Karnataka State Open University (KSOU) 2010 M.B.A Third Year - C – 16 A : Financial Planning - Question Paper
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Third Semester M.B.A. Examination, July 2010 Elective - A : Finance (Old Scheme) (Repeater) Course - 16 A : FINANCIAL PLANNING
Time : 3 Hours Max. Marks : 75
Instruction : Simple Calculators are allowed.
SECTION - A
1. Answer any five sub-questions. Each question carries 2 marks : (5x2=10)
a) What is EBIT - EPS Analysis ?
b) Write a note on Global Depository Receipts.
c) Mention any two guidelines of SEBI on Right issues.
d) Mention any two evils of over-capitalisation.
e) Name any two methods of making working capital forecasts.
f) What do you understand by the term private placement ?
g) What is trading on equity ?
SECTION - B
Answer any four questions. Each question carries five marks. (4x5=20)
2. Differentiate Capitalisation and capital structure.
3. Distinguish between permanent and temporary working capital.
4. Write a short note on Merchant-Banking.
5. What is financial planning ? Explain the principles governing a sound financial plan.
6. What are Bonus shares ? How do they benefit the shareholders ?
7. Enumerate the functions of SEBI.
Answer any three questions. Each question carries 10 marks. (3x10=30)
8. Explain briefly the guidelines issued by SEBI regarding
a) Euro Issues
b) Merchant Bankers.
9. Write a note on the current trends in the Indian capital market.
10. What are the different sources of long term financing ? State briefly the merits of each source of long-term financing.
11. A manufacturing company is considering an investment proposal which requires Rs.80 lakhs. The company is having 5000 Eq shares outstanding. Price of each equity share is Rs.100/-. The company can mobalise the required amount by the following plans.
a) 50% equity and 50% debentures @ 10%
b) 100% equity and
c) 100% debentures @ 8%
Assume a tax rate of 40%. Calculate EPS. Expected EBIT after the expansion is Rs. 18,00,000/-.
12. The following is the capital structure of A Ltd.
Rs.
Equity Share capital (Rs.10/- shares) 2,00,000 Share premium 3,00,000
Reserves and surplus 1,50,000
Total Net Worth = 6,50,000
The company issues bonus shares to its existing equity share holders in the ratio of 1 for every 10 at the market price of Rs.15/- per share.
You are required to show :
i) the new capitalisation of the company and
ii) earnings per share both before or after the bonus issue pressuming the net earnings of Rs. 22,000/-.
15
13. Estimate the net working capital required for the production of 1,04,000 units per annum from the following information.
Rs.
Estimated cost per unit :
Raw materials 80
Direct Labour 30
Overheads 60
Total cost 170
Overheads are exclusive of depreciation of Rs.10/- per unit.
Additional information :
i) Selling price per unit Rs. 200/-
ii) Raw materials in stock on an average 4 weeks.
iii) Work-in-progress on an average 2 weeks.
(Assume 50% completion stage in respect of concession costs and 100% completion in respect of materials)
iv) Finished goods in stock, average 4 weeks
v) Credit allowed by supplies, average 4 weeks
vi) Credit allowed to destors, average 8 weeks.
vii) Lag in payment of wages, average 1.5 weeks.
viii) Cash at bank is expected to be Rs. 25,000/All sales are on credit basis. Assume 52 weeks in a year. Add 10% to computed figure to allow contingenies.
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