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Financial Management (Paper Code-303) End Term Papers - Shilpa Arora - IINTM

This document provides details of an end-term examination for the fifth semester of a BBA program in financial management. It includes instructions, notes, and 8 questions covering topics such as true/false statements about finance concepts, traditional vs modern roles of financial management, capital budgeting techniques, cost of capital calculation, leverage, dividend policies, working capital management, and project evaluation methods. Students are asked to attempt 5 of the 8 questions.

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117 views6 pages

Financial Management (Paper Code-303) End Term Papers - Shilpa Arora - IINTM

This document provides details of an end-term examination for the fifth semester of a BBA program in financial management. It includes instructions, notes, and 8 questions covering topics such as true/false statements about finance concepts, traditional vs modern roles of financial management, capital budgeting techniques, cost of capital calculation, leverage, dividend policies, working capital management, and project evaluation methods. Students are asked to attempt 5 of the 8 questions.

Uploaded by

Matthew Hughes
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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END-TERM EXAMINATION

FIFTH SEMESTER (BBA-CAM) DECEMBER-2007


Paper Code: BBA (CAM) 303
Paper Id-19303
Time: 3 Hours

Subject: Financial Management


Batch:2005
Maximum Marks: 75

Note: Attempt five questions including Q.1. which is compulsory.


Q.1. State whether true or false giving reasons:

(2.5x 6)

(a) Finance Managers main objective is to maximize profits


(b) Money has no time value
(c) Higher NPV is preferred over lower NPV
(d) Debt is the cheapest source of fund
(e) Combined leverage is the product of degree of operating leverage and degree of financial leverage.
(f) Working Capital deals with short term liquidity position of the firm.
Q.2. (a) The traditional role of Financial Management was wider than the modern role of the financial
management. Comment and explain.
(7)
(b) Write notes on any two:

(4x2=8)

a) Factoring
b) Venture Capital
c) Depositories
Q.3. (a) Why is consideration of time important in decision making? How can time be adjusted.

(5)

(b) X Ltd. Is likely to get Rs.5,000 continuously for 5 years. What is its present value, if the discount rate is 10%
(PVAF= 3.791)?
(5)
(c) Delta Ltd. Declared dividend per share of Rs.5 last year. The dividend is expected to grow at the rate of 9% p.a.
forever. Is it worthwhile to buy the share at Rs. 105, if the company belongs to risk class of 14%.
(5)
Q.4. (a) Discuss the various types of capital budgeting decisions.

(6)

(b) A machine is available for Rs.1,00,000 which is likely to yield following earnings in the next five years.
Year
CFAT (Rs.)
1
35,000
2
32,000
3
30,000
4
24,000
5
26,000
The machine will be depreciated on straight line method basis. The company is subject to tax at the rate of 50%.
Should the machine be purchased if the cost of capital is 12%?
(9)
Q.5. (a) Explain briefly cost of capital.

(3)

(b) Explain weighted average cost of capital.

(5)

(c) The following information has been extracted from the balance sheet of fashions Ltd. As on 31.12.2005

(7)

Rs. In lakhs
400
400
1200
2000
Determine the weighted average cost of the capital of company? It had been paying dividends at a
constant rate of 20% per annum.
What difference will it make if the current price of Rs.100 share is Rs. 160?

Equity share capital


12% debentures
18% Long term loan
(i)
(ii)

Q.6. (a) Distinguish between operating and financial leverage. How the two leverage can be measured? Explain the
significance of operating and financial leverage.
(10)
(b) Calculate the degree of operating leverage from the following data and advise which firm is more riskier?

Sales
Variable cost
Fixed cost

A
25,00,000
50% of sales
7,50,000

(5)

B
30,00,000
25% of sales
15,00,000

Q.7. (a) Explain briefly Net Operating Income Approach and Modigilliani Miller approach to the problem of
capital structure.
(9)
(b) Explain theory of relevance of dividend payment.

(6)

Q.8. (a) Explain the factors having a bearing on working capital needs.

(6)

(b) Explain the method of preparation of cash budget

(6)

(c) What is inventory re-order point? How is it determined?

(3)

*****

END-TERM EXAMINATION
FIFTH SEMESTER (BBA-CAM) DECEMBER-2009
Paper Code: BBA (CAM) 303
Paper Id: 19303
Time: 3 Hours

Subject: Financial Management


Maximum Marks: 75

Note: Attempt any five questions in all including Question 1 which is compulsory.

