Professional Documents
Culture Documents
Section A. Question No.1 Is Compulsory That Caries 7.5 Marks and Other Questions Carry 2.5 Marks Each
Section A. Question No.1 Is Compulsory That Caries 7.5 Marks and Other Questions Carry 2.5 Marks Each
Section A. Question No.1 Is Compulsory That Caries 7.5 Marks and Other Questions Carry 2.5 Marks Each
Section A. Question no.1 is compulsory that caries 7.5 marks and other questions carry 2.5 marks
each.
1. You are the finance manager of a firm producing computer spreadsheets. Given the
information evaluate the implications different inventory valuation methods according to the
following questions.
i. Find out the profitability and all ratios concerned, and comment on which method would
you go for and why, under the conditions of (i) debt financing, (ii) trade union bargaining,
(iii) profit based CEO package, and (iv) tax consideration.
ii. There is no practice of using financial information in trade union bargaining in the
industry at present, but the management is thinking to be the pioneer in such
introduction. This may give an edge over labor management as labor unrest is not very
uncommon in the industry. In that case some of the alternative bonus packages for
laborer can be 5% of gross profit, 10% of net income or 2% of sales. The firm can
introduce any variable(s) for trade union bargaining as the union leaders are loyal to the
firm. If the present scenario continues then which method is most preferable in view of
trade union issue and why? (Hint: Construct a 3*3 matrix and make comment)
Section B. Answer any 3 questions of 2.5 marks each.
2. By the help of a hypothetical example how can you show that window dressing is costly? Why
do firms do it?
4. What is “the lemons problem” and how does financial analysis aim at to solve the problem?
5. Define the wealth maximization by means of graph. Show the limitations of accounting as
demonstrated in wealth maximization.
6. “The portfolio theory says that diversification is more economic on the part of the investors
rather than the firm.” Explain the statement in reference to the case of amazan.com.