Acharya Nagarjuna University (ANU) 2006 M.Com Commerce Financial Management - - - Question Paper

M.Com. (Previous) DEGREE EXAMINATION, DECEMBER 2006.
Paper IV - FINANCIAL MANAGEMENT

Time : 3 hours Maximum : 100 marks

part A - (5 X four = 20 marks)
ans any 5 of the subsequent.

1. (a) Wealth Maximisation
(b) Financial Markets.
(c) Payback Period
(d) Sensitivity Analysis.
(e) Operating Leverage
(f) Stable Dividend Payout Ratio.
(g) Net Working Capital
(h) Liberal Credit Policy.

part B - (2 X 20 = 40 marks)
ans any 2 of the subsequent in not more than four pages every.

2. What is Financial Management? What role a Financial Manager plays in a corporate enterprise?

3. explain the importance of Industrial Policy, 1991 in the light of latest modifications taking place in the Indian Economy.

4. What is risk adjusted discount rate? discuss its merits and demerits.

5. discuss Walter’s Model of Dividend Theory.

part C - (2 X 20 = 40 marks)
ans any 2 of the subsequent.

6. The subsequent figures of Sales and Profits for 2 periods are available in respect of a firm.
Sales Profit
Period I 1,00,000 15,000
Period II 1,20,000 23,000

You are needed to calculate:
(a) P/V ratio.
(b) Break-even Point
(c) Sales needed to earn a profit of Rs.20,000
(d) Profit at estimated sales of Rs.1,50,000.
(e) Margin of safety at a profit of Rs.50,000.

7. ABC Ltd., plans to sell 1,30,000 units next year. The expected cost of goods sold is as follows:
Rs.
(per unit)
Raw materials 250
Manufacturing expenses 130
Selling, administration and finance expenses 50
Selling price 3,000

The duration at different stages of the operating cycle is expected to be as follows:
Raw material stage 3 months
Work in process 2 months
Finished goods stage 1 month
Debtors stage 2 months

Assuming a monthly level of 12,500 units of production. compute the investment in different current assets.

8. A firm is considering an increase in its credit period from 40 to 60 days. It currently sells 5,00,000 units at Rs.2 per unit. The avg. age of receivables is 50 days, the variable costs per unit is Rs.15.70 and the avg. cost per unit is Rs.18.70. The change in the credit period is expected to increase the sales by 3,15,000 units and the avg. collection period to 80 days. presume the needed return on investment as 20%, should the firm carry out the proposal. (Assume 360 days year).

9. A company has the subsequent capital structure : 10,000 Equity shares of Rs.10 every Rs.1,00,000. 2,000 10% Preference shares of Rs.100 every : Rs.2,00,000. 2,000 10% Debentures of Rs.100 every : Rs.2,00,000. compute the EPS for every of the levels of EBIT as:

(a) Rs.1,00,000 and
(b) Rs.1,40,000.

Also compute the financial leverage taking EBIT level under base (a) Tax rate is 50%.

Earning:   Approval pending.