce horizontal
_____ merger refers to the combination of two firms operating in industries unrelatedhorizontal
The main objective of a______merger is to achieve a big size. horizontal
A watch manufacturer acquiring a cement manufacturer is an example of______ merhorizontal
Combination of a computer system manufacturer with a UPS manufacturer is an exa horizontal
A car manufacturer acquires a steel company is an example of_____ merger horizontal
In ______merger, the buyer merges into the target and the shareholders of the buyerhorizontal
g
A ______merger is said to occur when the buyer sets up an acquisition subsidiary whihorizontal
NPV= ________- Premium value creation
_______is where a company acquires another company, improve its performance andvalue the creation
Synergy that increase the overall revenue through expanded markets, product cross- se Cost
A_______merger in a small industry will definitely help in increasing the market sharehorizontal
An acquisition is the same thing as: a spin-off
The ways in which mergers and acquisitions occur do not include: vertical integration
Justifications for M&As do not include: to gain economies of scale
Financial motives for M&As do not relate to: earnings per share
Managerial motives for M&As do not relate to: emoluments
The three board approaches to company valuation do not include: future earnings valuation
Asset based company valuations do not include the: marginal cost method
Earnings based company valuations do not include the: P/E method
Other reasons for company valuations do not include: tax evasion
Which of the following are commonly cited reasons for M&As? synergy
All of the following are common motives for a merger or acquisition except for operating synergy
Amalgamation is governed by_______. AS 14
A new company is formed under______. Absorption
Balance of capital reduction should be transferred to_______. Security premium

UNIT 3
Internal reconstruction requires __________________ special resolution pass
Section 391 to 394 of companies act 1956 applies to ____________ takeover
____________ merger indicates combination of two companies operating in same indust horizontal merger
The ______________ is the process of making changes in the composition of a firms on corporate reconstructio
The _____________ means changing the structure of an organisation such as reducing financial restructuring
____________ is the merger of same or related industry but do not offer similar distr horizontal merger
__________ is an arrangement whereby the assets of two or more companies come umerger
____________ merger involves firms engaged in unrelated types of activities. vertical
Maruti Suzuki is example of __________________ franchising
In _______________ company distributes its shareholding in subsidiary to its shareh spin off
When existing company is dissolved to form few new companies, it is called as ____ spin off
KFC is example of ________________________ strategic alliance
____________ means the action of an organisation of government selling or liquidatinmerger
_____________ means the aquirer takes over the control of the target company. joint venture
Split off is a form of __________________ takeover
__________ parties work together on a single project for a finite period of time. strategic alliance
__________ may be defined as an arrangement where one party grants another partyalliance
_________________ results in change in the equity pattern of the company. organisational restructuring
_________________ is not a type of takeover. friendly takeover
A _________ is a act of gaining control of a company by buying more of its share thanmerger
Process of buying and selling of a company’s assets that comprise of far greater than asset liability restructur
In case of lease legal title is with ________________ lessor
In ___________ takeover the board member are usually the main shareholders. friendly
The ____________ can also engage in a proxy fight. friendly
________________ results in diluting the ownership in the firm. defensive tactics

Unit 4
Under lease contract, lessee takes the asset for a specified time and makes the paym interest
There are _____ parties involved in leasing 1
Lessor is entitled to the benefit of depreciation under section _____ of Income-tax Ac30A
In ________ type of lease, seller of the asset becomes the lessee Sales aid
Lessor gives personalised services to lessee in _______ type of lease Specialized service
Lease across national frontiers is called ______ National lease
Lessor is not concerned with maintenance expenditure in ________ Operating lease
Operating lease is ______ in the books of lessor added
One advantage of financial lease is that ________ it has a shorter maturity than term lo
Direct lease, sale and leaseback and leveraged lease are the examples of _____ Operating lease
Which of the following would not be included in the Gross Investment in Lease for a Guaranteed residual value
_______ is a method of financing of the fixed asset to be purchased on future date Leasing
_______ creates artificial demand for the product Takeover
AS-19 is applicable to ______ Hire purchase
Amount paid at the time of taking delivery of goods is called ____ Cash payment
Initial payment made on signing the hire purchase agreement is ______ Down payment
ABC Ltd purchased a machinery from XYZ Ltd on hire purchase where Mr. Q stands asABC a Ltd
From the point of view of lessee, a lease is a _______ Working capital decision
A short term lease which is often cancellable is known as _____ Finance Lease
In case of leasing, ______ is transferred to lessee Possession
The depreciation on an asset purchased through hire purchase should be _____ Straight line only
When making repayments on a lease, the profit and loss will contain which of the fol Interest and installment charges
From the point of view of lessor, ______ is considered as cash inflow Cost of the assets
Finance lease is for a _____ period Long term
Under hire purchase system, right of ownership is not passed on to the purchaser unl Down payment is made

