FINANCIAL MANAGEMENT (Paper – X) (Old),M.B.A. (Part – I) (Semester – II),2014 Question Paper,Solapur University

Solapur University Question Paper
M.B.A. (Part – I) (Semester – II) Examination, 2014
FINANCIAL MANAGEMENT (Paper – X) (Old)
Day and Date : Saturday, 10-5-2014 Total Marks : 70
Time : 3.00 p.m. to 6.00 p.m.
Instructions : a) Q. 1 and Q. 7 are compulsory.
b) Attempt any two questions from Q. 2, 3 and 4.
c) Attempt any one question from Q. 5 and 6.
d) All questions carry equal marks.
1. A) State true or false :
1) Decrease in working capital is the source of fund.
2) NPV method of capital budgeting does not consider time value of money.
3) Gross working capital represents total current assets.
4) Dividend should be paid from current profit only.
5) Stock split leads to increase in number of shares.
6) Cash credit is a short term source of funds.
B) Select the correct alternative :
1) Pre-paid expenses are part of _____________
a) Current liabilities
b) Current assets
c) Outstanding
d) None of the above
2) PE ratio is also known as _____________ ratio.
a) Profit earning
b) Profit employed
c) Price earning
d) None of the above
SLR-XY – 11 -2-
3) The appropriate objective of financial decisions of an enterprise is _______
a) Maximization of sales
b) Maximization of profit
c) Maximization of wealth
d) Maximization of assets
4) The _____________ motive is the need to hold cash to meet contingencies
in future.
a) Speculative b) Precautionary
c) Transaction d) Investment
5) A finance manager attempts to balance cash inflows and out flows is
called _____________ decision.
a) Liquidity b) Investment
c) Dividend d) Saving
C) Give long forms :
1) GDR
2) SEBI
3) DCF.
2. Write short notes (any two) :
a) Buy back of shares
b) Functions of finance manager
c) Source of financing working capital.
3. Write short notes (any two) :
a) Net present value and profitability index
b) EOQ
c) Share split.
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4. You are given the following information about X Co. Ltd.
Balance sheets :
Liabilities 31-3-10 31-3-11 Assets 31-3-10 31-3-11
Share capital 10,00,000 10,00,000 Building 3,00,000 5,00,000
Reserves 80,000 90,000 Plant 3,80,000 4,20,000
P and L A/c. 65,000 35,000 Furniture 80,000 80,000
Bank overdraft 1,55,000 5,95,000 Motor car 60,000 70,000
Creditors 2,00,000 6,00,000 Debtors 4,60,000 5,30,000
Stock 2,20,000 7,20,000
15,00,000 23,20,000 15,00,000 23,20,000
Other information :
1) Dividend for the year ended 31-3-2011 was paid at 10%.
2) The company sold a motor car during the year for Rs. 8,000. The cost price of
the car was Rs. 10,000 and depreciation Rs. 5,000, depreciation charged on
remaining car is Rs. 10,000.
3) Depreciation of Rs. 20,000 is to be provided on plant and no depreciation is
charged on building.
Prepare :
i) Schedule of changes in working capital
ii) Fund flow statement.
5. Define working capital. What are the determinants of working capital ?
6. A pro forma cost-sheet of RK Ltd. provides following particulars :
Element of cost (as a percentage of sales)
Material 40%
Direct labour 20%
Overheads 20%
Following further information is available :
i) It is proposed to maintain a level of activity of 2,00,000 units
ii) Selling price per unit is Rs. 12
iii) Raw materials are expected to remain in stores for an average period of
one month
iv) Material will be in process on an average half month
v) Finished goods are required to be in stock for an average period of one month
vi) Credit allowed to debtors is two months
vii) Credit allowed by suppliers is one month.
You are required to prepare a statement of working capital requirement.
7. A company is considering to purchase a machine. Two machines each costing
Rs. 40,000 are available. Earnings after taxation, but before depreciation are :
Year Machine ‘A’ Machine ‘B’
1 12,000 18,000
2 18,000 10,000
3 30,000 18,000
4 15,000 18,000
5 10,000 14,000
You are required to assess the profitability of the project on the basis of
a) Payback period
b) Average rate of return
c) Net present value (cost of capital @ 10%).
_____________

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