Bharathiar University 2007 B.Com Financial Management-. - Question Paper

IV Semester B.Com. Examination, Nov./Dec. 2007

COMMERCE
Financial Management

Time : three Hours Max. marks : 90

Instruction : ans either in Kannada or English.

part - A

ans any ten of the subsequent. every carries two marks. (2x10=20)

1. a) How do you compute operating leverage ?
b) What do you mean by cash flow ?
c) What do you mean by Trading on equity ?
d) What do you mean by wealth maximization ?
e) How do you arrive at the combined leverage ?
f) Mention the steps involved in the capital budgeting process.
g) What is Net current Value Method ?
h) What do you mean by scrip dividend ?
i) What is Inventory management ?
j) What do you mean by Dividend Policy ?
k) What do you mean by Receivable Management ?
l) elaborate the objects of cash management ?

part - B

ans any 5 of the subsequent. every carries five marks.

2. Examine the need for financial planning.

3. elaborate the importance of adequate working capital.

4. A company has Rs. 10,00,000 variable cost of Rs. 7,00,000 and fixed cost of Ts. 2,00,000 and debt of Rs. 5,00,000 at 10% rate of interest. elaborate the operating and financial leverages ?

5. Mention the salient features of Net current Value Method.

6. Brief the various forms of Dividend.

7. A industry is considering investment in a project which cost Rs. 6,00,000. The cash flows are Rs. 1,20,000, Rs. 1,40,000, Rs. 1,80,000, Rs. 2,00,000, Rs. 2,50,000. compute pay back.

8. elaborate the consequences of holding excess inventory ?

9. Mention the significance of cash management.

part - C

10. What is financial planning ? discuss the determinants of financial planning.

11. What is capital budgeting ? How is it significance for a firm ?

12. What is working capital ? What factors determines its requirements ? discuss.

13. A firm’s cost of capital id 10%. It is considering 2 mutually exclusive profits X and Y. The details are provided beneath :

Year Project ‘X’ (Rs.) Project ‘Y’ (Rs.)

Investment 1,40,000 1,40,000

Net cash flow one 20,000 1,20,000

2 40,000 80,000

3 60,000 40,000

4 90,000 20,000

5 1,20,000 20,000

3,30,000 2,80,000

calculate :

a) Pay back period
b) Net current Value

P.V. Factor at 10% for five years

Year one two three four 5

P.V. Factor @ 10% 0.909 0.826 0.751 0.683 0.621

14. compute 2 companies in terms of its financial operating leverages and combined leverage.

Firm A Firm B
Sales Rs. 20,00,000 Rs. 3,00,000
Variable cost 40% of sales 30% of sales
Fixed cost Rs. 5,00,000 Rs. 7,00,000
Interest Rs. 1,00,000 Rs. 1,25,000

Interpret the outcomes of the firms.

Earning:   Approval pending.