Question Bank (Principles of Financial Management)

Unit 2 and Unit 3

Unit 3
1. List the techniques of Financial Statement Analysis.
2. Distinguish between Vertical and Horizontal Analysis of financial data.
3. State the meaning of Analysis and Interpretation.
4. State the importance of Financial Analysis?
5. What are Comparative Financial Statements?
6. What do you mean by Common Size Statements?
7. Describe the different techniques of financial analysis and explain the
limitations of financial analysis.
8. Explain the usefulness of trend percentages in interpretation of financial
performance of a company.
9. What is the importance of comparative statements? Illustrate your
answer with particular reference to comparative income statement.
10. What do you understand by analysis and interpretation of financial
statements? Discuss its importance.
11. Explain how common size statements are prepared giving an example.
12. Explain three objectives of ratio analysis.
13. Explain three objectives of ratio analysis.
14. Describe three limitations of ratio analysis.
15. When are the computed ratios useful ?
16. Explain the traditional classification of ratios.
17. Explain the functional classification of ratios.
18. Explain any one ratio of profitability.
19. Explain any one ratio of liquidity.
20. Explain any one ratio of solvency.
21. What are included in operating expenses ?
22. Explain non-operating incomes.
23. Do we consider current investment for current ratio ?
24. Explain the approaches of proprietary funds.

Sums on:
1. Common Size Statements
2. Comparative Statements
3. Trend Analysis
4. Ratio Analysis
5. Cash Flow Statement

Unit 2
25. Discuss the objectives of financial management.
26. Critically evaluate various approaches to the financial management.
27. Explain the scope of financial management.
28. Discuss the role of financial manager.
29. Explain the importance of financial management
30. Profit maximization
Favourable arguments for profit maximization
Unfavorable arguments for profit maximization
Drawbacks of profit maximization
31. Wealth maximization
 Favourable arguments for wealth maximization
Unfavourable arguments for wealth maximization

• Study material was shared in class in whats app group as well as in teams.

Paper style of IA 2

Sr. No Questions Marks

Q1.[a] Theory of Unit 3 [10]

OR
Q1 [b] Sums from Unit 3 [10]

Q2[a] Theory of Unit 3 [10]

OR

Q2[b] Sums from Unit 3 [10]

Q3[a] Theory of Unit 2 [10]

OR

Q3[b] Theory of Unit 2 [10]