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ItffiililIililtililililltililt uG - 359

IV Semester B.B.A. Examinr#3n, September/Octob er 2A22


(Repeaters) (CBGS)
(2015 - 16 and Onwards)
BUSI NESS ADM INISTRATION
Paper - 4.4: Financial Management
Time : 3 Hours Max. Marks : 70

lnstruction : Answers should be completely wrffien in English only.

SEGTION -A
1. Answer any five sub-questions of the following. Each question carries
two marks. (2x5=10)

a) Define financial management.

b) Give the equation for EPS.

c) Fixed cost is Rs. 2,50,000, Profit is 1,75,000, Sales is Rs. 7,45,000.


Calculate contribution.

d) EBIT = 5,00,000, EBT = 3,00,000, calculate financial leverage.

e) Mention any four functions of financial management.


f) Give the meaniftg of time value of money.

g) Give the meaning of cash dividend.

sEcroN - B

Answer any three questions of the following. Each question carries six marks. (3x6=18)

2. Briefly explain the prime objectives of financial management.

3. Explain briefly the characteristics of a sound financial plan.

P.T.O.
uG - 359 -z- llllll llillil llllllllllllll lll llll

4. Compare the two companies in terms of operating leverage and financial


Ieverage.
FirmX Firm Y
Sales 30,00,000 45,00,000
Variable cost 35% on sales 45/" on sales
Fixed cost 8,00,000 9,00,000
lnterest 2,00,000 3,00,000

lnterpret the results of the firm.

5. Mr. Anil deposits Rs. 4,000 at the end of every year for 5 years and the deposits
earn a compound interest @ 10% p.a. Determine how much money he will
have at the end of five years ? Given (1.10)s = 6.105.

6. Discuss the salient features of NPV method. r'

..'::-,".',.,,'.' ,.
-
SECTION -C
..
Answer any three questions ftom tfre fullowing. Each queslion carries
14 marks. (14x3=42)

7. What do you understand by dividend policy ? Enumerate the factors that


determine the dividend policy.

8. Give the meaning of working capital. Explain the dangers of excessive and
inadequate working capital.

9. A firm's cost of capitat is 10%. lt is considering two mutually exclusive projects


X and Y. The details are given below : 1

Particulars 't1 Proiect X Proiect Y

I
tt
lnvestment 15,00,000 15,00,000
Net annual cash flows :

1 2,00,000 8,00,000
2 4,00,000 8,00,000
3 6,00,000 4,00,000
4 , 9,00,000 2,00,000
5 12,00,000 2,00,000
Iil]ttililtililililt]fltilllll -3- uG - 3s9
Compute :

A) Payback period
B) NPV

P.V. factor at 1 2/o for 5 years.

Year 1 2 3 4 5
P.V. factor @ 12% 0.893 4.797 0.712 0.636 0.567

10. ABC Ltd. is capitalised with Rs. 7,00,000 divided into 70,000 equity shares
. of Rs. 10 each. The management plans to raise another Fls. 5,00,000 to
finance some expansion programme.
The following are the four possible plans :
t'

1) All equity shares.


2) Rs. 2,50,000 in equity shares and the balance in debentures carrying
: - 10o/o interest.
' , carrying 10% dividend.
4) All debentures carrying 8% interest.
The existing EBIT amounts to Rs. 60,000 p.a. Calculate EPS in all the
above four plans

11. Discuss the factors affecting capital budgeting decisions of a firm.

&'t

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