Seat No:______________ Enrollment No:______________

PARUL UNIVERSITY
FACULTY OF MANAGEMENT
MBAWinter 2022 – 23 Examination
Semester: 2 Date: 15/11/2022
Subject Code: 06200153 Time: 2.00pm to 4.30pm
Subject Name: Financial Management Total Marks: 60
Instructions
1. All questions are compulsory.
2. Figures to the right indicate full marks.
3. Make suitable assumptions wherever necessary.
4. Start new question on new page.

Q.1 Do as Directed.
A). Multiple choice type questions/Fill in the blanks. (Each of 1 mark) (05)
1. Basic objective of Financial Management is ________________.
a)Maximization of profit. c)Maximization of shareholder's wealth
b)Ensuring Financial discipline in the d)All of these.
firm.
2. The market value of the firm is the result of__________.
a)Dividend decisions. c)Working capital decisions.
b)Capital budgeting decisions. d)Trade-off between risk and return.
3. Cost of capital is __________________.
a)Lesser than the cost of debt capital c)Equal to the last dividend paid to the equity
shareholders.
b)Equal to the dividend expectations of d) None of the above.
equity shareholders for the coming year.
4. In Walter model formula D stands for _________________.
a)Dividend per share. c)Direct dividend.
b)Direct earnings. d)None of these.
5. Quick asset does not include ____________.
a)Government bonds. c)Book debts.
b)Advance for supply of raw materials. d)Inventories
B).Define the following. (Each of 1 mark) (05)
1. Financial Management
2. Equity Share.
3. Working capital
4. Leverage
5. Dividend
C).Direct questions.(Each of 1 mark) (05)
1. What do you mean by time value of money?
2. How will you calculate operating leverage?
3. What is arbitrage process?
4. Give the Walter’s formula to determine the market price per share.
5. Assume that a project requires an outlay of Rs 50,000 and yields annual cash inflow of Rs
12,500 for 7 years. What is the payback period for the project?
Q.2 Answer the following questions.
A).Elaborate the scope and objectives of financial management. (07)
B).Explain the functions of finance manager. (08)
Q.3 Answer the following questions.
A).Explain the Determinants of Working Capital. (07)
B).Discuss the functions of financial management. (08)
Q.4 Attempt any two questions. (Each of 7.5 marks) (15)
1. Analyze the practical considerations in determining the capital structure of a company.
2. A 7 year, Rs. 100 debenture of a firm can be sold for Rs. 97.75. The rate of interest in 15
percent per year and the bond will be redeemed at 5 percent premium on maturity. The firm’s tax
rate is 15 percent. Compute the after tax cost of debenture.

Page 1 of 2
3. The share of a company is currently selling for Rs. 100. It wants to finance its capital
expenditures of Rs. 100 million either by retained earnings or selling new shares. If the company
sells new shares, the issue price will be Rs. 95. The dividend per share next year, DIV1 is Rs.
4.75 and it is expected to grow at 6 percent. Calculate the cost of retained earnings and new issue
of shares.
4. A firm is currently earning Rs 100,000 and its share is selling at a market price of Rs 80. The
firm has 10,000 shares outstanding and has no debt. The earnings of the firm are expected to
remain stable, and it has a pay-out ratio of 100 per cent. What is the cost of equity?

Page 2 of 2
 Seat No:______________ Enrollment No:______________
PARUL UNIVERSITY
FACULTY OF MANAGEMENT
MBASummer 2022-23 Examination
Semester:02 Date: 11/05/2023
Subject Code: 06200153 Time: 10:30am to 1:00pm
Subject Name: Financial Management Total Marks: 60
Instructions
1. All questions are compulsory.
2. Figures to the right indicate full marks.
3. Make suitable assumptions wherever necessary.
4. Start new question on new page.

