FM Question Bank

LOYOLA COLLEGE (AUTONOMOUS)
CHENNAI – 600 034.
EVEN SEMESTER (2021-22)
DEPARTMENT OF COMMERCE
(SHIFT – II)
LIST OF SUBJECTS
S. No. S_Code Subject Name Page No
1 UCO 2501 Business Law
2 UCO 2302 Statistics for Decision Making
3 UCO 4501 Cost Accounting
4 UCO 4502 Entrepreneurship Development
5 UCO 4601 EXIM Procedure & Documentation
6 UCO 4602 Financial Reporting & Analysis
7 UCO 4603 Managing Innovation
8 UCO 4604 Service Marketing
9 UCO 4403 Stock Market Operations
10 UCO 4404 Supply Chain Management
11 UCO 6501 Management Accounting
12 UCO 6502 Financial Management
13 UCO 6503 Human Resource Manageent

DEPARTMENT OF COMMERCE SHIFT –II
LOYOLA COLLEGE (AUTONOMOUS) CHENNAI -600034
DYNAMIC QUESTION BANK

UCO 6502 FINANCIAL MANAGEMENT
UNIT I
SECTION- A (2 Marks)
1. Define financial management?
2. State the objectives of financial management.
3. List out the finance functions.
4. Give the meaning of business finance.
5. State the relationship between ‘Risk’ and ‘Return’
6. Write the financial tools used by the finance manager in performance of his job.
7. What is meant by finance?
8. What do you mean by time value of money?
9. What is profitability?
10. Write short note ‘wealth maximization”
SECTION- B (10 Marks)

11. Ms. Puja is interested in a fixed annual income. She is offered three possible annuities. If
she could earn 8% on her money elsewhere, which of the following alternatives would she
choose? Why? (a) pay Rs.80,000 now in order to receive Rs.14,000 at the end of each year
for the next 10 years. (b) pay Rs.1,50,000 now in order to receive Rs.14,000 at the end of
each year for the next 20 years. (iii) pay Rs.1,20,000 now in order to receive Rs.14,000 at
the end of each year for next 15 years.
12. a) Mr. Sahul is planning to retire this year. His company can pay him a lump sum
retirement payment of Rs.2,00,000 or Rs.25,000 lifetime annuity. Mr. Sahul is in good
health and estimates to live for at least 20 more years. If his interest rate is 12%, which
alternative should he choose?
b) You have come across the following investment opportunity: Rs.2,000 at the end of
each year for the first 5 years plus Rs.3,000 at the end of each year from years 6 through
9 plus Rs.5,000 at the end of each year from years 10 through 15. How much will you
be willing to pay for this investment if the required rate of return is 14%?
13. a ) 15 years from now Mr. Das requires Rs.5 lakhs for his son’s higher education.
(i) If he decides to make an annual payment into a recurring deposit starting
immediately, how much should he deposit if the funds pays 10%.
(ii) If he decides to invest a lump sum in the account after one year, what should
be the amount?
b) Mr. Ahmed have borrowed a home loan for Rs.10,00,000 from his employer, who
charges 10% interest p.a. and expects a repayment in five equal installments at the end
of the year. Prepare a Loan Amortization Schedule.
Prepared by Prof. S. Charles Jail Singh, Dr P. Smitha, Dr K. C. Mini Mathew,

Dr Y. Alexander and Dr L. Sherley Mary

14. Enumerate the importance of financial Management.

15. Discuss the role of finance manager in an organization.
16. Profit maximization is the basic goal of a fiancé manager.” Do you agree? Discuss
17. “Investment, financing and dividend decisions are all interrelated”. Comment
18. Explain the functions of a finance manager.
19. Explain the rules of doubling period with your own examples
SECTION- C (20 Marks)

20. Explain the meaning, objectives and functions of financial management.
21. Enumerate the methods and tools of financial management.
22. Explain the factors affecting finance decision.
23. What are the major types of financial management decisions that business firms make?
Describe each one of them.
UNIT II
1. What is Indifference point EBIT?

2. Explain the term Operating Leverage.
3. What is Capital Structure?
4. Interest = Rs.12,000 Tax rate = 50% No. of equity share = 40,000 shares. Calculate
the likely level of EBIT if EPS is Rs. 4
5. Define capital structure.
6. Define financial leverage.
7. What is operating leverage?
8. What do you mean by EBIT-EPS analysis?
9. Define financial breakeven point
10. What is combined leverage?

