S1- MBA Model Examination-2019-2021

Subject: FINANCIAL MANAGEMENT

Max. Marks: 60 Duration: 3 Hours

Part A
Answer any five questions. Each question carries 2 marks

1. What is leverage?
2. What is CAPM?
3. What is meant by Business Valuation?
4. What is meant by Dividend?
5. What are the objectives of financial management?
6. Why do you meant by financial Investment?
7. Who is Payback Period? (5x2 marks = 10 marks)

Part B

Answer any five questions. Each question carries 6 marks

8. Explain the new role of financial manager in the modern business environment.
9. Sate the reason for time preference of the money.
10. What is the importance of working capital management? How should it be controlled?
11. Discuss the objectives of financial management in the modern day usage.
12. Critically examine the NI and NOI approach to capital structure decisions.
13. Explain the factors which affect the dividend policy of a firm.
14. Discuss the concept of OL, FL and CL.How are they measured? What is their
significance in planning a firm? (5x6 marks = 30 marks)
 Part C

Answer any one, the question carries 10 marks

15. A company is planning to purchase a machine which has the following cash flows:
Year 1 Probability Year 2 Probability
CFAT CFAT
9,00,000 0.5 9,00,000 0.5
15,00,000 0.5
13,00,000 0.5 18,00,000 0.6
15,00,000 0.4
The machine cost Rs12, 00,000 with an estimated life of 2 years. The cost of capital of
the company is 12 percent. Make your recommendation through the Decision Tree
Method.
16.A ltd is producing articles mostly by manual labour and is considering replace it by a
new machine. There are two alternative models X and Y of the new machine .prepare a
statement of profitability showing the payback period from the following information.
Ignore taxation.
Particulars Machine X Machine Y
Estimated life of the machine 4 years 5 years
Cost of machine Rs. 9,000 Rs.18,000
Estimated savings in Scrap Rs.500 Rs.800
Estimated savings in direct Rs.6,000 Rs.8,000
wages
Additional cost of Maintenance Rs.800 1,000
Additional cost of supervision Rs.1,200 Rs.1,800

(1x10 marks = 10 marks)

Compulsory question, the question carries 10 marks

17.Case Analysis: A Pro forma cost sheet of a company provides the following particulars:
 Elements of Amount per unit Rs.
cost
Materials 80
Direct Labour 30
Overheads 60
Total cost 170
Profit 30
Selling price 200
The following further particulars are available;

(a)Raw materials are in stock on an average of one month

(b)Raw materials are in progress on an average for half month

© Finished goods are in stock on an average for one month

(d) Credit allowed by suppliers is one month.

(e) Delay in payment of wages 1 ½ weeks

(f) Delay in payment of overheads is one month

(g) 1/4th output is sold against cash

(h) Cash in hand and at bank is expected to be Rs.25000.

(i) Credit allowed to customers 2 months.

You are required to prepare a statement showing the working capital needed to finance level of
activity of 1, 04,000 units of production.

You may assume that production is carried on evenly throughout the year, wages and overheads
accrue similarly and a time period of four weeks is equivalent to a month.