M.B.A. (Part II) (Semester III) (New CBCS) Examination, 2017
Group B FINANCIAL MANAGEMENT
Paper XX Strategic Financial Management (Paper II)
Day and Date Monday, 15-5-2017 Total Marks 70
Time 10.30 a.m. to 1.00 p.m.
Instructions Question No. 1 is compulsory.
Attempt any 2 from question no. 3 and 4.
Attempt any 2 from question no. 6 and 7.
Figures to the right indicate marks.
1. Following are the summarized Balance Sheet of Paras Ltd. As on 31/12/2010
and 2011. 14
Liabilities 2010 2011 Assets 2010 2011
Rs. Rs. Rs. Rs.
Share capital 2,00,000 2,50,000 Land and Buildings 2,00,000 1,90,000
General Reserve 50,000 60,000 Machinery 1,50,000 1,68,000
Profit and Loss A/c 30,500 30,600 Stock 1,00,000 74,000
Bank Loan (Long term) 70,000 Debtors 78,000 64,000
Creditors 1,40,000 1,30,000 Pre-paid insurance 1,800 1,200
Outstanding Exp. 10,000 5,200 Cash 700 600
Provision of Tax 30,000 35,000 Bills Receivable 8,000
Goodwill 5,000
5,30,500 5,10,800 5,30,500 5,10,800
Additional information
Dividend of Rs. 20,000 was paid.
Following assets were purchased from another company stock-10,000
machine-35,000, cost was paid by issue of shares of Rs. 50,000.
Depreciation written on Machinery Rs. 15,000.
Loss on sale of Machinery Rs. 600 was charged to general reserve.
Income tax provided during the year Rs. 32,000.
Prepare a fund flow statement and the statement showing net changes in working
capital.
2. Write short note on (any two). 14
Types of Leases.
Cost of Debt.
Concept of Economic Value Added Approach.
3. Attempt any two. 14
VRS.
Hire Purchase Financing.
A company has the following capital structure on 31/12/2003.
Particulars Rs.
Equity shares (20000 shares) 10,00,000
10% preference shares 2,50,000
14% debentures 7,50,000
20,00,000
The Company's share is currently selling at Rs. 20. Next year's expected
dividend is Rs.2 per share, that will grow at forever. The company is in
the tax bracket of 50%. You are required to calculate
WACC based on the existing capital structure.
New WACC if the company raised an additional Rs. 5,00,000 debt by
issuing 15% debenture. This will increase the existing dividend by Re.1
but leave growth rate unchanged, and the price of share will fall to Rs.15.
4. Attempt any two. 14
Vendor Management.
Cost of Equity and Preference share capital.
ABC Ltd. Wishes to acquire XYZ Ltd. on the basis of an exchange ratio of 0.8.
Other relevant financial data is as follows
Particulars ABC Ltd. XYZ Ltd.
Earnings after taxes Rs. 1,00,000 Rs. 20,000
Equity shares outstanding 50,000 20,000
Earnings per share Rs.2 Re.1
Market price per share Rs.20 Rs.8
Determine the number of shares required to be issued by ABC Ltd. for
acquisition of XYZ Ltd.
What would be the exchange ratio if it is based on the market prices of
shares of ABC Ltd. and XYZ Ltd.
What is the current price-earnings ratio of the two companies
Assuming the earning of each firm remains the same, what is the EPS
after the acquisition
5. What are legal and procedural aspects of merger Explain the different types of
mergers with the help of examples from Indian Industry. 14
6. Define Supply Chain Management. Explain in details financial aspects of Supply
Chain Management. 14
7. The Techno Company's most recent balance sheet is as follows 14
Liabilities Amount Assets Amount
Equity Capital 60,000 Net fixed assets 1,50,000
(Rs.10 per share)
10% Long Term debt. 80,000 Current Assets 50,000
Retained Earnings 20,000
Current liabilities 40,000
2,00,000 2,00,000
The company's total assets turnover ratio is its fixed operating cost is
Rs. 1,00,000 and the variable operating cost ratio is 40% of sale. The income
tax rate is 35%.
Calculate all the three types of Leverages.
Determine likely level of EBIT if EPS is
Re.1
3 and
Zero.