Q.1 Do as Directed.
A). Multiple choice type questions/Fill in the blanks. (Each of 1 mark) (05)
1. Which is the motive of holding cash?
a) Transaction Motive c) Speculative Motive
b) Translation Motive d) Both A& C

2. __________approach depends more on short-term funds. More short-term funds are used
particularly for variable current assets
a) Conservative c) Matching
b) Short Term d) Aggressive
3 Relationship between EBIT and EBT is given by________________
a) Operating Leverage c) Financial Leverage
b) Combined Leverage d)Profitability
4. There is 10%, 100 Rs par value bond with ROR=8%, What is Current Value (PO)?
a) Rs. 120 c) Rs. 125
b) Rs. 75 d) Rs. 100
5. Ignoring the time value of money is the one of the limitation of__________
a) Wealth Maximization c) Profit Maximization
b) Share Valuation d) EPS Valuation
B).Define the following. (Each of 1 mark) (05)
1. Credit terms
2. Agency Problem
3. Yield to Call
4. Discounting
5. Lock Box System
C).Direct questions.(Each of 1 mark) (05)
1. What is Gross operating cycle?
2. Classify various types of Investment decisions
3. Enlist the sources of long-term finance.
4. What is “Bird in the Hand Argument”?
5. Discuss the role of Controller.

Q.2 Answer the following questions.

Explain various determinants of Working Capital.
A). (07)

Page 1 of 2
 What are the discounted and non-discounted techniques used in capital budgeting decision process?
B). (08)
Explain them in detail

Q.3 Answer the following questions.

Consider the following three investments:

Cash flows
C0 C1 C2
Projects

A). X -2500 0 +3305 (07)

Y -2500 +1540 +1540

Z -2500 +2875 0

The discount rate is 12%. Compute the net present value and rate of return for each project

B).Explain the Net income approach and the traditional views for capital structure. (08)
Q.4 Attempt any two questions. (Each of 7.5 mark) (15)

Suppose that current market price of company’s share is 90 and the expected dividend per share
1. next year is Rs. 4.5. If the dividend are expected to grow at constant rate 8%, calculate the
shareholder’s required rate of return.

Apply the Gordon’s Model using following data:

EPS= Rs. 10
2 r = 15%, 10%, 8%
Ke= 10%
Payout Ratio = 40%, 60%, 90%

A company has issued a debenture of Rs. 50 Lakhs to be repaid after 7 years. How much
3 should the company invest in a sinking fund earning 12% in order to be able to repay the
debentures?

4. What are the different ways of classifying financial markets

Page 2 of 2
 Seat No: ______________ Enrollment No:______________
PARUL UNIVERSITY
FACULTY OF MANAGEMENT
MBA Winter 2023-24 Examination
Semester: 02 Date: 12/12/2023
Subject Code: 06200153 Time: 10:30am to 1:00pm
Subject Name: Financial Management Total Marks: 60
Instructions:
1. All questions are compulsory.
2. Figures to the right indicate full marks.
3. Make suitable assumptions wherever necessary.
4. Start new question on new page.

CO PO BT
Q.1 Do as Directed.
A) Multiple choice type questions/Fill in the blanks. (Each of 1 mark) (05)
A). 1. Time value of money indicates that
a) A unit of money obtained today is c) There is no difference in the value of
worth more than a unit of money money obtained today and tomorrow
obtained in future
b) A unit of money obtained today is d) None of the above
worth less than a unit of money
2. If obtained in future
the nominal rate of interest is 10% per annum and there is quarterly
compounding, the effective rate of interest will be:
a) 10% per annum c) 10.25%per annum
b) 10.10 per annum d) 10.38% per annum
3. Finance Function comprises
a) Safe custody of funds only c) Procurement of finance only
b) Expenditure of funds only d) Procurement & effective use of
funds
4. The only long term purpose of financial management is
a) Wealth Maximization c) Profit Maximization
b) Sales Maximization d) Assets maximization
5. Financial management mainly focuses on
a) All elements of acquiring and c) Efficient management of every
using means of financial resources business
for financial activities
b) Brand dimension d) Arrangement of funds
B).Define the following. (Each of 1 mark) (05)
1. Net Present Value (NPV)
2. Future Value
3. Financial Leverage
4. Dividend Decision
5. Financial Management
C).Direct questions. (Each of 1 mark) (05)
1.What is Operating Leverage?
2. Explain Combine Leverage with Example.
3. Define Working Capital.
1. 4. Write the Formula of Gorden’s Dividend Model.
5. Explain MM Hypothesis in Dividend Theory.

