B.B.A. (Semester (CGPA) Examination Mar/Apr-2018
FINANCIAL MANAGEMENT I
Time: 2½ Hours
Max. Marks: 70
Instructions: All questions are compulsory. Figures to the right indicate full marks. Use of Calculator is allowed.
Q.1

Select the correct alternatives:
07
A firm making less cash sales requires working capital.
Less
More
No
None of these
Equity share are paid dividend at rate.
Fluctuating
Fixed
High
Low
Outstanding Expenses is part of
Current Liability
Current Assets
Fixed Assets
None of these
The objective of receivable management is/are
Maximizing the value of firm
Optimum investment in sundry debtors.
Both a b
None of these
Debentures are issued to raise Capital.
Owned
Borrowed
Working
Internal
is the statement estimating the amount of capital required and formulating polices for effective administration of raised capital.
Cash Budget
Working Capital Management
Financial Plan
Capital Structure
Maximization of is the main goal of financial Management.
Cash
Profit
Wealth
Capital
Q.1

Complete the following Sentences:-
07
provide capital to new and innovative business.
is prepared to predict the cash flows over a given period of time.
is a contract in which user agrees to take an asset at prestated rent with an option to purchase.
motive necessitates the holding of inventories for unexpected changes in demand and supply factor.
Minimum Stock Level plus half of the reorder quantity is equal to
Objective of financial management does not consider time value of Money.
Accumulated dividend is paid to preference shares.
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Q.2
Attempt (Any Two)
14
ZEE is a product manufactured out of three raw materials N and Q. Each unit of ZEE requires 10 Kgs, 8 Kgs and 6 Kgs. of N and Q respectively. The re-order levels of M and N are 15,000 Kgs. and 10,000 kgs. respectively while the minimum level of Q is 2,500 Kgs. The weekly production of ZEE varies from 300 to 500 units, while the weekly production is 400 units. You are required to compute
The minimum stock level of M
The maximum Stock Level of N
The reorder level of Q
The following additional data are given:-
M
N
Q
Re-order Qty.
20,000
15,000
20,000
Delivery (in weeks)
Minimum
2
4
3
Average
3
5
4
Maximum
4
6
5
Objectives of Receivable Management
Importance of Financial Plan
Q.3
Attempt (Any Two)
14
Annual demand for a particular item of inventory is 6,000 units. Inventory carrying cost per unit per year is 10% ordering cost is Rs. per order. The price quoted by the supplier is Rs. per unit
However the supplier is willing to give discount of for order of 900 units or more. Is it worthwhile to avail the discount offer?
From the following prepare each budget for the month of January 2016
Cash in hand estimated on 1st January Rs.
Sales December 2015 Rs.
January 2016 Rs.
80% of amount is recovered in the month of sale balance is received in subsequent month.
Purchase for the month of December 2015 January 2016 are estimated to be and respectively.
No credit period is allowed by the creditors.
A sales commission of is paid in the month of sales itself.
Hire Purchase
Q.4
Attempt (Any One)
From the following particulars prepare the cash budget for the period January to March 2016.
Month
Sales Rs.
Purchase Rs.
Wages Rs.
Expenses Rs.
Nov
50,000
10,000
20,000
4,000
Dec
60,000
20,000
20,000
4,000
Jan
40,000
30,000
22,000
5,000
Feb
50,000
20,000
22,000
5,000
March
60,000
10,000
24,000
5,000
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Additional information:-
1. 10% of sales are on cash.
2. Debtors are allowed 1 month, on an average 50% of debtors will make payment on due date, while rest will make payment 1 month thereafter.
3. Credit from suppliers 2 months. 10% cash discount will be received if payment is made within 1 month and it is estimated that 50% of purchases will take advantage of cash discount.
4. Wages to be paid twice in a month 1st 16th respectively.
5. Expenses generally paid in next month.
6. Plant costing Rs. will be installed in Feb on payment of 25% of cost. In addition to the installation cost of Rs. Balance to be paid in 3 equal installments from the following month.
7. Opening cash balance Rs.
OR
State and explain the feature, advantages and disadvantages of debentures.
Q.5
Attempt (Any
Cost sheet of company provides the following date:-
Elements of Cost
Amount per unit Rs.
Raw Material
50
Direct Labour
20
Overheads (including Dep. Of Rs.10)
40
Total cost
110
Profit
20
Selling Price
130
14
Additional Information:- Average raw material in stock is for one month. Average material in progress is for half month. Credit allowed by supplier is one month. Credit allowed to debtors one month. Average time lag in payment of wages 10 days. Average time lag in payment of overheads 30 days. 25% of the sales are on cash basis. Cash balance is expected to be Rs.1,00,000/- finished goods lie in the warehouse for one month. You are required to prepare a statement showing the working capital needed to finance a level of activity of 50,000 units of production. State your assumptions, if any clearly.
OR
Explain the functions of Finance Manager and also explain the objectives of Financial Management.