Q1. 1. ABC Ltd. has $ 300 million, 12 per cent bonds outstanding with six years remaining to maturity. Since interest rates are falling, ABC Ltd. iscontemplatingofrefundingthese bonds with a $ 300 million issue of 6 year bonds carrying acoupon rate of10percent. Issue cost of the new bond will be $ 6 million and the call premium is 4 per cent. $ 9 million being the unamortized portion ofissue cost ofold bonds can be written offno sooner theold bonds are called off. Marginal tax rate of ABC Ltd. is 30 per cent. You are required to analyse the bond refunding decision.

Answer all the MCQ in proper sequence in reference to cost accounts:

2. Net Profit Ratio for a firm remaining parts same however the Net Profit Ratio is diminishing. The explanation behind such conduct could be:

(a) Increase in Costs of Goods Sold,

(b) If Increase in Expense,

(c) Increase in Dividend,

(d) Decrease in Sales.

3. Which of the accompanying assertions is right?

(a) A Higher Receivable Turnover isn't attractive,

(b) Interest Coverage Ratio relies on Tax Rate,

(c) Increase in Net Profit Ratio implies increment in Sales,

(d) Lower Debt-Equity Ratio implies lower Financial Risk.

4. Obligation to Total Assets of a firm is .2. The Debt to Equity ratio would be:

(a) 0.80, (b) 0.25, (c) 1.00, (d) 0.75

5. Which of the accompanying encourages investigating get back to value Shareholders?

(a) Return on Assets,

(b) Earnings Per Share,

(c) Net Profit Ratio,

(d) Return on Investment.

6. Profit from Assets and Return on Investment Ratios have a place with:

(a) Liquidity Ratios,

(b) Profitability Ratios,

(c) Solvency Ratios,

(d) Turnover.

7. XYZ Ltd. has a Debt Equity Ratio of 1.5 when contrasted with 1.3 Industry normal. It implies that the firm has:

(a) Higher Liquidity,

(b) Higher Financial Risk,

(c) Higher Profitability,

(d) Higher Capital Employed.

8. Proportion Analysis can be utilized to consider liquidity, turnover, benefit, and so forth of a firm. What does Obligation Equity Ratio help to contemplate?

(a) Solvency, (b) Liquidity, (c) Profitability, (d) Turnover,

9. In Inventory Turnover figuring, what is taken in the numerator?

(a) Sales,

(b) Cost of Goods Sold,

(c) Opening Stock,

(d) Closing Stock.

10. Monetary Planning manages:

(a) Preparation of Financial Statements,

(b) Planning for a Capital Issue,

(c) Preparing Budgets,

(d) All of the abovementioned.

11. Monetary arranging begins with the planning of:

(a) Master Budget,

(b) Cash Budget,

(c) Balance Sheet,

(d) None of the abovementioned.