Unit 5
The total Current Assets without deducting the current liabilities. Gross working capital
Current Assets-Current Liabilities Gross working capital

Cash Working Capital includes Fixed Assets less depreciation

Current Capital or
Working Capital is also known as circulating capital
._________ function includes a firm’s attempts to balance cash inflows and
outflows. Finance
Permanent Working Capital is also known as Gross working capital
……..will ensure high return on investment adequate working capit
………..refers to idle funds which earns no return shortage working capital
Which of the following is not a factor that affects the composiyion of the working
capital Nature of Business

Gross working capital mean Total Assets

Which of the following is not an item of current liabilities Sundry creditors
Internal long term source include Retained profit

Maximum permission
MPBf refers to bank finance
Interest on debenture is Paid out of income
Factoring involves Sale of debtors
The capital required to ensure the effective use of fixed assets and support the
normal operation of business is known as Permanent working Capi
The parties to the factoring are Client,Factor & Debtor

Long term fund have

been used for
financing short-term
If the net working capital is negative then it indicate that assets

Increasing the time

available for payments
The duration of the net operating cycle can be reduced by to creditors

Increase in the
average collection
Which of the following will cause a decrease in the net operating cycle of a firm? period

There is an increase in
When cash is received against overdraft from bank? Net Working Capital

Increase in the raw

Which of the following will increase the duration of the net operating cycle? storage period

The Factor has to Collect from debtor

Working capital finance is provided against Account Receivable
Total Current
Under the gross working capital concept the working capital is equal to Liabilities
Option1_CorreOption2 Option2_CorreOption3 Option3_Corre

9% 20% Y
Profit earned by simila Y Super Profit
Y Deducted from cash inflow Ignored
NPBT NPAT-Preference Divid Y
Y Market Value   Replacement of value
Y Added Ignored
Y Rs.29,167 Rs. 19,167
Y Intangible assets should be consider Fictitious assets should be consider
Y   Net assets available to debentures holder
Net assets available to preference hol
EBIT Ignored
Y NRR Rate of FMP
NPBT NOPAT Y
Y Extra profit earned Average profit earned by similar com
Super Profit x amount of purchases Super profit x No. of ye Y
Y   Present benefit Past benefit
Y Calls in arrears per share Paid up value per share
Y Before settlement of debt Before interest expenses
Y Quoted daily Quoted be the seller
Y Wealth of Debenture holders Wealth of employees
Yield value only Average of intrinsic andY
Y Tangible asset Intangible asset

Y 6,20,000 5,40,000

Y 10.2 15.2

Y 27.7 15.23

Y Rs.13.39 Rs.14.35

Y Acquisition Takeover
Acquisition Y Takeover
Acquisition Y Synergies
Y vertical conglomerate
Y vertical conglomerate
vertical conglomerate Y
vertical conglomerate Y
 vertical conglomerate Y
vertical conglomerate
vertical Y conglomerate
vertical Reverse Y
vertical Reverse
acceleration Synergies Y
Y acceleration Synergies
Revenue Y Reverse
Y vertical Reverse
a merger an amalgamation
conglomerate takenover diversification Y
nomies of scale to enter new markets to increase risk Y
corporation tax value added tax Y
job security power
nings valuation inventory valuation Y stock market valuation
Y book value method realizable value method
DCF method ABC method Y
Y inheritance tax assessment security for loans
market power strategic realignment
financial synergy raising the cost of capitY
Y AS 3 AS 21
Reconstruction Amalgamation Y
Capital reserve Y Share Capital

Y special resolution passed at board meordinary resolution passed at general

reverse merger horizontal merger
vertical merger Y conglomerate merger
Y communication ownership
organisational restructuY corporate restructuring
vertical merger cogeneric merger Y
Y buyout joint venture
horizontal conglomerate Y
strategic alliance joint venture Y
Y split off split up
split off split up Y
joint venture financial restructuring
joint venture takeover
takeover Y disinvestment
acquisition demerger Y
Y joint venture disinvestment
franchising Y slump sale
onal restructuring corporate restructuring internal reconstruction
hostile takeover joint takeover Y
takeover Y bidding
Y anti takeover defences defensive tactics
 Y lessee agent
Y hostile merger
hostile bidder Y
asset liability restructuring anti takeover defences Y

profit rent Y
2Y 3
34A 32A Y
Operating Conveyance
Y Sale and Lease back Sales aid
Foreign lease Transfer lease
Net lease Y Non-net lease
Y deducted not reflected
orter maturity than term lo it never appears as a liability in balan it eliminates the need to make perio
financial lease Y full service lease
d residual value Non guaranteed residual value Bargain purchase option
Hire purchase Y MVA
Restructuring Hire purchase Y
Leasing Y Depreciation
Advance payment Installment
Y Cash price Hire purchase price
Y XYZ Ltd Mr. Q
apital decision Financing decision Y Investment decision
Operating Lease Leverage Lease
Y Ownership Mortgage
based on the cost price Y based on total cost including interest
d installment charges Neither interest or installment Interest only Y
Refund of initial deposit Lease rentals Y
Y Short term Medium term
ment is made Advance payment is made Last installment is paid Y

