M.B.A-M.B.A 2nd Sem 202 : FINANCIAL MANAGEMENT(University of Pune, Pune-2013)
[4375] - 202
M.B.A. (Semester - II)
[Total No. of Pages : 3
202 : FINANCIAL MANAGEMENT
(2008 Pattern)
Time : 3 Hours] [Max. Marks :70
Instructions to the candidates:
1) Q.No. 1 is compulsory.
2) Solve any two questions from Section - I and Section - II. 3) Figures to the right side indicate full marks.
4) Use of non programmable calculator is permitted.
Q1) Explain in detail the role of a finance manager. [10]
SECTION - I
Q2) Define over capitalization? Explain the causes of over capitalization. [15]
Q3) a) Briefly discuss the different types of dividend. [5]
b) Explain the various factors affecting dividend policy of a firm. [10]
Q4) What are specific cost of capital? How will you calculate Weighted Average
Cost of Capital (WACC)? [15]
Q5) Write short notes on : (Any Three) [15]
Factoring.
Operating cycle.
Limitations of ratios
Bonus shares
Proforma of Balance sheet as per schedule VI of companies Act 1956.
SECTION - II
Q6) Assume that a firm has owner’s equity of A 100000. The ratios for the firm
are, [15]
Short - term debt to total debt = 0.4
Total debt to owner’s equity = 0.6
Fixed Assets to owners equity = 0.6
Total Assets turnover = 2 times
Inventory turnover = 8 times
Compute the following Balance sheet
Balance Sheet
Liabilities A Assets A
Short term debt Cash
Owners equity Inventory
Long term debt Fixed Assets
Q7) A company is considering the replacement of its existing machine which is
obsolete. The company has two alternatives. [15]
a) to buy machine A which is similar to the existing machine or.
b) to go in for machine B which is more expensive and has much greater
capacity.
The cash flow at the present level of operations under the two alternatives
are as follows.
Cash flow (in lach of A) at the end of the year
Machine 0 1 2 3 4 5
Machine A .25 .5 5 20 14 14
Machine B .40 10 14 16 17 15
P/V factor @10% .909 .826 .751 .683 .621
The company’s cost of capital is 10%. The finance manager tries to
evaluate the machines by calculating
i) NPV ii) PI
iii) PBP & iv) Discounted PBP.
At the end of his calculations, however, the finance manager is
unable to make up his mind as to which machine to recommend.
You are required to make these calculations and in the light there of
to advise the finance manager about the proposed investment.
Q8) From the following information. Prepare estimated working capital requirement
statement. [15]
Projected annual sales 26000 units Selling price per unit A 60.
Analysis of selling price.
Material • 40%
Labour • 30%
Overheads – 20%
Profit • 10%
Duration & various stages of operating cycles are expected to be as follows.
1) Raw material in stock 4 weeks
2) Production process 4 weeks
3) Debtors – 5 weeks
4) Creditors – 3 weeks
5) Lag in payments of wages and overheads 2 weeks
6) Finished goods 2 weeks 7) Cash in hand 32000.
8) 52 weeks to be considered in a year.
Q9) Calculate DOL, DFL & DCL for the following firms & Comment on the
results. [15]
A B C
Output (units) 60,000 15,000 1,00,000
Fixed costs (A) 7,000 14,000 1,500
Variable cost per unit (A) 0.20 1.50 0.02
Interests on borrowed funds 4,000 8,000 •
Selling price P.U (A) 0.60 5.00 0.10
Tax rate is 30% in all cases.
| Earning: ₹ 8.10/- |
