Total No. of Questions : 5] SEAT No.

:
PA-4166 [Total No. of Pages : 4

[5946]-202
M.B.A.
GC-08 : FINANCIAL MANAGEMENT
(2019 Pattern) (Semester-II)
Time : 2½ Hours] [Max. Marks : 50
Instructions to the candidates :
1) All questions carry 10 marks each.
2) All questions are compulsory.
3) In case of answering numericals, working notes should be part of the
answer.
4) Simple/Non-scientific calculator is alllwed.

Q1) Attempt any Five: [5 × 2 = 10]

a)Enlist the functions of a finance manager.
b)What is a "common size statement?"
c)What is financial leverage? How is it different from operating leverage?
d)Discuss in brief the concept of Net Present Value (NPV)
e)What is 'Trading on Equity'?
f)Differentiate between current ratio & quick ratio/acid test ratio.
g)Cost of equity capital Ke is always more than cost of Debt capital Kd"__
This statement is
i) False ii) True iii) Can't say
Q2) Answer any Two: [2 × 5 = 10]

1) Elaborate the determinants of capital structure.

2) Discuss in brief the factors responsible for determining the need of working
capital.

3) Compare the traditional methods of capital budgeting with the modern

methods/techniques of capital budgeting.

4) What are Turnover Ratios ? Explain any two turnover ratios.

P.T.O.
Q3) a) Following data is extracted from the books of XYZ ltd.
(Rs)
sales 5,00,000
less: variable cost 1,50,000
contribution 3,50,000
less: fixed cost 1,00,000
EBIT 2,50,000
less: Interest 50,000
EBT 2,00,000
Calculate: i) Degree of operating leverage.
ii) Degree of Financial leverage.
iii) Degree of combined leverage.
Also,
Calculate DOL, DFL & DCL if sales increase by 6% with other factors
remaining same.
OR
b) Based on the given information of PQR Ltd,
Calculate: i) Gross profit ratio
ii) Current ratio
iii) Stock Turnover Ratio (based on COGS)
iv) Debt equity ratio
v) Average collection period.
Income statement of PQR Ltd.
(Rs)
sales 10,00,000
raw materials consumed 2,00,000
wages 2,00,000
manufacturing expenses 1,00,000
cost of goods sold 5,00,000
administrative expenses 50,000
selling & distribution expenses 50,000
Net profit 4,00,000

[5946]-202 2
 Balance sheet of PQR Ltd as on 31st March

Liabilities Amount (Rs.) Assets Amount (Rs.)

Equity capital 2,00,000 Fixed assets 2,50,000

Reserves 1,50,000 Stock 2,50,000

Debentures 2,00,000 Debtors 1,00,000

Creditors 1,00,000 Cash & bank 1,00,000

Bank O.D. 50,000

Total 7,00,000 Total 7,00,000

Q4) a) Alfa Ltd has currently an ordinary share capital of Rs. 25 lakh, consisting
of Rs. 25,000 shares of Rs. 100 each.

The management is planning to raise another Rs. 20 lakh to finance a

major programme of expansion through one of the 3 financial plans,
given below.
i) Entirely through Equity Shares
ii) Rs.5 lakh through equity shares & Rs.15 lakh through long-term
borrowings at 16% P.A. interest.
iii) Rs.10 lakh through ordinary shares & Rs.10 lakh through preference
shares with 14% dividend.
This company is expected to earn EBIT of Rs.8 lakh. Assuming a tax
rate of 35% determine the EPS in each alternative & comment on
implications of financial leverage. Which alternative should be selected?
OR
b) XYZ Ltd sells its products on a gross profit of 20% on sales. Following
information is extracted from its annual accounts for the year ended on
31st March.
Sales at 3 month's credit Rs. 40,00,000
Raw material Rs. 12,00,000
Wages- avg time lag 15 days Rs. 9,60,000
Mfg.expenses-paid one month in arrears Rs. 12,00,000
Admin. expenses, paid one month in arrears Rs. 4,80,000
Sales promotion expenses-payable Rs. 2,00,000
half yearly in advance.

