B.B.A. (Semester (CBCS) Examination Nov/Dec-2018
FINANCIAL MANAGEMENT I
Time: 2½ Hours Max. Marks: 70
Instructions: All questions are compulsory.
Use of calculator is allowed.
Q.1 Choose the alternatives given below. 14
The following classes of costs are usually involved in inventory decisions
except
Cost of ordering Carrying cost
Cost of Shortage Machining Cost
Equity shareholders are called
Owners of the company Partners of the company
Executives of the company Guardian of the company
When a company is not earning profit, then which of the following securities
proves a burden on the finance of company?
Equity Shares Preference Shares
Redeemable Preference Shares Debentures
Receivables are one of the important constituents of
Current Liabilities Current Assets
Fixed Assets Equity
The time period between placing an order and its receipt in stock is known
as
Lead time Carrying time
Shortage time Over time
The creditworthiness of customers can be decided on the basis of
Credit Analysis Credit Period
Credit limit Discount policy
Which of the following is not a cash outflow for the firm?
Depreciation Dividends
Interest payment Taxes
Funds required for purchasing current assets is an example of
Fixed Capital requirement Ploughing back of profits
Working capital requirement Lease financing
Which of the following motive is considered for holding cash/near cash as a
cushion to meet unexpected demand?
Compensating motive Precautionary motive
Speculative motive Transaction motive
10) Which type of shares may have dividend in arrears?
Ordinary Shares
Cumulative Preference Shares
Non-cumulative Preference Shares
Redeemable Preference Share
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11) maximization and maximization are the two versions of
goals of the financial management of firm.
Profit, Wealth Production, Sales
Sales, Profit Value, Wealth
12) Average stock level can be calculated as
(Minimum Usage Maximum Usage) 2
(Minimum Level Maximum Level) 2
(Maximum Level Minimum Level) 2
(Maximum Level x Minimum Level) 2
13) The minimum stock level is calculated as
Recorder Level (Normal Consumption x Normal delivery time)
Recorder Level (Normal Consumption x Normal delivery time)
Recorder Level (Maximum Consumption x Maximum delivery time)
Recorder Level (Minimum Consumption x Minimum delivery time)
14) Those preference shares which do not enjoy the right to share additional
profits come under the category of
Irredeemable Preference Shares
Participating Preference Shares
Non-Cumulative Preference Shares
Non-Participating Preference Shares
Q.2 Answer the following: 14
What are Preference shares? Explain the types of Preference Shares.
What are the objectives of Financial Management? Explain Profit
maximization in detail.
Q.3 Answer the following: 14
Compute ROL, Minimum Level, Maximum Level and Average Level
Normal usage (units per month) 150
Minimum usage (units per month) 100
Maximum usage (units per month) 250
Reorder quantity (units) 900
Reorder period (months) 3 to 5
Anand Co. had furnished the following information, based on this, prepare
a cash budget for three months June, July, and August 2018.
Month Sales
Rs.
Materials
Rs.
Wages
Rs.
Production
Expenses
Rs.
May 2018 6,00,000 1,80,000 90,000 40,000
June 2018 7,20,000 2,50,000 1,00,000 60,000
July 2018 9,70,000 3,10,000 1,21,000 1,23,000
August 2018 8,60,000 2,55,000 1,06,000 2,60,000
Cash balance in hand on 1.6.2018 Rs.72,500
60% of sales are cash sales. Debtors are allowed one month's credit.
Creditors for materials grant one month's credit.
Sales commission 4.5% on sales is paid to the salesman each
month.
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Q.4 Attempt any one of the followings: 14
Prepare a statement showing the working capital needs to finance a level of
activity of 192000 units of output for the year. The cost structure for the
company's product for the above mentioned activity level is detailed below:
Cost per unit
Raw Material 20
Direct Labour 5
Overheads (including depreciation of Rs. 5 p.u.) 15
Total Cost 40
Profit 10
Selling Price 50
Additional information:
Minimum desired cash balance is Rs. 20000
Raw materials are held in stock, on an average for two months.
Work in progress (assume 50% completion stage) will approximate to
half a month's production. All three elements of cost are used 50%
Finished goods remain in warehouse on an average for a month.
Suppliers of materials extend 2 month's credit.
Customers are given 2 month's credit. Cash sales are 25% of total
sales.
There is a time lag in payment of wages of a month and half a month in
case of overheads.
What is meant by a Explain the features, advantages and
disadvantages of Equity Share?
Q.5 Attempt any one of the followings: 14
A firm requires 90000 units of a certain item annually. The cost per unit is
Rs. 40, the cost per purchase order is Rs. 3000 and the inventory carrying
cost is Rs. 60 per unit per year.
What is the Economic Order Quantity?
What should the firm do if the supplier offers discount of for
purchase in lots of 4500 units?
From the following details, prepare an estimate of requirements of working
capital:
Production: 63900 units
Selling Price per unit: Rs. 45
Raw Materials: 60% of Selling Price
Direct Wages: 10% of Selling Price
Overheads: 20% of Selling Price
Materials in hand: 2 months
Production time: 1 months
Finished Goods in stores: 3 months
Credit for material: 2 months
Credit allowed to customers 3 months
Average cash balance: Rs. 20000
Wages and overheads are paid at the beginning of the month following. In
production, all the required materials are charged in the initial stage and
wages and overheads accrue evenly.