Tamil University 2006 M.Phil Commerce FINANCIAL MANAGEMENT - Question Paper

2006 Tamil Nadu State Madurai Kamaraj University M.phil (commerce) exam May 2006 ques. Papers

FINANCIAL MANAGEMENT

Time: 3 hours Maximum: 100 marks

ans any 5 ques..All ques. carry equal marks.

1. discuss the principal components of Indian
Financial System.

2. What do you understand by Financial Statement
Analysis? elaborate its limitations?

3. discuss the requirements of a good budgetary
control system.

4. elaborate the repercussions if a firm has
(a) Redundant working capital; (b) inadequate working
capital? discuss.

5. What is Weighted avg. Cost of Capital?
Examine the rational behind the use of weighted
avg. cost of capital?

6. What do you understand by capital structure?
discuss the considerations to be kept in view while
devising the capital structure of a new public company.


7. From the subsequent information, you are needed
to prepare a Balance Sheet.
(a) Current Ratio - 1.75
(b) Liquid ratio =1.25
(c) Stock turnover ratio =9
(cost of sales/closing stock)
(d) Gross profit ratio =25%
(e) Debt collection period =11 \2 months
(f) Reserves and surplus to share capital =0.2
(g) Turnover to fixed assets =1.2
(based on cost of sales)
(h) Capital Gearing Ratio =0.5
(i) Fixed assets to networth =1.25
(j) Sales for the year =Rs. 12,00,000.


8. Draw material procurement budget (quantitative)
from the subsequent info. Estimated sales of a
product 40,000 units. every unit of the product requires
3 units of material A and five units of material B.
Estimated opening balances at the commencement of
the next year:
Finished product - 5,000 units
Material A - 12,000 units
Material B - 20,000 units
2 5937/C12
Materials on order:
Material A - 7,000 units
Material B - 11,000 units
The desirable closing balances
next year :
Finished product - 7,000 units
Material A - 15,000 units
¥aterial B - 25,000 units.
Material on order:
Material A - 8,000 units
Material B - 10,000 units.



9. The subsequent data relate to a manufacturing
company:
Plant capacity = 4,00,000 units p.a
current utilisation =40%
Actuals for the year 1999 were:
Selling price - Rs. 50 per unit
Material cost - Rs. 20 per unit
Variable cost - Rs. 15 per unit
Fixed cost - Rs. 27 lakhs.
at the end of the
In order to improve capacity utilisation the I
subsequent proposals are considered. I
decrease selling price by 10% spend additionally I:
Rs. three lakhs on sales promotion. I
How many units should be sold to earn a profit of I
'
Rs. five lakhs per year.
3 5937/C12 .,



10. Star Ltd. is considering the purchase of a machine.
Two option models are available. Relevant
!Iinform~tion is as follows;
Using discounted cash flow method, prepare a
statement of profitability and recommend the profitable
machine.
At the prevailing rate of 12% the current value of
Re one received annually for
(a) four years - Rs. 3.04
(b) five years - Rs. 3.60
Machine X Machine Y
Rs. Rs.
Cost of the machine 3,00,000 3,00,000
Savings in scrap 45,000 50,000
Savings in wages 1,40,000 1,80,000
Supervision 10,000 15,000
Maintenance 6,000 10,000
Indirect material 4,000 5,000
Tax rate 50% 50%

Earning:   Approval pending.