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Financial Management Question Papers Pune University

MAY 2009 OLD 

Instructions to the candidates:

1) Q.1 is compulsory. From Q.2 to Q.9, attempt any two questions

from section I and any two questions from section II.

2) Figures to the right indicate full marks.

3) Use of non programmable calculator is allowed.

 

SECTION – I

 

Ql)  What is working capital management? Explain the concept of Operating Cycle. [10)

 

Q2)  Explain the factors which affect the capital structure planning of the organization.  [15)

 

Q3)  What is ratio analysis? Explain its significance. Explain the liquidity ratios. [15]

 

Q4)  What is overcapitalization? Why overcapitalization arise? Explain the corrective

remedies for the overcapitalization. [15)

Q5)  Explain the scope of decision making in the financial management.       [15)

 

SECTION – II

 

 

Q6) The financial data of a firm is given as follows,                                     [15)

 

Equity shares ofRs. 100

Rs. 10,00,000

12% Pref.shares of Rs. 10

Rs. 5,00,000

Profit after Tax

Rs. 4,00,000

Equity Dividend paid

200/0

Market price of Equity share

Rs. 120

Calculate the following ratios.

a) Dividend yield on equity shares.

b) Cover for preference and equity dividend.

c) EPS for equity shares.

d) Price-Earning Ratio.

 

Q7) Prepare an estimate of working capital requirements from the following

information of a trading concern.                [15]

a) Expected annual sales        1,00,000 units

b) Selling Price                       Rs. 10 p.u

c) Cost of production & sales   Rs. 7,50,000

d) Average credit allowed to customers       10 weeks

e) Average credit allowed by suppliers        5 weeks

f) Average stock holding (at cost price)        8 weeks

 

Consider 10% contingencies in your estimate.

 

Q8)  ABC Ltd. is planning to purchase a machinery & at present evaluating

2 mutual quotations for the same. The details are as follows, [15]

 

Particulars

Machinery A

(Rs.)

Machinery B (Rs.)

Purchase cost

27,00,000

30,00,000

Salvage value

Nil

 

Nil

Depreciation

Straight line

 

Straight line

Cash Inflows in years

 

 

 

1

 

6,50,000

9,75,000

2

 

7,25,000

10,<‘>0,000

3

 

8,75,000

11,00,000

4

 

9,50,000

10,25,000

5

 

9,00,000

9,50,000

6

 

8,00,000

8,50,000

Assume 50% as tax rate. Cost of capital @ 15% & Present values are,

 

Years

P. V factor for 15%

1

.870

2

.756

3

.658

4

.572

5

.497

6

.432

Calculate Pay Back Period, Net Present Value at 15% cost of capital & Average Rate of Return.

Q9  Write Short Notes (any 3): [15]

a) Advantages of Joint Stock Company.

b) Hire Purchase

c) Turnover Ratios.

d) Financial Leverage

e) Optimum capital structure.

MAY 2009 NEW

Instructions to the candidates:

1) Answer any three from section-l and any two from section-II.

2) All questions carry equal marks.

3) Use of non-programmable calculator is allowed.

SECTION-I

Q1)  Explain in detail the role and functions of finance manager of a globally diversified corporate entity.

Q2)  Discuss in detail the merits and limitations of following :

a)         Under & over capitalization.

b)          Trading on equity.

c)          Ratio Analysis.

d)         Capitalization of reserves.

Q3) . Discuss in detail the procedural and legal formalities involved in the payment of dividend.

Q4) Discuss the disclosure requirements of the following items in schedule VI format:

a)         Debtors.

b)          Equity share capital.

c)          Secured loans.

d)         Investments.

SECTION-II

Q5)  A company is to start a new project which is having cost ofRs.50,000/- and life of 5 years. Salvage value is nil, tax rate for the company is 55% and it follows S.L.M. method of depreciation. The cash flows before tax (CFBT) are as follows:

Year:           1                 2                 3                 4                 5

CFBT: (Rs.) 10,000         11,000         20,000                   30,000                   35,000

Compute the following:

a) Payback period.

b) Average rate of return.

c) Internal rate of return

Q6) EBIT of the company is Rs.20,00,000/-. It is planning to add Rs.50,00,000/¬~additional funds through one of the following means for diversification. The present equity share capital (5,00,000 shares of RS.1 0 each) RS.50,00,000/-. Following are the alternative sources:

a) Issue of 12% debentures.

b) Issue of 2,5 0,000 equity shares at par & the balance by 120/0 debentures.

c) Issue of ] 0% preference shares of Rs.25,00,000 and balance by 15% term loan.