Page 1 of 2
Q.2 Attempt any two Questions.
A). Do You Think NPV measurement of Capital Budgeting is better than IRR? Why? (07)
B). The following information is available for ABC & Co. (08)
EBIT RS.11,20,000
PBT Rs. 3,20,000
F.C Rs. 7,00,000
Calculate % change in EPS if the sales are expected to increase By 5%.
You have find out O.L, F.L, C.L?
Q.3 Answer the following questions.
A). The following information is available about a company, (07)
Ke=15 %, EPS =20
Assume that the return on investment R= 18%, 15%, 12 %
Show the effect of dividend policy on the market price of shares using Walter’s
model When D/P Ratio is 0 % , 25% , 50 %.
B). Difference between operating leverage & Financial Leverage. (08)
Q.4 Attempt any two questions. (Each of 7.5 mark) (15)
1. For the project X &Y , the following cashflows are given; (08 Marks)
Project C0 C1 C2 C3
M -750 350 350 159
N -750 250 250 460
Rank the project as per
1. NPV (10% discount rate) 2. IRR 3. PI 4. PB 5. Discounted PB 6. ARR.
2. Define Bond. Discuss the Features of Bond and Types of Bond with Examples.
3. What is Working Capital? Discuss the Factors affecting Working Capital
4. Requirement.
Define Capital Budgeting. Discuss the DCF & Non-DCF Methods of Capital
Budgeting in detail.

Page 2 of 2
Seat No:______________ Enrollment No:______________
PARUL UNIVERSITY
FACULTY OF MANAGEMENT
MBA Summer 2023-24 Examination

Semester: 02 Date: 21/05/2024

Subject Code: 06200153 Time: 10:30am to 1:00pm
Subject Name: Financial Management Total Marks: 60
Instructions
1. All questions are compulsory.
2. Figures to the right indicate full marks.
3. Make suitable assumptions wherever necessary.
4. Start new question on new page.

Q.1 Do as Directed. CO PO BT
A) Multiple choice type questions/Fill in the blanks. (Each of 1 mark) (05)
A). 1. If ROE is 5% and Dividend Payout Ratio is 60%, Calculate the Growth rate. CO1 PO1 B1
a) 12 c) 3
b) 2 d) None of the above

2. If the nominal rate of interest is 10% per annum and there is quarterly compounding, the CO1 PO2 B1
effective rate of interest will be:
a) 10% per annum c) 10.25%per annum
b) 10.10 per annum d) 10.38% per annum
3.Identify the role of Finance Manager CO1 PO1 B1
a) Raising Funds c) Profit Planning
b) Product Testing d) Both a & c
4. The only long-term purpose of financial management is
CO1 PO2 B1
a) Wealth Maximization c) Profit Maximization
b) Sales Maximization d) Assets maximization
5. Financial management mainly focuses on CO1 PO1 B1
a) All elements of acquiring c) Efficient management of every business
and using means of financial
resources for financial
activities
b) Brand dimension d) Arrangement of funds
B).Define the following. (Each of 1 mark) (05)
1. Internal Rate of Return CO1 PO1 B2
2. Perpetuity CO1 PO2 B2
3. Combine Leverage CO2 PO3 B1
4. Investment Decision CO2 PO2 B1
5. Financial Management CO1 PO1 B1
C).Direct questions. (Each of 1 mark) (05)
1.What is Operating Leverage? CO1 PO1 B1
2.Which are the Components of Working Capital Management? CO1 PO2 B1
3. Define ROI CO1 PO2 BI
1. 4. Write the Formula of Gorden’s Dividend Model. CO2 PO3 B2
5. What is Agency Problem? CO1 PO2 B1
Q.2 Attempt any two Questions.
A). Do you Think Internal Rate of Return is Better than Net Present Value for Capital CO3 PO5 B4
(07)
Budgeting Decisions? Why?

Page 1 of 2
B). PQR Company has Earnings before interest and tax of Rs 11,20,000, Profit before Tax of (08) CO4 PO6 B5
Rs. 3,20,000 and Fixed Cost of Rs. 7,00,000. Calculate % change in EPS if the sales are
expected to increase by 5%. Determine Degree of Financial Leverage, Degree of
Operating Leverage and Degree of Combined Leverage.

Q.3 Answer the following questions.

