- JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
End Semester Examinations – APRIL 2012
- I.B – II Semester
FINANCE FOR MANAGERS
TIME: 3 hours Max. Marks: 100
Section – A
- Answer SEVEN questions out of Ten. (7 x 5 = 35)
- Explain any five risk accounting methods.
- Compute weighted average cost of capital from the following
| Particulars | amount | After tax cost |
| Equity capital(Rs.10/share | 150,00,000 | |
| Retained earnings | 100,00,000 | |
| 10% preference shares | 50,00,000 | |
| 26% debentures | 60,00,000 | 13% |
| Term loans 24% | 70,00,000 | 12% |
| 430,00,000 |
Expected dividend is Rs. 2 per share.
- The capital structure of Enron consists of ordinary share capital of Rs. 10,00,000 (100 per share) & Rs. 10,00,000 10% debentures
The selling price is Rs. 10 p.u, variable cost Rs. 6 p.u and fixed expenses Rs. 2,00,000. Income Tax rate is 30%
The sales level is expected to increase from 1,00,000 to 1,20,000 units
Calculate FL, OL and percentage change in EPS
- Explain determinants of Receivables and the cost involved in it.
- Critically evaluate the issue of Bonus shares.
- Explain in detail the cost computation methods of different components of capital
- Explain the Functions of Finance Manager.
- Explain the importance and difficulty of Capital budgeting decisions
- Explain any ten determinants of Capital Structure.
- Critically evaluate Irrelevance theory of Dividends
Section – B
- Answer THREE questions out of Five. (3 x 15 = 45)
- Explain critically the objectives of financial management.
- A Performa cost sheet of a company provides the following
Particulars/Element of cost amount per unit
Material 80
Direct labour 30
Overheads 60
Total cost 170
Profits 30
Selling price 200
The following further particulars are available:
- Raw materials in stock- 1 mt
- Materials in process- half mt
- Finished goods in stock-1 mt
- Credit allowed by suppliers is one month.
- credit allowed to debtors is two months
- Lag in payment of wages 1 1/2 wk
- Lag in payment of overheads one month
- 1/4 th output is sold against cash
- cash in hand is expected to be Rs. 25,000
- Level of activity 1, 04,000 units.
Compute working capital requirements.
You may assume that production & sales follow consistent pattern.
Time period of 4 weeks is equal to one month.
- Explain factors affecting Dividend Policy.
- Evaluate critically the different sources of Long term capital.
- Explain in detail inventory Management Techniques.
Section – C
- Compulsory Case study (1 x 20 = 20)
- R ltd can make either of two investments at the beginning of 2011 using the following methods evaluate the projects and suggest which investment to be made.:
- a) Discounted cash flow method (NPV)
- b) Payback period method
- c) Average return on average investment method.
The details are: Rate of return 10 %
P.T.O..
| Proposal X | Proposal Y | |
| Cost of the investment | Rs 25000 | Rs 30000 |
| Life | 5 yrs | 6 yrs |
| Scrap Value | – | – |
Net Income after Depreciation and Tax
| Year | Rs | Rs |
| 2001 | 600 | 3800 |
| 2002 | 1000 | 4500 |
| 2003 | 2500 | 5000 |
| 2004 | 3000 | 4500 |
| 2005 | 3500 | 5500 |
| 2006 | – | 6000 |
It is estimated that each of the alternative projects will require an additional working capital of Rs 2000 which will be received back in full after the expiry of each project life .Depreciation is provided under straight line method.
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