LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

M.A. DEGREE EXAMINATION – MEDICAL SOCIOLOGY

OC 10

SECOND SEMESTER – APRIL 2007

SO 2805/SO 2950 – HOSPITAL FINANCIAL MANAGEMENT

 

 

 

Date & Time: 21/04/2007 / 1:00 – 4:00 Dept. No.                                              Max. : 100 Marks

 

 

PART  A

ANSWER ALL QUESTIONS                                              10 X 2 = 20

 

1. How are risks and return related to each other?
2. What are the objectives of Working Capital Management?
3. State any two advantages of Cash management.
4. What are the reasons of time value of money?
5. What is Cost of Capital?
6. What are NPV, EBIT, PI, and ARR?
7. Define Financial Management?
8. Alphonse has invested Rs.10,000 for 3 years at 11% pa, then What

would be total amount he gets at the time of maturity?

9. What is Bonus?
10. Write short notes on capital structure.

 

PART B

 

ANSWER ANY FIVE QUESTIONS                                   5 X 8 = 40

 

• Examine the relationship between the value of the firm and value of stock?
• What are the merits and demerits of IRR?
• Enumerate the various factors determining the amount of working capital requirements?
• From the following details calculate weighted average cost of capital:

8 % debentures                  Rs. 8,00,000

9% preference shares         Rs. 5,00,000

Equity share capital             Rs. 7,00,000

The market rate of a equity share is Rs.90.  The shareholders required rate of returns is 10%.

• Write short notes on Discounted cash flow techniques.
• Explain the various components of working capital.
• What are the functions of Financial Management?

 

PART C

 

ANSWER ANY TWO QUESTIOS                          2 X 20 = 40

 

• Explain the different factors that are influencing the dividend policy?

 

• Explain in detail the scope and objectives of Financial Management.

 

 

 

 

 

• A) Explain the various basic financial decisions. (10)

 

1. B) What is the significance’s of optimum capital structure. Give one model for optimum capital structure. (10)

 

21. From the following details calculate
22. Pay Back Period
23. Average Rate of Return on original investment and

Average investment methods

1. Net present value method and
2. Profitability index method

 

Original investment Rs. 3,00,000  – life time 5 years and annual cash inflows (before tax at 50%) of the project are as follows

1^st yr      Rs.40,000

11 yr       Rs 48,000

111 yr      Rs. 55,000

1V yr       Rs.72,000  and

V yr.      Rs.96,000.

The cost of capital of the company is 10%.

 

 

 

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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

CO 36

M.A. DEGREE EXAMINATION – MEDICAL SOCIOLOGY

SECOND SEMESTER – APRIL 2008

    SO 2805 / 2950 – HOSPITAL FINANCIAL MANAGEMENT

 

 

 

Date : 24/04/2008            Dept. No.                                        Max. : 100 Marks

Time : 1:00 – 4:00

SECTION: A

Answer All Questions:                                                                                       10 x 2 = 20

 

1) What are the basic financial decisions?

2) What is Capital Expenditure Budget?

3) What do you mean by “Operating Cycle”?

4) Define Leverage

5) State the following statements are True or False

• Retained earnings have no cost to the firm
• The terms “Permanent working capital” and core current assets have synonymous meanings.
• Discounted cash flow technique takes into account the time value of money.
• A finance manger’s concern must be to maintain liquidity rather than profitability

6) A project costs Rs.40, 00,000 and yields annually a profit of Rs.6, 00,000 after

Depreciation @12.5% but before tax at 50%. Calculate the payback period.

7) The current market price of an equity share of a company is Rs.110 and the current

Dividend per share is Rs.5.50. Assuming that the dividends grow at the rate of 5%,

Calculate the cost of equity capital?

8) Calculate Economic-ordering Quantity: Annual Usage12000 units, Cost of Materials

per unit Rs.40, cost of placing and receiving one order Rs.120, annual Carrying cost  Rs.4 per unit.

9) What are motives for holding cash?

10) Write a short note on the concept of dividend.

 

SECTION – B

Answer any Five only:                                                                                         5 x 8 = 40

11) “The operative objective of financial management is to maximize wealth of the firm”. Discuss.

