B.B.A. (Three Year) DEGREE EXAMINATION, MARCH/APRIL 2017.
End Semester Examination
Fourth Semester
Part II
FINANCIAL MANAGEMENT
2 C 4401
Time 3 Hours Max. Marks 70
PART — A
Answer any FIVE of the following questions. 4 20 Marks)
1. Profit maximisation.
2. Capital rationing.
3. Financial leverage.
4. Working capital gap.
5. Dividend policy.
6. Capital budgeting process.
7. EBIT analysis.
8. Factoring service.
PART — B
Answer ALL the following questions. 10 50 Marks)
UNIT I
9. What are the financial decisions that a financial manager has to take for
maximizing the wealth of shareholders?
Or
What is financial planning? Explain the significance and steps involved in
financial planning.

UNIT II
10. Discuss the techniques of evaluating alternative investment projects.
Or
A firm whose cost of capital is 10% is considering two mutually exclusive
projects and the details of which are
Cash flows
Year Project Project
0 70,000 70,000
1 10,000 50,000
2 20,000 40,000
3 30,000 20,000
4 45,000 10,000
5 60,000 10,000
Compute NPV profitability index and IRR for the two projects.
UNIT III
11. Explain the components and determinants of working capital.
Or
What is TQM and explain its role in inventory management?
UNIT IV
12. Define capital structure and explain the factors affecting the capital structure
of a firm.
Or
Calculate the degree of operating leverage degree of financial leverage
and the degree of combined leverage for the following firms.
Particulars Firm X Firm Y Firm Z
Output (Units) 60,000 15,000 10,000
Fixed cost 7,000 14,000 1,500
Variable cost per unit 0.20 1.50 0.02
Interest on borrowed funds 4,000 8,000
Selling price per unit 0.60 5.00 0.10
C 4401
3
UNIT V
13. Explain the assumptions and arguments used by modigliani and miller in
support of the irrelevance of dividends.
Or
What are the main determinants of a dividend policy? Why do companies pay
dividends? Explain.
——————