Madras University (UnOM) 2008 B.B.A Financial Management (CAIB) - Question Paper

April 2008
Subject Code: CA1B
Time :Three Hours
Maximum: 100 marks


Part A – (10x two =20 marks)
ans All ques.
All ques. carry equal marks.
every ans should not exceed 50 words.

1. What is meant by short term finance?
2. What do you mean by business finance?
3. What is optimal capital structure?
4. What do you mean by over capitalization?
5. What is Cost of Capital?
6. State any 2 theories of dividend?
7. What do you understand by Cash Flows?
8. What is meant by Systematic Risk?
9. describe the term working capital.
10. What do you mean by inventory?

Part B- (5x6 =30 marks)
ans All ques..
All ques. carry equal marks.
every ans should not exceed 250 words.

11.(a) discuss the features of Preference shares.
(b) A company problems Rs.10,00,000 10% redeemable debentures at a discount of 5%.The cost of floatation amount to Rs.30,000. The debentures are redeemable after five years. compute before tax and after tax cost of debt assuming a tax rate of 50%.
12.(a) elaborate the kinds of working capital?
(b) discuss the different factors which influence working capital of a firm.
13. compute operating leverage and financial leverage under situations one and two and financial plans A and B respectively from the subsequent info relating to the operation and capital structure of a company. elaborate the combinations of operating and financial leverage which provide highest and lowest value?
Installed capacity 2000 units.
Annual production and sales 50% of installed capacity
Selling price per unit Rs.20
Variable Cost per unit Rs.10
Fixed Cost : Situation 1: Rs. 4,000 Situation two : Rs.5,000
Capital Structure:




Financial plan
A (Rs) B (Rs)
Equity 5,000 15,000
Debt (Cost 10%) 15,000 5,000
-----------------------------------------------------
20,000 20,000
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14. (a) discuss the nature and concept of capital budgeting?
(b) A company problems 10,000 10% preference shares of Rs.100 every. Cost of problem is Rs.2 per share. compute cost of preference capital if these shares are issued at (i) at par (ii) at a premium of 10% and (iii) at a discount of 5%.
15. (a) discuss the meanings and auses of over capitalization.
(b) From the subsequent information, compute the avg. collection period :
Total Sales Rs.1,00,000 Cash sales Rs.20,000 Sales Returns Rs.7,000 Debtors at the end of the year Rs.11,000 Bills Receivable Rs.4,000 creditors Rs.15,000.

Earning:   Approval pending.