ABM C - Unit 19 - Motivational Banker

1. Net Working Capital (NWC) means:

Excess of Assets over total outsider's liabilities

Excess of total current liabilities over trade payable

Excess of long term sources over long-term uses

Excess of long term sources over short-term uses

Question 1 of 30

2. Which of the following statements is not true for efficient inventory management?

It results in reduction in inventory

It reduces the working capital requirements of the enterprise

It reduces the NWC available with the enterprise

It increases the Inventory Turnover Ratio if the level of sales remains same.

Question 2 of 30

3. Which of the following is not a source for meeting working capital requirements?

Suppliers' credit

Bank finance

Other current liabilities

Advance payment to suppliers

Question 3 of 30

4. Which of the following is a liquidity ratio?

Quick ratio

TOL/TNW

DSCR

DER

Question 4 of 30

5. Which of the following is not correct regarding Current Ratio?

For same level of current assets, increase in NWC results in increased current ratio

The current ratio can be less than one

The current ratio can be negative

Current ratio is an indicator of liquidity

Question 5 of 30

6. The commercial paper can be issued by

Corporates

Corporates and partnership firms

Any business entity

None of the above

Question 6 of 30

7. Which of the following is not correct regarding Forfaiting?

It a form of working capital finance

It is used in export finance

It is with recourse to the drawer of the bill

Under this, financier discounts the bills drawn on buyer.

Question 7 of 30

8. Which of the following is correct regarding Letters of Credit?

These are opened by a bank for export sales by the client

These are opened by a bank for local sales by the client

Letters of Credit do not carry much risk for the opening bank

Letters of Credit are opened by a bank for purchase of goods by the client

Question 8 of 30

9. Under Turnover method of assessment, as per RBI instructions, the limit is sanctioned at per cent of the projected turnover.

Question 9 of 30

10. Cash budget method of assessment is more suitable for those business enterprises which have

uniform level of operations

High level of operations

Low level of operations

Seasonal operations

Question 10 of 30

11. When did the Reserve Bank of India announce the guidelines for setting up and operating the Trade Receivables Discounting System (TReDS)?

3/12/2012

3/12/2014

3/12/2016

3/12/2018

Question 11 of 30

12. What is the main objective of the Trade Receivables Discounting System (TReDS)?

Facilitating the financing of trade payables

Facilitating the financing of trade receivables of MSMEs

Providing loans to large corporations

Providing liquidity to the stock market

Question 12 of 30

13. Who are the direct participants in the TReDS platform?

Only MSME sellers

Only financiers

MSME sellers, corporate and other buyers, and financiers

Corporate and other buyers, excluding MSME sellers

Question 13 of 30

14. What types of transactions are facilitated by TReDS?

Only invoices discounting

Only bills of exchange discounting

Both invoices and bills of exchange discounting

Only reverse factoring

Question 14 of 30

15. What is the primary concern addressed by a Letter of Credit (LC)?

Buyer's worry about non-receipt of goods

Seller's worry about non-receipt of payment

Buyer's worry about non-receipt of payment

Seller's worry about non-receipt of goods

Question 15 of 30

16. Who acts as an intermediary in a Letter of Credit transaction?

Buyer

Seller

Bank

International Chamber of Commerce (ICC)

Question 16 of 30

17. What is the role of the bank in a Letter of Credit transaction?

Selling goods

Buying goods

Facilitating payment between buyer and seller

Insuring the goods

Question 17 of 30

18. What governs the conduct of Letter of Credit business?

International Trade Organization (ITO)

World Trade Organization (WTO)

International Chamber of Commerce (ICC)

United Nations (UN)

Question 18 of 30

19. What is the minimum tangible net worth required for a company to be eligible to issue Commercial Paper (CP) in India?

Rs. 2 crores

Rs. 4 crores

Rs. 6 crores

Rs. 8 crores

Question 19 of 30

20. What is the minimum credit rating required for the issuance of Commercial Paper (CP) according to SEBI guidelines?

'A1'

'A2'

'A3'

'A4'

Question 20 of 30

21. What is the maximum maturity period allowed for Commercial Paper (CP) from the date of issue?

6 months

9 months

12 months

15 months

Question 21 of 30

22. Who is eligible to invest in Commercial Paper (CP) in India?

Only individuals

Only banks

Only Foreign Institutional Investors (FIIs)

Individuals, banks, other corporate bodies, NRIs, and FIIs

Question 22 of 30

23. What is factoring in the context of business financing?

A method of inventory management

A method of financing payables

A method of financing the receivables of a business enterprise

A method of financing long-term investments

Question 23 of 30

24. What is the main role of the factor in factoring?

Purchasing inventory from the client

Administering the sales ledger of the client

Controlling the credit given to the buyers of the client

Providing loans to the client

Question 24 of 30

25. What does factoring on a "without recourse" basis mean?

The factor has recourse to the client if the buyer fails to pay

The client is not liable to pay the factor if the buyer fails to pay

The factor has to pay the client in advance

The client must provide collateral to the factor

Question 25 of 30

26. Under RBI guidelines, what percentage of income should a factoring company derive from factoring activity?

At least 50%

At least 60%

At least 70%

At least 75%

Question 26 of 30

27. What is the main difference between factoring and forfaiting?

Factoring is used for domestic transactions, while forfaiting is used for exports.

Forfaiting involves bills of exchange/promissory notes and is always without recourse to the client.

Factoring carries the risk of default by the buyer, while forfaiting does not.

Forfaiting is used for short-term financing, while factoring is used for long-term financing.

Question 27 of 30

28. What is the maximum trade credit period allowed for the import of non-capital goods under the Rupee (INR) denominated trade credit framework?

Up to one year from the date of shipment

Up to two years from the date of shipment

Up to three years from the date of shipment

Up to five years from the date of shipment

Question 28 of 30

29. What is the maximum trade credit amount permitted per import transaction under the Rupee (INR) denominated trade credit framework?

USD 10 million equivalent

USD 15 million equivalent

USD 20 million equivalent

USD 25 million equivalent

Question 29 of 30

30. What types of instruments can AD Category-I banks provide in respect of trade credit under the Rupee (INR) denominated trade credit framework?

Guarantees only

Letters of Undertaking only

Letters of Comfort only

Guarantee, Letter of Undertaking, or Letter of Comfort

Question 30 of 30

ABM C – Unit 19

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