Scribd
Upload
199 views6 pages

Mbac 2001

This document contains questions for an MBA exam on financial management. It covers topics like approaches to financial management, types of capital expenditures, capital budgeting, cost of debentures, operating leverage, dividend policy, risk and return tradeoffs, weighted average cost of capital, net present value, Gordon and Walter models, determinants of dividend policy, business and financial risk, and working capital requirements. The exam has three parts with questions ranging from basic concepts to practical calculations and analyses.

Uploaded by

sujith
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
199 views6 pages

Mbac 2001

This document contains questions for an MBA exam on financial management. It covers topics like approaches to financial management, types of capital expenditures, capital budgeting, cost of debentures, operating leverage, dividend policy, risk and return tradeoffs, weighted average cost of capital, net present value, Gordon and Walter models, determinants of dividend policy, business and financial risk, and working capital requirements. The exam has three parts with questions ranging from basic concepts to practical calculations and analyses.

Uploaded by

sujith
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 6

MBAC 2001

M.B.A. DEGREE EXAMINATION, JANUARY 2021.

Second Semester

General (Common)

FINANCIAL MANAGEMENT

Time : Three hours Maximum : 100 marks

PART A — (5 × 6 = 30 marks)

Answer any FIVE questions.

1. Financial management is essentially of a


stewardship nature — Discuss.

2. Explain the approaches to financial management.

3. Discuss the different types of capital expenditure


decisions required for construction and FMCG
industry.

4. Analyse the process of capital budgeting for


Government.
5. Raj ltd., issues 10% debentures at par for a total
value of Rs 10,00,000. The debentures are
redeemable after 10 year at a premium of 10%. If
the tax rate is 40%, compute the cost of debentures
to the company before tax and after tax.

6. Calculate operating leverage for the Manu Ltd. of


software industry from the given information and
explain the answer in comparison to the Industry.
No. of units produced 50,000
Selling price per unit : Rs. 50
Variable cost per unit : Rs. 20

7. Explain how M-M hypothesis of dividend policy


evolved.

8. What is “Conservative Approach” to working


capital financing? How it differ from hedging
approach?

PART B — (5 × 10 = 50 marks)

Answer any FIVE questions.

9. What are the basic financial decisions? How do


they involve risk — return trade off?

2 MBAC 2001
10. Satyam industries ltd., has assets of Rs. 3,20,000.
The reserve funds are
Equity capital Rs. 1,80,000;
General reserve Rs. 36,000;
Debt Rs. 1,04,000.
The company total profits after interest and taxes
for the year ended 31st march 2017 were 27,000. It
pays 10% interest on its debts and is in the 50%
tax bracket. The equity share capital consists of
1800 shares of Rs. 100 each. Current market price
of the share is Rs. 150.
Calculate the Weighted Average Cost of Capital
using market value and book value weights.

11. Relliance Ltd., is considering the purchase of one


of the two machines. As the basis for selection, the
following data were developed.
Machines A Machines B
(Rs.) (Rs.)
Original cost 25,565 25,565
Profit after
tax
Year I 687 4,687
Year II 1,687 3,687
Year III 2,687 2,687
Year IV 3,687 1,687
Year V 4,687 678
13,435 13,435

3 MBAC 2001
The expected rate of return for the company is
16%. Both the machines have a life of five years
and will not have any salvage value. The company
is in the 40% tax bracket.
You are required to calculate NPV and PV index.
Suggest most profitable machine.

12. “There is nothing like an optimum capital


structure for a firm”. Critically examine the
statement.

13. The following data related to Alliya Ltd., is given


below:
Earnings per share Rs. 10
Capitalization rate 10%
Retention ratio 40%
Determine the price of the share under Walter’s
model and Gordon’s model if the internal rate of
return is
(a) 15%, (b) 10% and (c) 5%.

14. What is meant by stability of dividends? Discuss


the determinants of dividend policy of a corporate
enterprise.

4 MBAC 2001
15. What do you understand by business risk and
financial risk? Explain in detail about these risks
faced by transport and Hotel Industry.

16. Discuss the various approaches to determine an


appropriate financial mix of working capital.

PART C — (1 × 20 = 20 marks)

Compulsory.

17. (a) What is large and small size of firms?


Explain the different sources available for
working capital for these firms. (10)

(b) Assuming a year of 50 weeks of 5 days each,


estimate the working capital requirements
from the given data.

Sales: 1,50,000 units sold at Rs.1 per unit on


credit.

Consumers are allowed 60 days credit.

Production cost:
Raw material 0.50
Labour 0.20
Expenses 0.25
5 MBAC 2001
The production cycle is 20 days and all
materials are issued at the commencement of
each cycle.
Credit allowed by suppliers 50 days
Credit required: One quarter of the
remaining current assets.
Stock level:
Raw materials: 40 days of supply
Finished goods: 20 days of supply
Ignore work in progress. (10)

——————

6 MBAC 2001

You might also like