B.B.A. (Semester (CGPA) 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 correct alternatives: 14
Receivable are one of the important constituents of
Current Liabilities Current Assets
Fixed Assets Equity
Which of the following is not a cash outflow for the firm?
Depreciation Dividends
Interest payment Taxes
The term 'redeemable' is used for
Preference Shares Commercial Paper
Equity Shares Public Deposits
enjoy the Pre-emptive rights.
Equity Shareholders Preference Shareholders
Debenture holders Borrowers
Current assets are also referred to as
Working Capital Investment
Inventory Livestock
The cost of insurance and taxes are included in
Cost of ordering Set up cost
Inventory carrying cost Cost of shortages
The creditworthiness of customers can be decided on the basis of
Credit Analysis Credit Period
Credit limit Discount policy
The order cost per order of an inventory is Rs. 400 with an annual carrying
cost of Rs.10 per unit. The EOQ for an annual demand of 2000 units is

400 440
480 500
The need to hold cash to take benefit of favourable market conditions is
known as motive.
Compensating Precautionary
Transaction Speculative
10) The following classes of costs are usually involved in inventory decisions
except
Cost of ordering Carrying cost
Cost of Shortage Machining Cost
11) and carry a fixed rate of interest and are to be paid off
irrespective of the firm's revenues.
Debentures, Dividends Debentures, Bonds
Dividends, Bonds Dividends, Treasury Notes
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12) Amounts due from customers when goods are sold on credit are called
Trade balance Trade debits
Trade discount Trade off
13) maximization and maximization are the two
versions of goals of the financial management of firm.
Profit, Wealth Production, Sales
Sales, Profit Value, Wealth
14) Reorder level is calculated as
Maximum consumption rate x Maximum reorder period
Minimum consumption rate x Minimum reorder period
Maximum consumption rate x Minimum reorder period
Minimum consumption rate x Average reorder period
Q.2 Answer the following. 14
Concepts and types of Working Capital
Principles for formulating Financial Plan
Q.3 Answer the following. 14
A manufacturer has to supply his customers 60000 units of product per year.
Shortages are not allowed and the inventory carrying cost amounts to Rs.
0.60 per unit per year. The set up cost per run is Rs.80.
Find EOQ and number of orders to be placed per year
What will be the EOQ, if set up cost per run changes to Rs.125? How
many orders have to be placed in this case?
Following details are available in respect of a material:
Ordering cost per order Rs. 48
Annual consumption 9500 units
Carrying cost per unit per annum Rs.12
Lead times: Average 10 days, Minimum 6 days, Maximum 15 days
Consumption Rate: Minimum 10 units per day, Maximum 20 units per day
Calculate Reorder Level, Maximum Level, Minimum Level, Average Level
Q.4 Answer any one of the following
Prepare a Cash Budget for six months ending 31st December 2018 from the
following information.
14
Month Sales
Selling
Overheads
Raw
Materials
Wages
Production
Overheads
Office
Overheads
Rs. Rs. Rs. Rs. Rs. Rs.
May 95000 3600 35000 9000 6000 2500
June 84000 3400 36000 9200 6100 2400
July 88000 3500 40000 9800 6300 2400
Aug 84000 3200 45000 10500 7000 2300
Sep 95000 14000 55000 13000 8600 2400
Oct 120000 15000 40000 10400 8100 3000
Nov 125000 16000 30000 9000 5900 2600
Dec 118000 7000 28000 7000 4900 2500
The cash balance in hand on 1st July 2018 will be Rs.96000
It is necessary to provide for the payment of Rs.10800 in July 2018 and
Rs.86600 in December 2018 in respect of capital expenditure.
It is anticipated that a dividend of Rs. 23000 will be paid in August 2018
Debtors are allowed two month's credit
Creditors (for goods or overhead) grant one month credit
The time lag in payment of wages is to be disregarded and payments in
advance and accruals are to be ignored for the sake of simplicity.
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OR
Define Financial Management. Elaborate the objectives of Financial
Management.
Q.5 Attempt any one of the following. 14
Calculate the amount of working capital requirement from the following
information:
Per Unit
Raw materials 150
Direct Labour 50
Overheads 110
Total Cost 310
Profit 40
Selling Price 350
Raw materials are held in stock on an average for 1.5 months.
Materials are in process on an average for half a month. Finished goods
are in stock on an average for one month. Credit allowed by suppliers is
one month and credit allowed to debtors is two months. Time lag in
payment of wages is 1½ weeks. Time lag in payment of overheads
expenses is one month. One fourth of the sales are made on cash basis.
Cash in hand and at the bank is expected to be Rs. 50000 and
expected level of production amount to 90000 units for a year. You may
assume that production is carried on evenly throughout the year.
OR
Discuss the features of Preference Shares and Debentures.