Anna University Chennai 2007 Post Graduate Diploma Financial Management (PGDFM) FINANCIAL MANAGENENT - Question Paper

Time, three hours Maximum Marks : 100
Note three Attempt any fiue ques.. Atl ques. carry
i :
equal morks.
l. {a} elaborate the major financial managernent decisions
that a firrn has to make ? define. every area of
decision and ,indicate how they are related.
h) discuss the eoncept of 'time value of money, with
examples.
2. {a} Diiiinguish ranging from
,, capitaf'. '''
74, 6
fluctuating and fixed working
tb)
''''
How is the risk and return trade-off maintained by
working'capitapl olicy? .' 6, 14
:.
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3. (a) explain 2 techniques of selective approach to
inventory management.
(b) discuss the different motives for holding cash. 70, 10
4. (a) discuss and illustrate yield to maturity (YTM)
method. 10
(b) What is the difference ranging from primary market and
secondary market ? Briefly define a few significant
developments in the stock market that have taken
place recently in India . 2, I
5. elaborate the objectives of the credit policy ? explain the
factors that influence the credit policy of a firm, and
discuss them with examples. 5, 15
6. (a) What is operating leverage ? Distinguish it from
financial leverage.
(b) The subsequent are the details :
A Company B ComPanY
Rs. Rs.
Sales 10,00,000 6,00,000
Variable cost 4,00,000 2,40,000
Fixed cost 2,40,000 1,80,000
Interest 1,00,000 1,00,000
compute the subsequent :
(i) Degree of operating leverage and financial leverage
of both the firms.
(ii) Comment on the risk position. 4, 4, 12
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7. {a}
(b)
8. (a)
(b)
,i
What is meant by buyback of shareg.?
rationale ?
How can share buyback be used
shareholder'sv alue ? discuss in detail.
What is its :
to increase
4 , eight , 8
What is payback period method of capital
budgeting ? discuss and explain its drawbacks.
Anuprav Electronics is considering the replacement
of its 1 of the old machines by a new rnachine.
The cash flows of this proposal are as under :
Year
Cash flows
(Rs.)
current value of interest
factor of Re. 1
0 5,00,000
1 80,000 0.8772
2 1,10,000 a.7695
3 90,000 0-6750
4 85,000 0.592L
5 85,000 0.5L94
6 70,000 0'4556
7 80,000 0.3996
I 90,000 0.3506
What is the project's net current value if the
needed rate of return is 14% ? Should the firm
accept the proposal or not ? 8, 12
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9. Writee xplanatorny oteso n any 2 of the following:
70, 10
(i) Dividend policy
(ii) CAPM
(iii) Lease financing
(iv) EOQ
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Earning:   Approval pending.