Bharathiar University 2007 B.Com FINANCIAL MANAGEMENT- - Question Paper

IV SEM. B.COM. EXAMINATION, MAY/JUNE 2007

COMMERCE
FINANCIAL MANAGEMENT

Time:3Hours Max.Marks:90




SECTION-A
ans ant ten of the subsequent (2*10=20)
1. A) Mention any 4 functions of financial management.
B) What is financial planning ?
C) Differentiate ranging from ‘gross’ and ‘net’ working capital.
D) What is meant by Financial Risk ?
E) provide the meaning of earning per share.
F) Mention the steps involved in the capital budgeting process.
G)What is meant by time value of money?
h)Cost of a plant is Rs.2,00,000 and cash flows for the 1st three years are Rs. 20,000, Rs. 2,00,000 and Rs. 1,2,000. Express the pay back period in terms of years
I)Mention any 4 forms of dividend
j)What is capital budgeting?
k)What is ment by dividend policy?
l)What is inventory management?


SECTION-B
ans any 5 of the following(marks:5*5=25)

2.Briefly discuss the characteristics of a sound financial plan
3.State the criticisms laid against ‘profit maximizations’.
4.Explain the significance of financial and operating leverage in financial management of a firm
6.Explain the merits and demerits of stock dividend
8.A company has sales of Rs. 20,00,000 variable cost of Rs. 14,00,000. Fixed cost of Rs. 4,00,000 and debt of Rs. 10,00,000 at 12% rate of interest .What are the operating and financial leverages?
9.A industry is considering investments in a project which cost Rs. 12,00,000. The cash flows are Rs. 2,40,000 Rs. 2,80,000, Rs. 3,60,000,Rs 4,00,000 and Rs. 5,00,000/cacculate P.B.P

SECTION-B
ans any 3 of the following(15*3=45)
10.What is financial Management? discuss the goals of Financial Management
11.What is dividend policy? discuss factors which determine the divided policy
12.What is working capital? define the need and determinants of working capital in a firm
13.a company has EBIT of Rs. 4,80,000 and its capital structure consists of the subsequent
Securities:
Rs.
Equality Share Capital[rs. 10 each] 4,00,000
12% preference shares 6,00,000
14.5% debentures 10,00,000
The company is facing fluctuations in its sales. What would be the change in EPS.
a) If EBIT of the company increased by 25% and
b) If EBIT of the company reduced by 25%
The corporate tax is 35%
14.A firm whose cost of capital is 10 %is considering 2 mutually exclusive projects
‘X’ and ‘Y’ the details of which are
PROJECT ‘X’ PROJECT’Y’

INVESTMENT Rs. 70,000 Rs. 70,000
ESTIMATED five years five years
CAS INFLOWS
YEAR one 10,000 60,000
2 20,000 40,000
3 30,000 20,000
4 45,000 10,000
5 60,000 10,000
1,65,000 1,40,000
Computer the avg. rate and NPV for the 2 projects
YEAR one two three four 5
PVF. AT 10% 0.909 0.826 0.751 0.683 0.621

Earning:   Approval pending.