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 This company enjoys one month's credit from its suppliers of raw materials &
maintains 2 month's stock of raw materials & 1½ month's stock of finished
goods. Cash balance of Rs.1,00,000 is maintained. Assuming 10% margin,
findout the working capital needs of XYZ Ltd.

Q5) a) ABC Ltd, whose cost of capital is 10% is considering two mutually
exclusive projects X & Y. The details of which are:

Particulars Project X(Rs.) Project Y(Rs.)

Investment-: 70,000 70,000

Cash inflow: year 1 10,000 50,000

2 20,000 40,000

3 30,000 20,000

4 45,000 10,000

5 60,000 10,000

1,65,000 1,30,000

Calculate NPV, P I of Project X & Project Y. Which project should be selected?

Why?
PVF @ 10% for year 1 to 5 are (0.909, 0.826, 0.751, 0.683, 0.621)
OR
b) Calculate the cost of capital in following cases.

i) X Ltd issues 12% debentures of face value Rs.100 each & realizes
Rs.95 per debenture. These debentures are redeemable after 10 years
at a premium of 10%
&

ii) Y Ltd issues 14% preference shares of face value of Rs.100 each at
Rs.92 these shares are repayable ( redeemable) at par after 12 years.
Assume that both the companies are paying income tax at 50%.

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[5946]-202 4
Total No. of Questions : 5] SEAT No. :
P6869 [5860] - 202
[Total No. of Pages : 5

M.B.A. - I
202 : GC - 08 : FINANCIAL MANAGEMENT
(2019 Pattern) (Semester - II)
Time : 2½ Hours] [Max. Marks : 50
Instructions to the candidates:
1) All questions are compulsory.
2) Figures to the right indicate full marks.
3) Use of simple calculator is allowed.

Q1) Answer the following Multiple Choice Question (Any 5). [10]
i) Funds are financial resources in the form of:
a) Corporate capital b) Business Funds
c) Cash Equivalents d) All of these
ii) The sum of short term and long therm sources of finance is know as :
a) Capital structure b) Both of these
c) Financial structure d) None of these
iii) The decisions of investing in long term or fixed assets on the basis of
cost - benefit analysis or risk - return analysis are known as:
a) Working capital decisions b) Financial Decisions
c) Capital budgeting decision d) None of these
iv) The decisions relating to the use of profit or income of an entity or
organization are known.
a) Finance decision b) Dividend decisions
c) Investment decision d) Any of these
v) The concept that value of a rupee to be received in future is less than the
value of a rupee on hand today is named as what.
a) Recovery factor concept b) Time value of money
c) Compounding factor concept d) None of these
vi) The method of converting the amount of cash and cash equivalents value
in present is known as:
a) Compounding b) Annuity
c) Discounting d) None of these

[5860] - 202 1 P.T.O.

 vii) The decisions which are concerned with allocation of funds to the short
term investment proposal are known as:
a) Capital investment b) Working Capital decisions
c) Capital budgeting d) None of these
viii) Through leaverage analysis the financial manager measure the relationship
between.
a) Cost and earning b) Sales revenue and earning
c) Cost and sales revenue d) Cost sales, revenue and earning

Q2) Write short notes: (Any 2) [10]

a) Financial forecasting.
b) Factoring.
c) Operating cycle.
d) Trading on equity.