Q.1. Write notes on any five of the following:


a)
b)
c)
d)
e)
f)

(3x5=15)

Wealth Maximization
Certainty Equivalent Coefficient
Commercial Paper
Financial and Operating Leverage
Net and Gross Working Capital
Economic Order Quantity

Q.2. The profit maximization is not an operationally feasible criterion. Do you agree? Illustrate your views.
(15)
Q.3. (a) A machine costs Rs.85, 000 and its effective life is estimated At 10 years. If the scrap value is Rs. 5,000 ,
what amount should be siphoned out of profit at the end of each year and invested at the end of each year and
invested at the compound interest rate of 7% p.a., so that a new machine can be purchased after 10 years. CVAF
(7%,10)= 13.816
(8)
(b) Define following:

(3.5x2)

(i) Annuity
(ii) Present Value
Q.4. A machine is available for Rs. 80,000 which is likely to yield following earnings in the next five years:
Year
1
2
3
4
5
CFAT
35,000
32,000
30,000
24,000
26,000
The machine will be depreciated on straight line basis and has salvage value of Rs. 10,000. The company is subject
to tax at the rate of 50%. Should the machine be purchased if the cost of capital is 12%. PVF values at 12% are
given below:
(15)
Year I= 0.893, Year II= 0.797, Year III= 0.712, Year IV= 0.636, Year V= 0.567
Q.5. What are the different sources of long term financing? State briefly the merits of each source.

(15)

Q.6. Critically examine the Net Income and Net Operating approaches to capital structure. What is the traditional
view of the question?
(15)
Q.7 (a) A company has the following capital structure:
10,000 equity shares of Rs. 10 each, Rs. 1,00,000
2000 10% Preference shares of Rs.100 each, Rs. 2,00,000

2000 10% Debentures of Rs. 100 each, Rs. 2,00,000


Calculate the EPS and Financial Leverage if EBIT is Rs. 1,00,000

(9)

(b) The current market price of an equity share of a company is rs.90. The current dividend per share is Rs. 4.50. In
case the dividends are expected to grow at the rate of 7%, calculate the cost of equity capital.
(6)
Q.8. State the factors that you would like to consider in estimating the working capital requirements of a business.
(15)

*****

END-TERM EXAMINATION
FIFTH SEMESTER (BBA-CAM) DECEMBER-2011
Paper Code: BBA (CAM) 303
Paper id-19303
Time: 3 Hours

Subject: Financial Management


Maximum Marks: 75

Note: Attempt any five questions.


Q.1. The following information is related to GEH Ltd.
Gross Profit
Rs. 45 lakh
Gross profit margin
20%
Total Assets Turnover ratio
3
Total debt to equity ratio
1.50
Current assets
Rs. 35 lakh
Current ratio
2.50
What is outstanding amount of term loan in its balance sheet? (Assume term loan is the only interest bearing
borrowings made by the company.)
(15)
Q.2. (a) Wealth maximization is superior to other goals in context of financial decisions. Comment.

(5)

(b) Payment of dividend does not affect the value of the firm according to MM. Comment.

(5)

(c) Briefly explain the concept of weighted operating cycle.

(5)

Q.3. Differentiate between Capital Structure and Financial Structure. Explain the factors
determining the capital structure of a firm.

(15)

Q.4. State the various sources of long term financing available to a business firm indicating
their advantages and weakness.

(15)

Q.5. The following figures are collected from the annual report of XYZ Ltd.:
Return on investment
12%
No. of outstanding equity shares
1,00,000
Net Worth
Rs. 25 lakh
Total Debt
Rs. 40 lakh
Average cost of debt
9%
Applicable tax rate
40%
Calculate the earning per share for the company.

(15)

Q.6. The net cash flows associated with a project are given below. The cost of capital is 14%.
Year
Project Y
0
(1500)
1
650
2
450
3
650
4
550
5
150
6
600
The figures in brackets indicate cash outflow. You are required to-

(5x3=15)

a) Calculate the net present value of the project.


b) Calculate the benefit-cost ratio of the project.
c) Calculate the internal rate of return of the project.
Q.7. the following data pertain to two companies A Ltd. And B Ltd.:Description
A Ltd.
Current Assets
Rs. 250 lakhs
Net Fixed Assets
Rs. 30 lakhs
EBIT
Rs. 60 lakhs
Calculate the working capital leverage for:

B Ltd.
Rs. 50 lakhs
Rs. 250 lakhs
Rs. 60 lakhs

(a) 20% reduction (b) 20% increase in current assets of the company
What conclusions can you draw from the above calculations?
Q.8. Briefly describe any three of the following:

(15)
(5x3=15)

(a) Venture Capital

(b) Global Depository Receipt

(c) Loan Syndication

(d) Pay back period

*****

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