M.B.A. (Part II) (Semester III) (New CBCS) Examination, 2018
Group B financial management
Paper XX Paper II Financial Decision Analysis
Day and Date Tuesday, 18-12-2018 Max. Marks 70
Time 10.30 a.m. to 1.00 p.m.
1. Multiple Choice Questions. 14
The measure of business risk is
Operating Leverage Financial Leverage
Combined Leverage Working Capital Leverage
Funds Flow Statement is also known as
Statement of Funds Flow
Statement of Sources and Application of Funds
Statement of Sources and Uses of Funds
All of the above
Provision of taxation is treated as
As a current liability As an appropriation of profits
Either or None of the above
The existence of on the balance sheet generates tax advantages
that directly influence the capital structure of the firm.
a large proportion of fixed assets
long-term debt
retained earnings
all of the above answers are
EBIT is usually the same thing as
Funds provided by operations
Earnings before taxes
Net income
Operating profit
Expansion finance is a method of financing
Later stage Early stage
Start-up stage Seed capital
Set P
SLR-CL 38 *SLRCL38*
is a lease, in which the lessor and lessee are domiciled in
different countries.
Domestic lease International lease
Import lease Cross boarder lease
Ownership transferred after the payment of last installment in
Lease Hire Purchase
Both and None of these
Comparison of financial statements highlights the trend of the of
the business.
Financial position Performance
Profitability All of the above
10) Which technique used for figures of two or more periods are placed side by
side to facilitate easy and meaningful comparisons
Comparative statement Common-size statement
Trend analysis None
11) Venture capital firms are usually organized as
closed-end mutual funds limited partnerships
corporations non-profit businesses
12) In the calculation of return on shareholders investments the referred
investment deals with
All reserves
Preference and equity capital only
All appropriations
All of the above
13) Dividing the net profit by the paid up amount of equity share capital yields
Temporary investment
Earning per share
Rate of return on equity share capital
None of the above
14) The return on investment may be calculated as
Net profit before interest, tax and dividend/Capital employed
Net profit after interest, tax and dividend/Shareholder's fund
Net profit-preference dividend/No. of equity shares
Return on Investment/Net profit ratio
Set P
*SLRCL38* SLR-CL 38
2. Answer the following 14
Stages of Venture Capital.
Types of Leverages.
3. Attempt the following 14
Lease financing v/s Hire purchase financing.
A company has capital structure exclusively of ordinary shares amounting to
Rs. 5,00,000. The company desires to raise additional funds of Rs. 5,00,000
for financing its expansion programme. The company has a four alternative
financial plans
Raise the entire amount by equity capital.
Raise 50% as equity and 50% as debentures.
Raise the entire amount by debentures.
Raise 50% as equity and 50% as Preference Capital.
The existing EBIT is Rs. 60,000. Tax rate is 50%. Outstanding equity shares
number 5000 and market price per share is Rs. 100 under all four alternatives.
Which financing plan should he select
4. Attempt any one of the following 14
What are legal and procedural aspects of merger Explain the different
types of mergers with the help of examples from Indian Industry.
OR
Following are Income Statements for the year 2015 and 2016 and Balance
Sheet of ABC and Co.
Prepare the Comparative Balance Sheet and Comparative Income Statement
for these two years.
Income Statements
Particulars 2015 2016 Particulars 2015 2016
Rs.)
To Cost of goods By Net Sales 4,00,000 5,00,000
Sold 3,00,000 3,75,000
To General
Expenses 10,000 10,000
To Selling
Expenses 15,000 20,000
To Net Profit 75,000 95,000
4,00,000 5,00,000 4,00,000 5,00,000
Set P
Balance Sheets
Liabilities 2015 2016 Assets 2015 2016

Share Capital 3,50,000 3,50,000 Land 50,000 50,000
Reserves 1,00,000 1,22,500 Building 1,50,000 1,35,000
Secured Loans 50,000 75,000 Plant 1,50,000 1,35,000
Creditors 1,00,000 1,37,500 Furniture 50,000 70,000
Outstanding Cash 50,000 70,000
Expenses 50,000 75,000 Debtors 1,00,000 1,50,000
Stores 1,00,000 1,50,000
6,50,000 7,60,000 6,50,000 7,60,000
5. Case study. 14
From the following Balance Sheet and the information of TNG Ltd. Prepare
funds flow statement and schedule of changes in working capital for the year
31st March 2015.
Balance Sheet
Liabilities 2014 2015 Assets 2014 2015

Equity Share Land 2,00,000 1,90,000
Capital 2,00,000 2,50,000 Building 1,50,000 1,69,000
General Reserve 50,000 60,000 Debtors 80,000 64,200
Profit and Loss A/c 30,500 30,600 Bank 8,000
Long Term Loans 70,000 Goodwill 5,000
Trade Creditors 1,50,000 1,35,200 Cash 500 600
Provision for Tax 9,000 10,000 Stock 1,00,000 74,000
Proposed Dividend 21,000 25,000
5,30,500 5,10,800 5,30,500 5,10,800
Additional Information
1. Additional Land was purchased during the year at the cost of Rs. 1,20,000
and later on sold a profit of Rs. 20,000 during the year.
2. An interim dividend of Rs. 5,000 was paid during the year.
3. Income Tax paid Rs. 8,500.