M.B.A. I (Semester II) (CBCS) Examination, 2017
FINANCIAL MANAGEMENT (Paper
Day and Date Thursday, 18-5-2017 Total Marks 70
Time 2.30 p.m. to 5.00 p.m.
Instructions Q. No. 1 is compulsory.
Attempt any two questions from Q. No. 2 to Q.No. 4.
Attempt any two questions from Q. No. 5 to Q. No. 7.
1. A choice is to be made between two competing projects which require an equal
investment of Rs. 50,000 and expected to generate net cash flow as under.
Year Project I Project II
1 25,000 10,000
2 15,000 12,000
3 10,000 18,000
4 Nil 25,000
5 12,000 8,000
6 6,000 4,000
The cost of the capital of the company is 10%. With the help of the above given
information you are required to calculate and recommend which proposal is to be
preferred.
Pay Back Period.
NPV at 10%.
PI
(PV factor 1 0.909, 2 0.826, 3 0.751, 4 0.683, 5 0.621, 6 0.564) 14
2. Write notes on (any two) 14
Debentures.
Bonus Shares.
Foreign Exchange Market.
3. Write notes on (any two) 14
Venture Capital.
Dividend Policy.
Operating Cycle.
4. The following is the Balance Sheet of a company as on 31-12-2014. 14
Liabilities Rs. Assets Rs.
Equity Shares 3,00,000 Fixed Assets 10,80,000
10% Preference Share Capital 60,000 Less Depreciation 3,00,000 7,80,000
Reserves and Surplus 2,40,000 Cash 30,000
10% Debentures 4,20,000 Short-term Investment 90,000
Creditors 36,000 Stock 1,80,000
Bills Payables 60,000 Debtors 1,20,000
Outstanding Expenses 6,000
Taxation Provision 78,000
12,00,000 12,00,000
Other Information
Net Sales Rs. 18,00,000
Cost of Goods sold Rs. 15,48,000
Net Income Before Tax Rs. 1,20,000
Net Income After Tax Rs. 60,000
Calculate
Current Ratio
Acid Test Ratio
Debt-Equity Ratio
Gross Profit Ratio
Net Profit Ratio
Operating Ratio
Return on Shareholders Funds
Stock Turnover Ratio
Debtors Turnover Ratio
10) Working Capital Turnover Ratio.
5. Mahindra Ltd. has prepared the following budget estimates for the year
2012-2013. 14
Sales in uints 21,000
Sales in Rs. 2,10,000
Fixed Cost Rs. 30,000
Variable Cost per unit Rs. 7
You are required to calculate
PV Ratio, Break Even Point, Margin of Safety.
Calculate Revised PV Ratio, Break Even Point, Margin of safety in each of the
following cases.
Increased of 10% in selling price.
Decrease of 10% in variable cost.
Increase of sales volume by 2500 units.
6. From the following information you are required to prepare forecast of working
capital requirement. 14
Output 10000 units per annum.
Raw Material Rs. 6 per unit
Direct Labour Rs. 4 per unit
Overheads Rs. 5 per unit
Total Cost Rs. 15 per unit
Profit Rs. 3 per unit
Selling Price Rs. 18 per unit
Additional Information
Raw materials are kept in stock on an average of one month.
ii) Work in process is on an average of 14 days.
iii) Finished goods are in stock on an average of one and half month.
iv) Credit allowed to debtors is two months.
Credit allowed by creditors is one month.
vi) Wages are in next month of accrual.
vii) Lag in payment of overheads ½ month.
7. Define Financial Management. Explain the functions of Finance in detail. 14