D.B.M. (Semester II) Examination, 2017
FINANCIAL MANAGEMENT
Day Date: Monday, 08-05-2017 Max. Marks: 80
Time: 02.30 PM to 05.30 PM
N.B.: Question .No. 1 is compulsory.
Figures to the right indicate full marks.
Use of calculators is allowed.
Q.1 Select correct alternatives: 08
A net working capital will arise when current assets
exceeds current liabilities.
Negative Positive Fixed Fluctuating
are capable of getting converted into cash usually
within a year.
Current assets Fixed assets
Fictitious assets Capital assets
Current assets does not include
Raw material Undrawn profit
Prepaid expenses Cash
represents the hybrid form of financing.
Equity Debentures
Term Loan Preference share
refers to that portion of company's net earnings that
are paid out to the equity shareholders.
Authorized Capital Dividend
Stock Split Paid up Value
is/are non discounted technique of capital budgeting.
Profitability Index Net Present Value
A B None of these
debentures are those debentures that are transferable
by delivery only.
Bearer Registered
Mortgaged Convertible
The ratios which shows ability of firm to pay its current
obligation are termed as
Liquidity Ratio Turnover Ratio
Solvency Ratio Profitability Ration
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SLR-S- 21
Q.1 Fill in the blanks with appropriate word: 08
maximization are the goals of financial
management.
When current assets are less than current liabilities then the
resulting figure is
is the capital required to spent on day to day business
activities.
Debenture holders are the of the company.
preference shares are converted into equity shares
after specific time period.
shareholders do not have voting rights.
is the internal source of capital.
Preference shareholders get dividend at rate.
Q.2 A Co. is considering an investment proposal to install new
machine at a cost of Rs. The machine has a life
expectancy of 5 years and has no salvage value. The tax rate is
50%. Assume that the firm use straight line depreciation. The
estimated Cash flows before depreciation and tax (CFBT) from
the investment is as follows:
08
Year 1 2 3 4 5
CFBT 20,000 22,000 24,500 21,300 29,000
Calculate:
Pay Back Period
NPV 10% Discount Rate
Discuss Preference Shares in detail. 08
Q.3 Capital Budgeting Techniques 08
Current Ratio 2.5 08
Liquid Ratio: 1.5
Net Working Capital 3,00,000
Calculate: Current Assets, Current Liability, Liquid Assets and
Stock.
Q.4 A proforma cost sheet of a company provides the following
particulars:
16
Elements of cost: Amount per Unit
Materials 4.8
Direct Labour 2.4
Overheads 2.4
The following further particulars are available:
It is proposed to maintain a level of activity of 2,00,000 units.
Selling Price is Rs. 12 per unit.
Raw materials are expected to be in stores for an average of
1 months.
Materials will be in process on an average for half a month.
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SLR-S- 21
Finished goods are required to be in stock for an average of
1 months.
Credit allowed to debtors in 2 months.
Credit allowed to suppliers is 1 months.
Estimate working capital required.
OR
Define working capital. Explain the various determinants of
working capital requirement.
Q.5 Explain dividend policy. Also explain the determinants of dividend
policy.
16
OR
Explain the Meaning of Financial Management. Also explain
Importance and Objectives of Financial Management.