A). Bright way company has a Cost of capitalization rate is 15 %, Earning per share is of Rs (07) CO3 PO5 B4
20 per share and if the rate of return on investment 18%, 15%, 12 %, Show the effect of
dividend policy on the market price of shares using Walter’s model when
Dividend Payout ratio is 0%, 25 % and 50%.
B). Define Sources of Finance. Discuss the different sources of Long-Term Finance for the (08) CO2 PO4 B3
Firm.
Q.4 Attempt any two questions. (Each of 7.5 mark) (15)
1. For the project X has initial investment of Rs 750 Rs and Expected to have Cash Inflow CO3 PO3 B4
of Rs 350, Rs 350 and Rs 159 in one trough three years respectively. Project Y has Initial
investment of Rs 750 and expected to earn Cash inflow of Rs 250, Rs 250 and Rs 460 in
one trough three years respectively. Rank the project for investment purpose as per Net
Present Value Method if 10% discount rate and Internal Rate of Return method.
2. Define Bond. Discuss the Features of Bond and Types of Bonds with Examples. CO2 PO2 B2
3. Which Factors affecting Working Capital Requirement of the Business. CO3 PO3 B3
4. Define Capital Budgeting. Discuss the different Evaluation Methods of Capital Budgeting CO4 PO3 B2
in detail.

Page 2 of 2
Seat No:______________ Enrollment No:______________
PARUL UNIVERSITY
FACULTY OF MANAGEMENT
MBA Summer 2023-24 Examination

Semester: 02 Date: 21/05/2024

Subject Code: 06200153 Time: 10:30am to 1:00pm
Subject Name: Financial Management Total Marks: 60
Instructions
1. All questions are compulsory.
2. Figures to the right indicate full marks.
3. Make suitable assumptions wherever necessary.
4. Start new question on new page.

Q.1 Do as Directed. CO PO BT
A) Multiple choice type questions/Fill in the blanks. (Each of 1 mark) (05)
A). 1. If ROE is 5% and Dividend Payout Ratio is 60%, Calculate the Growth rate. CO1 PO1 B1
a) 12 c) 3
b) 2 d) None of the above

2. If the nominal rate of interest is 10% per annum and there is quarterly compounding, the CO1 PO2 B1
effective rate of interest will be:
a) 10% per annum c) 10.25%per annum
b) 10.10 per annum d) 10.38% per annum
3.Identify the role of Finance Manager CO1 PO1 B1
a) Raising Funds c) Profit Planning
b) Product Testing d) Both a & c
4. The only long-term purpose of financial management is
CO1 PO2 B1
a) Wealth Maximization c) Profit Maximization
b) Sales Maximization d) Assets maximization
5. Financial management mainly focuses on CO1 PO1 B1
a) All elements of acquiring c) Efficient management of every business
and using means of financial
resources for financial
activities
b) Brand dimension d) Arrangement of funds
B).Define the following. (Each of 1 mark) (05)
1. Internal Rate of Return CO1 PO1 B2
2. Perpetuity CO1 PO2 B2
3. Combine Leverage CO2 PO3 B1
4. Investment Decision CO2 PO2 B1
5. Financial Management CO1 PO1 B1
C).Direct questions. (Each of 1 mark) (05)
1.What is Operating Leverage? CO1 PO1 B1
2.Which are the Components of Working Capital Management? CO1 PO2 B1
3. Define ROI CO1 PO2 BI
1. 4. Write the Formula of Gorden’s Dividend Model. CO2 PO3 B2
5. What is Agency Problem? CO1 PO2 B1
Q.2 Attempt any two Questions.
A). Do you Think Internal Rate of Return is Better than Net Present Value for Capital CO3 PO5 B4
(07)
Budgeting Decisions? Why?

Page 1 of 2
B). PQR Company has Earnings before interest and tax of Rs 11,20,000, Profit before Tax of (08) CO4 PO6 B5
Rs. 3,20,000 and Fixed Cost of Rs. 7,00,000. Calculate % change in EPS if the sales are
expected to increase by 5%. Determine Degree of Financial Leverage, Degree of
Operating Leverage and Degree of Combined Leverage.

Q.3 Answer the following questions.

