THIRUTHANGAL NADAR COLLGE III.B.Com (General) FINANCIAL MANAGEMENT PART A Answer all questions 1. What is meant by financial management?

2. What is meant by Finance? 3. What is meant by capital Structure? 4. What is meant by e!erage? ". What is meant by #ost of $ebt? %. What is meant by #ost of #apital? &. What is meant by #ost of 'reference Shares? (. What is meant by #ost of )quity? *. What is meant by Financial e!erage? 1+. What is meant by ,perating e!erage? PART#B Answer any fi!e questions 11. What are the ob-ecti!es of financial management? 12. What are the types of e!erage? 13. ).plain the // theory Approach? 14. What are the factors 0etermining capital Structure? 1". A company raise0 preference share capital of 1s.12 ++2+++ by issue of 1+3 preference shares of 1s.1+ each. #alculate the cost of preference capital when 4i5 1+3 'remium2 an0 4ii5 at 1+ 3 $iscount. 1%. A #ompany issue 1+3 irre0eemable 0ebentures of 1s.12 ++2+++. the company is in the ""3 ta. brac6et. #alculate the cost of 0ebt when issue0 4i5 at par 4ii5 1+3 $iscount. 1&. Apollo t0 e.pecting an annual )789 of 1s.22 ++2+++. 9he company has 1s. %2++2+++ in 1+3 0ebentures. 9he cost of equity capital is 12."3. :ou are require0 to calculate the total !alue of the firm. PART#C Answer any three questions 1(. 9he 8nstalle0 capacity of a factory is %++ units. Actual capacity is 4++ units. Selling price per unit is 1s.1+. ;ariable cost is 1s.% 'er unit. #alculate the operating le!erage in each of the following three situations. 1. When fi.e0 cost are 1s.4++ 2. When fi.e0 cost are 1s. 12+++ 3. When fi.e0 cost are 1s. 122++ % 10 "%0 10 !" !0

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1*. 9he current )789 is 1s.1+2+++. 9he firm has "3 bonus aggregating to 1s.4+2 +++2 while the 1+3 preference shares amount 1s.2+2+++. what woul0 be the earning per share . Assuming the )789 being 415. 1s.%2 +++ 4251s.142+++2 435 <umber of ,r0inary shares is 12+++. 2+. What are the Functions of Finance /anager? 21. A #ompany is ha!ing the following capital structure. )quity capital 1+3 'reference share (3 $ebentures 22++2+++ 22++2+++ 22"+2+++

9he present )789 is 1s.12 ++2+++ an0 ta. rate is "+32 #ompute of financial le!erage.