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

Part C – (5x10= 50 marks)
ans all ques.
All ques. carry equal marks.
every ans should not exceed 500 words.

16.(a) Bring out the functions of financial manager in a large scale indusrial establishment?
(b)A company offers 12% percent rate of interest on deposits.What is the effective rate of interest if the compounding is done (i) Half yearly (ii) Quarterly (iii) monthly.
17.(a) provide a critical appraisal of the traditional approach and the Modigliani –Millers approach to the issue of Capital structure.
(b) A firm is considering 2 financial plans with a view to examining their impact on Earnings Per Share (EPS). The total funds needed for investment in assets are Rs.5,00,000.
Financial Plans
Plan I PlanII
Debt (Interest @10% p.a) 4,00,000 1,00,000
Equity shares (Rs.10 each) 1,00,000 4,00,000
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Total finances needed 5,00,000 5,00,000
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No of equity shares 10,000 40,000
The earnings before interest and ta are presumed as Rs.50,000, Rs. 75,000 and Rs.1,25,000.The rate of tax to be taken @ 50%. Comment.
18. (a) discuss the different factors which influence the dividend decisions of a firm.
(b) A firm has the subsequent capital structure and after tax costs for the various sources of funds used:
Sources of Funds Amount(Rs) Proportion (%) After tax Cost (%)
Debt 15,00,000 25 5
Preference shares 12,00,000 20 10
Equity shares 18,00,000 30 12
Retained Earnings 15,00,000 25 11
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60,00,000 100
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You are needed to calculate the weighted avg. cost of capital.
19.(a)Do the NPV and PV always lead to the identical investment decisions? explain.
(b) discuss the merits and demerits of avg. Rate of Return.
20.(a) explain the different aspects of receivables management.
(b) From the subsequent info you are needed to estimate the net working capital:
Cost per Unit (Rs)
Raw materials 400
Direct labour 150
Overheads(excluding depreciation) 300
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Total Cost 850
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Additional information:
Selling price Rs.1,000 per unit
Output 52,000 units per annum
Work in Progress:
(Assume 50% completion stage with full material consumption) avg. two weeks
Finished goods in stock avg. four weeks.
Credit allowed to debtors avg. four weeks
Credit allowed by creditors avg. eight weeks.
Cash at bank is expected to be Rs.50,000
presume that production is sustained at an even place during the 52 weeks of the year.Al sales are on credit basis. State any other assumption that you might have made while computing.

Earning:   Approval pending.