A). Bright way company has a Cost of capitalization rate is 15 %, Earning per share is of Rs (07) CO3 PO5 B4
20 per share and if the rate of return on investment 18%, 15%, 12 %, Show the effect of
dividend policy on the market price of shares using Walter’s model when
Dividend Payout ratio is 0%, 25 % and 50%.
B). Define Sources of Finance. Discuss the different sources of Long-Term Finance for the (08) CO2 PO4 B3
Firm.
Q.4 Attempt any two questions. (Each of 7.5 mark) (15)
1. For the project X has initial investment of Rs 750 Rs and Expected to have Cash Inflow CO3 PO3 B4
of Rs 350, Rs 350 and Rs 159 in one trough three years respectively. Project Y has Initial
investment of Rs 750 and expected to earn Cash inflow of Rs 250, Rs 250 and Rs 460 in
one trough three years respectively. Rank the project for investment purpose as per Net
Present Value Method if 10% discount rate and Internal Rate of Return method.
2. Define Bond. Discuss the Features of Bond and Types of Bonds with Examples. CO2 PO2 B2
3. Which Factors affecting Working Capital Requirement of the Business. CO3 PO3 B3
4. Define Capital Budgeting. Discuss the different Evaluation Methods of Capital Budgeting CO4 PO3 B2
in detail.

Page 2 of 2
Seat No: ..................... Enrollment No: .....................

PARUL UNIVERSITY
FACULTY OF MANAGEMENT STUDIES
MBA Winter 2024 - 25 Examination

Semester: II Date: 03-12-2024

Subject Code: 06200153 Time: 10:30 AM TO 01:00 PM
Subject Name: Financial Management Total Marks: 60

Instructions:
1. All questions are compulsory.
2. Make suitable assumptions whenever necessary.
3. Write the answers for both sections on separate answer sheets.

SECTION - A Marks CO BT
Q1. Attempt Any Two Questions out of Three (4)
i. Identify any two methods for bond valuation. 2 CO1 BT1
ii. Summarize the various approaches to working capital 2 CO3 BT2
management.
iii. Contrast fixed and fluctuating working capital. 2 CO3 BT4

Q2. Attempt Any Three Questions out of Four (18)

i. Discuss the various approaches to working capital management.
Compare and contrast the conservative, aggressive, and 6 CO1 BT2
matching approaches in managing working capital.
ii. Explain the Economic Order Quantity (EOQ) model. How does
it help in inventory management? Discuss the assumptions and 6 CO3 BT4
formula used in EOQ with an example.
iii. For a startup with limited access to credit, analyze the best 6
strategies to optimize working capital without compromising CO1 BT4
growth.
iv. Explain how the profitability index (PI) is used to rank
investment projects. Why is it particularly useful in capital 6 CO3 BT2
rationing scenarios?

Q3. Answer the following (8)

Mrs. Gupta borrows from a Bank for 5 years worth Rs.5,00,000
to renovate her house. If Mrs. Gupta wants to pay an equal
annual installment at the end of every year, and if the rate of 8 CO1 BT2
interest is 11%, calculate the amount of installment every year
and prepare a loan amortization schedule.

SECTION - B Marks CO BT
Q4. Attempt Any Two Questions out of Three (4)
1/2
 i. Demonstrate the calculation of terminal value. 2 CO2 BT3

ii. Criticize the use of high dividends in emerging markets. 2 CO4 BT5

iii. Analyze how an increase in accounts receivable impacts the 2 CO4 BT6
working capital cycle of a company.

Q5. Attempt Any Three Questions out of Four (18)

i. Illustrate the importance of using the cost of capital in evaluating
investments. Discuss how it affects the selection of projects in 6 CO2 BT3
capital budgeting.
ii. Evaluate the role of inventory management in working capital 6
management. How does effective inventory management CO4 BT5
contribute to the overall working capital strategy of an
organization?
iii. Formulate a methodology for incorporating risk into investment
analysis that goes beyond conventional practices. How would 6 CO2 BT6
you integrate new tools such as machine learning or predictive
analytics to assess risk more dynamically?
iv. Galaxy Corp. has a cost of capitalization rate of 12%, an earning
per share of Rs. 15, and a rate of return on investment of 15%,
12%, and 9%. Show the effect of dividend policy on the market 6 CO4 BT6
price of shares using Walter’s model when the dividend payout
ratio is 0%, 25%, and 50%.

Q6. Answer the following (8)

Suppose that the current market price of a company’s share is
Rs. 75, and the expected dividend per share next year is Rs. 3.75. 8 CO2 BT6
If the dividends are expected to grow at a constant rate of 7%,
calculate the shareholder’s required rate of return.

2/2