Tuesday, October 01, 2013

Dibrugarh University - Financial Management (Nov' 2012)

2012 (November)
Commerce (Speciality)
Course: 302
Full Marks: 80
Time: 3 Hours

1. Write ‘True’ or ‘False’:
(a)    Financial decision includes financial planning and capital structure decisions.
(b)   Profit maximization is a capitalistic approach.
(c)    Debentures do not carry any voting right.
(d)   A firm should always keep a large balance of cash so as to meet the contingencies

2. Fill in the blanks:
(a) The time required to process and execute an order is called___ time.
(b) Payment of dividend involves legal as well as___ considerations.
(c) ‘Ploughing back of profit’ is also known as ___ earnings.
(d) Leasing benefits both the lessee as well as the ___.

3. Write short notes on:
(a) Trading on Equity
(b) Lease Financing
(c) Stable Dividend Policy
(d) Inventory Management

4. (a) “Finance is lifeblood of an organization and financial management is the network which facilitates its flow and availability to all organs of an organization.” Explain.
(b) What is financial management? What are the objectives of financial management? Discuss its scope.

5. (a) What do you mean by Investment Decisions? What are its characteristics? Discuss any one technique of investment decisions.
(b) What is financial Leverage? What are its important features? Calculate the degree of financial leverage from the following capital structure of a company:
Equity Share Capital                                        1000000
10% preference Share Capital                       1000000
8% Debentures                                              1250000
The Earning Before Interest and Tax (EBIT) are Rs. 500000. The rate of income tax is 50%

6. (a) What are the main sources of finance available to industries for meeting long-term financial requirements? Discuss these sources.
(b) What is Capital Market? What are the main components of a capital market? Distinguish between Capital Market and Money Market.

7. (a) Discuss the M-M Theory of dividend distribution. What are the major criticisms of this theory of irrelevance?
(b) What do you mean by Ploughing Back of profit? What are the purposes of Ploughing back? Discuss different factors that influence the Ploughing back of profits.

8. (a) What is Receivable Management? Discuss the factors which influence the size of receivables.
(b) A proforma Cost Sheet of a company provided the following particulars:
Elements of Cost:
Raw Material                      40%
Direct Labour                     10%
Overheads                          30%
Following further particulars are also available:
(i)      Raw materials are to remain in stores on an average of 6 weeks
(ii)    Processing time is 4 weeks
(iii)   Finished goods are required to be in stock on an average period of 8 weeks
(iv)  Credit period  allowed to debtors on an average of 10 weeks
(v)    Credit period  allowed by creditors is 4 weeks
(vi)  Lag-in payment of wages is 2 weeks
(vii) Selling price per unit is Rs. 50
You are required to be preparing an Estimate of Working Capital Requirements adding 10% margin for contingencies for a level of activity of 130000 unites of production.