Advise the company as to the selection of the best alternative by giving detailed reasoning therefore.

Q7) P Ltd. sells goods at a gross profit of25%. Depreciation is considered in cost of production.

a) Sales (2 months credit) : RS.18,00,000.

b) Material consumed (1 month credit) : RsA,50,000.

c) Wages paid (1 month delay) : Rs.3,60,000.

d) Administration Expenses (1 month lag) : Rs.1,20,000.

e) Sales promotion expenses paid quarterly in advance: RS.60,000.

f) Income Tax payable in 4 equal instalments of which one falls due in the

next year: Rs.1 ,50,000.

The company also keeps one month’s stock of each of raw material and finished goods. It also keeps cash of RS.1 ,00,000/-. Assuming 15% safety margin compute the working capital requirement on cash basis.

 

Financial Management Question Papers Pune University – MBA Semester II

APRIL 2012

Total No. of Questions : 9]

[Total No. of Pages : 3

[4175] – 202

M.B.A.

202 : FINANCIAL MANAGEMENT

(2008 Pattern) (Sem. – II)

Time :3 Hours] [Max. Marks :70

Instructions to the candidates:-

1) Question number 1 is compulsory.

2) Attempt any two questions from section I & section II.

3) Use of simple calculator is allowed.

4) Figures to the right indicate full marks.

Q1) What is Financial system? Explain its functions. [10]

SECTION – I

Q2) Explain in detail various sources of finance available to support working capital needs? [15]

Q3) What are the limitations of financial statements? What do you understand by analysis of financial statement? Describe the uses of such analysis. [15]

Q4) Define capitalization. Explain the various theories of capitalisation. [15]

Q5) Write short notes (Any Three) [15]

a) Capital Rationing.

b) Bonus shares

c) Time value of money.

d) Cash Management.

e) Financial planning.

SECTION – II

Q6) Prepare an estimate of working capital requirement from the following data of a trading concern. [15]

a) Projected annual sales 80,000 units.

b) Selling price Rs. 8 per unit

c) Percentage net profit as sales 20.

d) Average credit period allowed to customers – 10 weeks.

e) Average credit period allowed to suppliers – 8 weeks.

f) Average stock holding in terms of sales requirement – 10 weeks.

g) Allow 20% for contingies.

Assuming 52 weeks in a year.

Q7) The directors of Bharucha Enterprises Ltd ask you to ascertain : [15]

a) Proprietor’s fund

b) Fixed Assets.

c) Closing Debtors.

d) Closing Creditors.

e) Closing Stock.

f) Share Capital.

g) Cash and Bank Balance.

From the following information :

i) Inventory turnover ratio is 6 times. Year end debtors are outstanding for 2 months.

Year end creditors are outstanding for 73 days.

ii) Ratios of cost of goods sold to :

1) Proprietor’s funds is 2 : 1.

2) Fixed Assets is 4 : 1.

iii) Ratio of gross profit to sales is 20%

iv) Closing stock is greater than opening stock by Rs. 10,000 /-

v) The gross profit for the year ended 31st March 2011 is Rs. 1,20,000.

vi) Reserves and surplus appearing in the Balance sheet as at 31st March 2011 total to Rs. 40,000/-

Q8) A company is considering an investment proposal to install a new machine. The project will cost Rs. 50,000 and will have a life of 5 years and no salvage value. The company’s tax rate is 35% and no investment allowance is allowed. This firm uses straight line method of depreciation. The estimated net income before depreciation and tax from the proposed investment proposal are as follows :[15]

Year Net income before depreciation & tax (Rs.)
1 10,000
2 11,000
3 14,000
4 15,000
5 25,000

Compute the following :

a) Pay back period.

b) Average Rate of Return.

c) Net present value at 10% discount Rate.

d) Profitability index at 10% discount Rate.

Following are the present value factors @ 10%.
Year P.V. Factors at 10% Year P.V. factors at 10%
1 0.909 4 0.683
2 0.826 5 0.751
3 0.621

Q9) Calculate operating, financial and combined leverage under financial plan X
and financial Plan Y when the fixed costs are Rs. 50,000 and Rs. 1,00,000 in
two different situations. The information regarding capital structure and other
data are as under. [15]
Rs.
Total Assets 5,00,000
Total Assets turnover based on sales 2
Variable cost as percentage of sales 60
Financial Plan ‘X’ Financial Plan ‘Y’
(Rs) (Rs)
Equity 5,00,000 1,00,000
10% debenture 1,00,000 5,00,000

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