GOBIND KUMAR JHA 9874411552

B. Com. (Semester – VI)

Financial Management
Final 100% Guaranteed Theory Questions

Unit – I (Introduction & Basic Concept)

1. Explain the significance of time value of money in financial decision making.
2. What do you mean by time value of money? What are its reasons?
3. Discuss the basic components of the financial environment under which a firm has to operate.
4. Why value maximization (wealth maximization) objective is called better than profit maximization
objective?
5. Differentiate between profit maximization and wealth maximization.
6. Explain the relationship between financing decision, investment decision and dividend decision.
7. Explain the functions of financial management or financial manager.
8. Discuss the relationship between Risk and Return.
9. Explain the compounding & discounting technique in relation to time value of money.
10. Discuss the role of Chief Financial Officer (CFO).
11. Specify the limitations of ‘Maximization of Profit’ as the objective of the firm.
12. Define Financial Management.
13. What are the objectives of financial management?
14. Discuss the importance of Financial Management.

Unit – II (Sources of Capital & Cost of Capital)

15. What is the WACC? What weights do you take into consideration of WACC? Which of them do you
recommend most? Why?
16. What are the various sources of short term finance of limited company?
17. What are the various sources of long-term finance of limited company? Explain merits and demerits of
any three of them.

Unit – III (Leverage & Capital Structure)

18. Write a short note on Trading on Equity.
19. Write a short note on EBIT – EPS Analysis.
20. Mention the factors that are to be considered in determining capital structure.
21. What do you mean by optimum capital structure? Discuss the features of an optimum capital structure.
22. What do you mean by capital structure? Discuss the pattern of capital structure.

Unit – IV & V (Working Capital Management)

23. “Length of operating cycle is the major determinant of the working capital needs of a business firm” –
Explain.
24. Explain the working capital investment policies or approaches or strategies to financing current assets.
25. Explain the concept of working capital cycle or operating cycle.

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GOBIND KUMAR JHA 9874411552
26. Classify the working capital.
27. Explain the significance or importance of working capital.
28. What do you mean by Working Capital Management?
29. Explain the various sources of finance to meet working capital requirements.
30. What factors are to be considered in determining the working capital need of a firm?

Unit – VI & VII (Capital Budgeting)

31. Write a short note on capital rationing.
32. Write a short note on profitability index method.
33. Write a short note on Accounting Rate of Return Method.
34. Examine the rationality of the payback period method in the context of capital expenditure decisions.
35. Compare between Internal Rate of Return and Net Present Value.
36. Discuss briefly IRR Method of evaluation of projects.
37. Discuss briefly the NPV Method of evaluation of projects.
38. Discuss the different types of investment projects.
39. What are the process or steps of capital budgeting?
40. What do you mean by capital budgeting? Discuss its importance.
41. What is capital budgeting? What are the purposes of capital expenditure decisions?
42. Explain the features of Capital Budgeting.

Unit – VIII (Dividend Policies)

43. What factors determine the dividend policy of a firm? / Discuss the determinants of dividend policies.
44. Discuss the assumptions of Walter’s Divided Model. To what extents are the shortcomings of their
model are justified to you?
45. Discuss the Gordon’s Model of dividend policies with assumptions. What are the criticisms made
against Gordon’s Model?