BBA -II PAPER 203 Financial Management

Section A : - All ten questions are compulsory. Each questions is to be attempted in 50 words. Each question carries 2 marks.

Section B : - Attempt any three questions. Each question is to be attempted in 500 words. Each question carries 10 marks.
Section C :-  One question case study is compulsory and carries 20 marks.

Sec.-A

1. What is difference between financial and accounting function?
2. What do you mean by cash planning?
3. What is Profitability index?
4. What do you mean by dividend policy?
5. What is meant by 'Leverage'?
6. Current ratio is 2:1 and the net working capital is Rs. 36000 calculate the amount of current assets and current liabilities.
7. Explain the term trading on equity?
8. What do you understand by capital structure of a company.
9. What do you mean by cash planning?
10. What is M, M's formula of dividend policy?

Section-B

1. Explain financial management. Discuss the concept of profit maximization v/s wealth maximization.
2. Kavita Limited is considering two projects. Each requires an investment of Rs. 10000. The net cash inflows from investment in two projects X and Yare as follows.
Year 1 2 3 4 5 6

Project X 5000 4000 3000 2000 1000 --
Project Y 1000 2000 3000 4000 5000 6000
The company has fixed three years pay back periods as the cut off point. State which project should be accepted?
3. The Modern Machine Co. Ltd. Places before you the following figures.
Sales Profit
2005 200000 10000
2006 180000 2000
You are required to:-
i. PIV Ratio
ii. BEP Point
iii. Predict the expected profit or loss with sale of
a. Rs. 150000
b. Rs. 300000

4. The following information is given about an inventory problem.
Annual consumption 12000 units
Order cost Rs.12 per order
Cost per unit Rs.1 per unit
Inventory carrying Cost 24% of cost
Normal lead time 15 days
Safety stock 30 days consumption
The factory work for 360 days in a year calculate
i. EOQ
ii. Re-order level (ROL)
iii. SS (Safety Stock)
5. Write short notes on following
i. Equity Shares
ii. Retained earning

Sec.-C

1. The comparative Balance Sheets of Mr. Tandon for the two years were as folows:

Liabilities 2004 2005 Assets 2004 2005

Rs Rs Rs Rs.

Capital 1,50,000 1,75,000 Land & Building 1,10,000 1,50,000

Loan from Bank 1,60,000 1,00,000 Machinery 2,00,000 1,40,000

Creditors 90,000 1,00,000 Stock 50,000 45,000

Bills Payable 50,000 40,000 Debtors 70,000 80,000

Loan from R.F.C. 25,000 Cash 20,000 25,000

4,50,000 4,40,000 4,50,000 4,40,000

Additional Information

(i) Net profit for the year 2005 amount to Rs. 60,000.

(ii) During the year a machine costing Rs. 25,000 (accumulated depreciation Rs. 10,000) was sold for Rs. 13,000. The provision for depreciation against machineray as on 31.12.04 was Rs. 59,000 and on 31.12.05 Rs. 85,000.

You are required to prepare a Cash flow Statement