6. Explain various techniques of inventory management. ( 10 Marks)
MB0029 Financial Management(3 credits)Assignment 2(60 Marks)Answer the following questions:
1. “Capital Expenditure decisions are by far the most important decisions in the field of financial management.” Elucidate. ( 10 Marks)2. Prepare cash budget for the period January-June from the following information.( 15 Marks) November DecemberJanuaryFebruaryMarchAprilMayJuneSales80,00090,0001,00,0001,05,0001,05,0001,10,0001,00,00095,000Purchases40,00045,00050,00055,00055,00050,00050,00040,000Wages8,0009,00010,00010,50010,50011,00010,0009,500Overheads5,0006,0006,5006,5007,0007,5007,0006,000Additional informationi)20% of the sales are on cash basis; 70% is received in the month followingsales and balance in two months following salesii)Suppliers offers two months credit on all purchasesiii)Lag in payment of wages is one monthiv)Expected cash balance as on 1
April is Rs.75,000v)Tax of Rs. 60,000 to be paid in the month of March3. “Efficient cash management will aim at maximizing the availability of cash inflows bydecentralizing collections and decelerating cash outflows by centralizing disbursements”Discuss. (10 Marks) 4. The following information is available related to three companies P Ltd., Q Ltd. and R Ltd. ( 15 Marks)
A Ltd.B Ltd.C Ltd.
EPS = Rs. 30EPS = Rs. 30EPS = Rs. 30K
= 12%r = 14%r = 12%r = 10%Determine the value of shares as per Walter model when the dividend pay out ratio is0%, 25%, 50%, 75% and 100%