Solapur University Question Paper
M.B.A. (Part – II) (Semester – III) Examination, 2014
FINANCIAL DECISION ANALYSIS (Paper – XX)
Group B : Financial Management (Paper – II) (Old)
Day and Date : Wednesday, 4-6-2014 Max. Marks : 70
Time : 11.00 a.m. to 2.00 p.m.
Instructions : 1) Q. No. 1 and 7 is compulsory.
2) Attempt any two questions from Q. No. 2 to Q. No. 4
3) Attempt any one questions from Q. No. 5 to Q. No. 6
4) Figures at right indicate marks.
1. A) Fill in the blanks : 5
1) _______ is a combination in which a firm established in one industry
combines with a firm from an unrelated industry.
2) In _______ the lessor transfers, substantially all the risks and rewards
incidental to the ownership of the asset to the lessee.
3) _______ is the firm’s ability to use fixed operating cost to magnify the
effects of changes in sales on its earnings before interest and tax.
4) _______ measures the ratio of long term or total debt to the shareholders
equity.
5) _______ stage financing are often comparatively modest amounts of capital
provided to inventors or entrepreneurs to finance the early development of
a new product or service.
B) State whether the following statements true or false: 5
1) Funds flow analysis is one of the techniques of financial analysis.
2) Venture capitalist is an individual/institution that provides equity financing
to small and medium and risky firms.
3) Lease asset is capitalized in the books of lessee.
4) Current ratio is one of the prime ratios for measuring the short term solvency
of the firm.
5) Low degree of operating leverage and high degree of financial leverage is
an ideal situation for the organization. P.T.O.
Seat
No.
SLR-XY – 34 -2-
C) Define following terms: 4
1) P/E ratio
2) WACC
3) Joint venture
4) Business risk.
2. Write short notes (any two): 14
1) Cash flow statement
2) Significance of Ratio analysis
3) Strategies for revival of sick units.
3. Write short notes (any two): 14
1) Leasing v/s Hire purchase
2) Common size statements
3) Business evaluation models.
4. Following financial information for the year 2012 and 2013 is provided by SSK
Company Ltd. 14
Liabilities 2012 2013 Assets 2012 2013
(Rs.) (Rs.) (Rs.) (Rs.)
Capital 9,00,000 10,00,000 Goodwill 1,20,000 1,00,000
General reserves 1,40,000 1,80,000 Building 4,00,000 3,60,000
P & L a/c 1,95,000 1,20,000 Machinery 3,70,000 3,60,000
Provision for tax 1,60,000 1,70,000 Stock 3,00,000 2,54,000
Creditors 80,000 54,000 Debtors 2,00,000 2,22,000
Bills payable 62,000 13,000 Cash 66,000 1,52,000
Provision for Investments 1,00,000 1,10,000
Doubtful debts 19,000 21,000
15,56,000 15,58,000 15,56,000 15,58,000
-3- SLR-XY – 34
Adjustments:
1) Depreciation is to be provided on machinery Rs. 40,000 and on building
Rs. 40,000.
2) Interim dividend of Rs. 75,000 is to be paid.
3) Provision for tax of Rs. 50,000 is to be made during the year.
Prepare funds flow statement for the company.
5. What is venture capital ? Explain the features and stages of venture capital
financing. 14
6. What is the conceptual framework of mergers ? Describe various types of mergers
and explain the procedural aspects of mergers. 14
7. AK Company Ltd. presently having ordinary share capital of Rs. 25,00,000
comprised of 25,000 equity shares of Rs. 100 each. The management is having
plan to raise finance of Rs. 20,00,000 for its major project of expansion through
four alternative plans.
These plans are given below :
A) Entire finance through ordinary shares.
B) Rs.10,00,000 from ordinary shares and Rs. 10,00,000 from long term
borrowings @ 8% rate of interest.
C) Rs.5,00,000 from ordinary shares and Rs. 15,00,000 from long term
borrowings @ 9% rate of interest.
D) Rs.10,00,000 from ordinary shares and Rs. 10,00,000 from preference
shares @ 5% dividend.
As per the present conditions company expects earnings before interest and
tax Rs. 8,00,000. The present rate of tax is 50%.
