M.B.A. DEGREE EXAMINATION, NOVEMBER 2017
Business Analytics
FINANCIAL MANAGEMENT
(2016 onwards)
Time 3 Hours Maximum 75 Marks
Part A (10 x 2 20)
Answer all questions.
1. Define the term financial management.
2. What is profit maximization?
3. What is IRR?
4. What is CAPM?
5. What is NPV?
6. What is capital budgeting?
7. What is financial leverage?
8. What is capital structure?
9. Define inventories.
10. Define working capital.
Sub. Code
23
CP-8252
2
Wk 11
Part B x 5 25)
Answer all questions.
11. Explain the scope of financial management.
Or
What are the goals of financial management?
Discuss them in brief.
12. Explain the cost of equity.
Or
A company issues 10% irredeemable debentures of
Rs. 1,00,000. The company is in the 55% tax
bracket. Calculate the cost of debt (before as well as
after tax) if the debentures are issued at
Par
10% discount and
10% premium.
13. What are the objectives of a capital expenditure
budget?
Or
Determine the payback period for a project which
requires a cash outlay of Rs. 10,000 and generates
cash inflows of Rs. 2000, Rs. 4,000, Rs. 3000 and
Rs. 2,000 in the first, Second, Third and Fourth year
respectively.
CP-8252
3
Wk 11
14. Apex Ltd., is expecting an annual EBIT of
Rs. 1 Lakh. The company has Rs. 4 Lakhs in 10%
debentures. The cost of equity capital or
capitalization rate is 12.5%. You are required to
calculate the total value of the firm and also state
the overall cost of capital under Net income
approach.
Or
Explain the different forms of dividend.
15. What are the factors that influencing working
capital?
Or
What are the motives for holding cash?
Part C x 10 30)
Answer all questions.
16. Explain the main functions of financial
management.
Or
Explain the relationship between financial
management and other areas of management.
17. Explain the significance of cost of capital.
Or
Two firms A and B are identical in all respects
expect the degree of leverage. Firm A has debt of
Rs. 3 lakhs, while firm B has no debt. Both the
firms earn an EBT of Rs. 1,20,000 each. The equity
capitalization rate is 10% and the corporate tax is
60%. Compute the market value of the two firms.
CP-8252
4
Wk 11
18. Explain the limitations of inadequate and excessive
working capital.
Or
From the following information calculate
Economic order quantity and The number of
orders to be placed in one quarter of the year.
Quarterly consumption of material 2000 kg.
Cost of placing one order Rs. 50
Cost per unit Rs. 40
Storage and carrying cost on average inventory.
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