Q3) The following is the Balance Sheet of Global India Pvt. Ltd .., Ahmednagar as
on 31st March 2022. [10]
Balance Sheet as on 31.03.2022.
Liabilities Amount Assets Amount
Share capital 2,00,000 Land and Building 1,40,000
Profit and loss A/C 30,000 Plant and Machinery 3,50,000
General Reserve 40,000 Stock in Trade 2,00,000
12% Debenture 4,20,000 Debtors 1,00,000
Creditors 1,00,000 Bills Receivable 10,000
Bills payable 50,000 Bank 40,000
Total 8,40,000 Total 8,40,000
Calculate:
1) Current Ratio.
2) Quick Ratio.
3) Inventory to working capital.
4) Debt to Equity.
5) Proprietary Ratio.
OR
[5860] - 202 2
 The following Balance Sheet of Amrish Ltd. in as follow:
Balance Sheet As on 31.03.2022
Liabilities Amount Assets Amount
Equity capital 1,00,000 Goodwill 5,00,000
6% per share 5,00,000 Plant and Machinery 6,00,000
General Reserve 1,00,000 Land and Building 7,00,000
Profit and loss A/c 4,00,000 Further 1,00,000
provision for tax 1,76,000 Inventory 6,00,000
Bills payable 1,24,000 Bills Receivable 30,000
Bank o/d 20,000 Debtor 1,50,000
Creditors 80,000 Bank 2,00,000
12% Debenture 5,00,000 Short term Investment 20,000
Total 29,00,000 Total 29,00,000
Calculate:
i) Current Ratio.
ii) Liquid Ratio.
iii) Current Asset to Fix Asset.
iv) Debt to Equity.
v) Proprietary Ratio.

Q4) a) Swaraj Ltd. is considering investing in a project that is expected to cost

A 12,00,000 and has an effective life of 5 year. The projected cash inflow
for this period is as follows: [5]
Year Amount (A)
1 3,00,000
2 3,00,000
3 4,50,000
4 4,50,000
5 7,50,000
Calculate:
i) Pay Back Period.
ii) Net Present value @10% rate of discount.
iii) Profitability Index.
OR

[5860] - 202 3
 a) A firm whom 10% is consider in to mutual exclusive proposal. X & Y.
Then details of which are as follow:
Year Proposal ‘X’ Proposal ‘Y’
1 1,00,000 6,50,000
2 2,50,000 6,00,000
3 3,50,000 6,00,000
4 5,50,000 5,75,000
5 7,50,000 5,25,000
Calculate IRR of the following proposal X and Y. for an intial investment
of A15,00,000.

b) Gaurav Ltd. has following capital structure. [5]

Source Amount A
Equity capital (Expected divided 12%) 10,00,000
10% preference share 5,00,000
8% loan 15,00,000
Your required to calculate weighted Average cost of capital (WACC)
Assuming that 50% as the rate of income Tax.
OR
b) Calculate weighted average cost of capital from the following.
Source of Capital Book value of capital rupee Specific cost %
Equity share 25,00,000 11
Preferance share 18,00,000 13
Bank loan 13,00,000 10

Q5) The Board of Directors of sarthak limited request you to prepare a statement
showing the working capital requirements for a level of activity of 30,000
units of output for the year.
The cost structure for the company’s product for the above mentioned
activity level is given below.
Particular Cost per unit (RS)
Raw materials 20
Direct labor 5
Overheads 15
Total 40
Profit 10
Selling Price 50

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 a) Past experience indicates that raw materials are held in stock, on an
average for 2 months.
b) Work in progress (100% complete in regard to materials and 50% for
labour and overhead) will be half a month’s production.
c) Finished goods are in stock on an average for 1 month.
d) Credit allowed to supplier : 1 month.
e) Credit allowed to debtors : 2 month.
f) A minimum cash balance of A 25,000 is expected to be maintained.
Prepare a statement of working capital requirements. [10]
OR
Calculate the working capital requirement of “RJM Ltd,”.
Particular Cost per unit (Rs)
Raw material 800
Direct labour 300
Over heads 600
Total cost 1700
Profit 300
Selling price 2000
Additional information.
1) Output 60,000 units per annum.
2) Raw material in stock 1 month.
3) W/P - half month (consider 100% Raw material and 50% labour and
OH).
4) Finish goods in stock 1 month.
5) Credit allowed by suppliers - 1 month.
6) Credit allowed to debtors 2 month.
7) Delay in payment of wages half month.
8) Delay in payment of overheads half month.
Assume that production is carried out evenly throughout a year. All the sales
are credit sales.

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