You are required to determine the earnings per share for the company under
each of the alternative and comment on your answer. 14
_______________
M.B.A. (Part – II) (Semester – III) Examination, 2014
FINANCIAL DECISION ANALYSIS (Paper – XX)
Group B : Financial Management (Paper – II) (Old)
Day and Date : Wednesday, 4-6-2014 Max. Marks : 70
Time : 11.00 a.m. to 2.00 p.m.
Instructions : 1) Q. No. 1 and 7 is compulsory.
2) Attempt any two questions from Q. No. 2 to Q. No. 4
3) Attempt any one questions from Q. No. 5 to Q. No. 6
4) Figures at right indicate marks.
1. A) Fill in the blanks : 5
1) _______ is a combination in which a firm established in one industry
combines with a firm from an unrelated industry.
2) In _______ the lessor transfers, substantially all the risks and rewards
incidental to the ownership of the asset to the lessee.
3) _______ is the firm’s ability to use fixed operating cost to magnify the
effects of changes in sales on its earnings before interest and tax.
4) _______ measures the ratio of long term or total debt to the shareholders
equity.
5) _______ stage financing are often comparatively modest amounts of capital
provided to inventors or entrepreneurs to finance the early development of
a new product or service.
B) State whether the following statements true or false: 5
1) Funds flow analysis is one of the techniques of financial analysis.
2) Venture capitalist is an individual/institution that provides equity financing
to small and medium and risky firms.
3) Lease asset is capitalized in the books of lessee.
4) Current ratio is one of the prime ratios for measuring the short term solvency
of the firm.
5) Low degree of operating leverage and high degree of financial leverage is
an ideal situation for the organization. P.T.O.
Seat
No.
SLR-XY – 34 -2-
C) Define following terms: 4
1) P/E ratio
2) WACC
3) Joint venture
4) Business risk.
2. Write short notes (any two): 14
1) Cash flow statement
2) Significance of Ratio analysis
3) Strategies for revival of sick units.
3. Write short notes (any two): 14
1) Leasing v/s Hire purchase
2) Common size statements
3) Business evaluation models.
4. Following financial information for the year 2012 and 2013 is provided by SSK
Company Ltd. 14
Liabilities 2012 2013 Assets 2012 2013
(Rs.) (Rs.) (Rs.) (Rs.)
Capital 9,00,000 10,00,000 Goodwill 1,20,000 1,00,000
General reserves 1,40,000 1,80,000 Building 4,00,000 3,60,000
P & L a/c 1,95,000 1,20,000 Machinery 3,70,000 3,60,000
Provision for tax 1,60,000 1,70,000 Stock 3,00,000 2,54,000
Creditors 80,000 54,000 Debtors 2,00,000 2,22,000
Bills payable 62,000 13,000 Cash 66,000 1,52,000
Provision for Investments 1,00,000 1,10,000
Doubtful debts 19,000 21,000
15,56,000 15,58,000 15,56,000 15,58,000
-3- SLR-XY – 34
Adjustments:
1) Depreciation is to be provided on machinery Rs. 40,000 and on building
Rs. 40,000.
2) Interim dividend of Rs. 75,000 is to be paid.
3) Provision for tax of Rs. 50,000 is to be made during the year.
Prepare funds flow statement for the company.
5. What is venture capital ? Explain the features and stages of venture capital
financing. 14
6. What is the conceptual framework of mergers ? Describe various types of mergers
and explain the procedural aspects of mergers. 14
7. AK Company Ltd. presently having ordinary share capital of Rs. 25,00,000
comprised of 25,000 equity shares of Rs. 100 each. The management is having
plan to raise finance of Rs. 20,00,000 for its major project of expansion through
four alternative plans.
These plans are given below :
A) Entire finance through ordinary shares.
B) Rs.10,00,000 from ordinary shares and Rs. 10,00,000 from long term
borrowings @ 8% rate of interest.
C) Rs.5,00,000 from ordinary shares and Rs. 15,00,000 from long term
borrowings @ 9% rate of interest.
D) Rs.10,00,000 from ordinary shares and Rs. 10,00,000 from preference
shares @ 5% dividend.
As per the present conditions company expects earnings before interest and
tax Rs. 8,00,000. The present rate of tax is 50%.
You are required to determine the earnings per share for the company under
each of the alternative and comment on your answer. 14
_______________
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