12) What do you mean by Optimum Capital Structure? Make a list of factors determining

Optimum Capital Structure.

13) Discuss the importance of capital Budgeting.

14) Using the information given below, compute the Pay-Back Period under (a)

Traditional Payback Method, and (b) Discounted Payback Method and Commenton the results.

 

Initial Outlay                         Rs.80, 000

Estimated Life                       5 Years

Profit After Tax:

End of Year   1                      Rs.6, 000

• 14,000
• 24,000
• 16,000
• Nil

Depreciation has been calculated under straight-line method. The cost of capital may be taken at 20%p.a and the P.V of Rs.1 at 20% p.a is given below:

Year:                1          2          3          4          5

P.V factor       .83       .69       .58       .48       .40

 

15)  A) Preferred Hospital Ltd issued 30,000, 15% Preference shares of Rs.100 each. The

cost  of issue was Rs.30,000. Determine the cost of preference capital if shares

are   issued (a) at a premium of 10% and (b) at a discount of 10%.

1. A firm issues debentures of Rs.1, 00,000 and realizes Rs.98, 000 after allowing

2% commission to brokers. The debentures carry an interest rate of 10%. The

dentures   are due for maturity at the end of the 10^th year. You are required to

Calculate the effective cost of debt before tax and after tax.

 

16) From the following information taken from the books of A Ltd, compute the

Operating cycle days:

Period Covered 365 days

Average period of credit allowed by suppliers 16 days

Rs.

Average debtors outstanding                                                                  4800

Raw material consumption                                                                   44000

Total production cost                                                                          100000

Total Cost of Sales                                                                              105000

Sales for the year                                                                                160000

Value of average stock maintained                                                         2500

Raw Materials                                                                                         3200

Work in progress                                                                                     3500

Finished goods                                                                                        2600

 

17 ) Summarized below are the Income and Expenditure forecasts for the months of

March to July 2007.

Month                   Sales.(Rs.)                   Purchases.(Rs.)            Wages.(Rs.)

March                    60,000                         36,000                           9,000

April                      62,000                         38,000                           8,000

May                       64,000                         33,000                         10,000

June                       58,000                         39,000                           8,500

July                        56,000                         39,000                           9,500

Prepare cash budgets for 3 months starting from 1^st May 2007.

1. Cash balance on 1^st May 2007 Rs.8,000
2. Advance tax Rs.8,000 payable in March and June each.

• Credit allowed by suppliers is 2 months and allowed to customer 1 month.

1. Lag in payment of wages is one month.

 

18) JV hospital Ltd. is planning to buy a new machine costing Rs.80,000. Cash flows are

expected  to be as follows:

Years:                       1                 2                  3                     4                      5

Cash Flows (Rs)      8000           24000           32000             48000             32000

The company expects a minimum return of 10 percent. On the basis of Net

Present Value, find the profitability of the machine and state if it is financially

Preferable.  P.V of Rs.1 at 10% p.a is given below:

Year:                1          2          3          4          5

P.V factor       .909     .826     .751     .683     .621

 

SECTION – C

Answer any two only.                                                                                  2 x 20 = 40

 

19) Limited company is considering investment in a project requiring a capital outlay

of Rs.2, 00,000. Forecast for annual income after depreciation but before tax is as

follows:

Year:                    1                      2                      3                      4                      5

Annual  Income:  100000           100000            80000              80000              40000

Depreciation may be taken as 20% on original cost and taxation at 50% of net income. You are required to evaluate the project according to each of the following methods. 1) Pay Back Method 2) Rate of Return on average investment method.  3) Discounted cash flow method taking cost of capital as 10%.

 

20) Apex Hospital Ltd has the following capital structure:

Particulars                   Market Value              Book Value                 Cost %

Equity Capital              Rs.80,00,000              Rs.120,00,000             18

Preference Capital       Rs.30,00,000              Rs.20,00,000               15

Secured Debt              Rs.40,00,000               Rs.40,00,000               14

Cost of individual sources of capital is net of tax. Compute the Weighted Average

Cost of capital Based on Market Value and Boo value.

 

21) What is Working Capital? Explain various determinants of working capital of a concern.

 

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