Y Net Working Capital Permanent working Capital

Net Working Capital Y Permanent working Capital

Debtor at sales less

ts less depreciation Debtor at sale value profit margin Y

Y Work in progress capital Day to day Capital

Investment Y Liquidity
Net Working Capital Core Working Capital Y
Y surplus working capital shortage working capital
orking capital excess working capital Y variable working capital
 Nature of Raw
material used Tax structure of the c Y

Total current assets Y Total current liabilities

Advance from customers Hire purchase dues
Depreciation Both (1) and (2) Y

Minimum permission
Y bank finance Bank overdraft
Y Paid out of profit Paid out of debentures
Y Sale of creditor Discounting B/E

Y Variable working capital Temporary working capital

Y Drawer,Drawee & Payee Consignor & Consignee

Long term fund have short term fund have

been used for been used for
financing long-term financing long-term
assets assets Y

Decreasing the raw Decreasing the work-

material storage in-progress storage
Y period period

Increase in the Increase in the

average payment finished goods storage
period Y period

There is an increase in
There is an increase in both Net & Gross
Gross Working Capital Y Working Capital

Decreasing in the Increase in the

average collection average payment
Y period period
Pay commission to the
Y Pay to creditor buyer
Inventories Both (1) and (2) Y

Surplus Current Assets Total Current Assets Y

Option4 Option4_Correct Marks/Points

2% 2
Loss 2
Outflow 2
PAT 2
Price Value 2
None of the above 2
Rs. 10,000 2
Intangible trading asset should be consider 2
Gross assets available on equity shareholde2
Price to earning ratio Y 2
ARR 2
Gross Profit 2
Average profit earned by other companies 2
Average profit 2
No benefit 2
Unpaid up value per share 2
After interest expenses 2
  Quoted by the buyer 2
to know the status of the company 2
Extrinsic value 2
Realisable 2

3,80,000 2

40.1 2

10.92 2

Rs. 14.49 2

Demerger
Demerger
Demerger
concentric
concentric
concentric
concentric
concentric
concentric Y
concentric
concentric
Subsidiary Y
speculation
speculation
Subsidiary
Subsidiary
a takeover Y
horizontal integration
to achieve synergy
unemployed tax Shields
dividends Y
asset valuation
replacement cost method
ARR method
capital gains tax assessment
all of the above Y
buying undervalued asset
AS 32
All of the above
Profit & Loss Account

ordianary resolution passed at board meeting

demerger Y
cogeneric merger
capital structure
all of the above
conglomerate merger
demerger
demerger
financial restructuring
none of the above
all of the above
franchising Y
disinvestment Y
demerger
disinvestment
franchising
joint venture
financial restructuring Y
proxy fight
amalgmation
none of the above
none of the above
bidding
none of the above
none of the above

dividend 2
4 2
31A 2
Sale and Lease back Y 2
Conveyance 2
Cross border lease Y 2
Full-payout 2
expenditure 2
it provides a way to indY 2
off balance sheet methods of financing 2
Executory costs Y 2
Takeover 2
Leasing 2
Mergers 2
Down payment Y 2
Interest 2
Bank 2
Buy or make decision 2
Net Lease Y 2
Funds 2
no depreciation is provided until the final 2
Installment only 2
Tax on Lease rentals 2
Temporary 2
Asset is used 2

Temporary Working Capital 2

Temporary Working Capital 2

Creditor at purchase
cost less profit margin 2

Trading capital 2

Dividend 2
Fixed Capital 2
Core Working Capital 2
Fixed working Capital 2
Process technology used 2
Fixed assets minus
current assets 2
Debenture Y 2
Share Capital 2

Cash credit 2
Paid out of loan 2
Hire purchase dues 2

Floating working capital 2

Client,Factor & Creditor 2

short term fund have

been used for
financing short-term
assets 2

Increase the raw

material storage
period 2

Increase in the W-I-P

period 2

There is no effect on
both Net & Gross
Working Capital 2

Decreasing in the
conversion period 2

Pay to debtor 2
Machinary 2

Total Fixed Assets 2