Financial Management theory questions

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Functions of finance manager

Scope of financial management
Profit maximization vs wealth maximization
Sources of long and short term finance
Types of working capital
Factors affecting working capital requirement
MPBF
Motives for holding cash
5 Cs for debtor evaluation
Aeging schedule
Methods of capital budgeting
Motives for capital budgeting
Types of mergers
WACC
Operating leverage vs financial leverage

Types of sums to be done in every chapter:1.

Leverages:- sums on calculation of OL, FL, CL and reverse calculations in case sales or
EBIT increases.

2.

Receivables:- Sums of evaluating the credit policy to be chosen given the data on credit
period, additional sales and opportunity cost

3.

Working capital:- sums on assessment of working capital. Please do the adjustment on

advance paid, outstanding wages and expenses, safety margin

4.

Capital Structure:- sums on choosing a appropriate capital structure based on EPS

calculation. Please go through financial break even point

5.

Cash management:- sums on assessment of cash inflow and outflow. Adjustment on cash
purchase and cash sales to be specifically done. Also adjustment on advance paid to be
gone through

6.

Cost of capital:- sums on computation on WACC pre tax and post tax. Also do sums on
calculating cost of equity and cost of debt. Revise sums where floatation cost is given.
Also revise a sum on debt equity mix to be adopted.

7.

Capital budgeting:- sums on calculation of constant inflow across years and different inflow
across years. Do question on capital rationing, NPV, ARR and PI. Revise sums where
releasing working capital and depreciation are involved. Please concentrate on
depreciation incase if EBIT and PAT are given. If the question states inflow no need to add
back depreciation, if the question states PAT add back depreciation to get inflow, if the
question states EBIT subtract depreciation and then add back to PAT to get inflow.

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Capital restructuring:- sums on swaps based on EPS and MPS. Also purchase
consideration based on NAV.