11. Calculate the Degree of operating leverage, degree of financial leverage and the degree
of combined leverage from the following data:
Output (in units) 3,00,000
Fixed costs Rs.2,00,000
Variable cost per unit Rs.3
Interest expenses Rs.60,000
Selling price per unit Rs.6


12. The following data relates to Seetha Ltd:

The company wants to implement a new project for which Rs.10 lakhs is needed. The
following two options are identified:
Option (i) Equity shares @ Rs.100 each Rs.10 lakhs
Option (ii) Equity shares @ Rs.100 each Rs.5 lakhs
10% preference shares @Rs.100 each Rs.2 lakhs
8% debentures @ Rs.100 each Rs.3 lakhs
Calculate the EBIT at the indifference point. Assume 30% tax.
13. The following are the date relating to R Ltd.,

Sales Rs. 60 lakhs
Variable cost to sale 30%
Fixed cost Rs. 5 lakhs
9% debentures Rs.20 lakhs
Equity share capital @ Rs.10 each Rs.50 lakhs
Tax rate 40%
Calculate a) operating leverage b) financial leverage c) combined leverage d) Determine the
percentage change in EPS associated with 20% increase and 20% decrease in EBIT e) Calculate
the percentage change in EPS, if Sales increases by 12%
14. (i) Kay Ltd’s existing capital structure is as follows:

Equity shares @Rs.100 each Rs. 10 lakhs
8% preference shares Rs. 10 lakhs
The company considers taking up a new project which requires a capital of 40 lakhs.
The following two options are identified:
(a) Equity shares @ Rs.100 each Rs.20 lakhs
Term loan @ 11% Rs.20 lakhs
(b) Equity shares @ Rs.100 each Rs.10 lakhs
9% preference shares @Rs.100 each Rs.20 lakhs
10% debentures @ Rs.100 each Rs.10lakhs
Assuming tax rate is 50%, calculate the EBIT level at which investors would be
Indifferent to the two options.
15. The following are the date relating to Ram Ltd.,

Output (Units) = 75,000 Fixed Cost (Rs.) = 7,00,000
Unit Variable Cost (Rs.)= 7.50 Interest Expenses (Rs.)= 40,000
Unit Selling Price (Rs.) = 25
a) Calculate Operating leverage , Financial leverage & Combined leverage
b) Determine the percentage change in EPS associated with 20% increase and 20%
decrease in EBIT.


16. ShaaLtd’s existing capital structure is as follows:

Equity shares @Rs.100 each Rs. 20 lakhs
10% Preference shares Rs. 10 lakhs
The company considers taking up a new project requiring a capital outlay of 60 lakhs.
The following two options are identified:
(a) Equity shares @ Rs.100 each Rs.30 lakhs
Term loan @ 11% Rs.30 lakhs
(b) Equity shares @ Rs.100 each Rs.20 lakhs

12% Preference shares @Rs.100 each Rs.20 lakhs
11% Debentures @ Rs.100 each Rs.20lakhs
Assuming tax rate is 40%, Calculate the EBIT level at which investors would be
indifferent to the two options.
17. Elaborate different factors affecting capital structure
18. The existing capital structure of Reliance Ltd is as follows:

Equity shares of Rs.100 each Rs.2,00,000
6% debentures Rs.1,00,000
The existing rate of return on the company’s capital employed is 10% and tax rate 50%.
The company requires a sum of Rs.2,00,000 to finance its expansion program, for which
it is considering the following options:
a) Issue 2,000 equity shares of Rs.100 each
b) Issue 12% preference shares
If the estimated Price Earnings Ratio in the above two financing options would be 17
and 15 respectively, which option would you recommend.
19. The following are the information related to AB Ltd:

Rs.
EBIT 3,00,000
Less: debenture interest @12% 60,000
Earnings Before Tax 2,40,000
Less : Tax (0.35) 84,000
Earnings After Tax 1,56,000
No. of equity shares Rs. 10 each 40,000 shares
Earnings per share Rs. 3.9
Market price per share Rs. 39
Price Earnings ratio 10 times


The company has undistributed reserves of Rs. 6,00,000. It is in need of Rs.2,00,000

for expansion which will earn the same rate as funds already employed. You are
informed that a debt-equity ratio (debt/debt-equity) higher than 35% will push the P/E
ratio down to 9 and raise the interest rate on additional amount borrowed to 15%.
It has identified the following financial options:
(a)Raise as debt
(b)Issue 10,000 equity shares at Rs.10 each and a term loan for the balance.
Advise the company.
20. ReagreLtd’s Capital Structure consists of the following:

Equity shares of Rs.100 each Rs.10,00,000
7% Debentures Rs. 4,00,000
Retained Earnings Rs. 5,00,000
9% Preference Shares Rs. 6,00,000
The company now earns a return of 10% on its capital employed and expects an increase
in return of 2% after expansion program. The tax rate is 50%. The company requires a
sum of Rs.12,50,000 to finance its expansion program, for which it is considering the
following options:
a) Issue 10,000 Equity shares at a premium of Rs.25 per share.
b) Issue 10% Preference shares.
c) Issue 8% Debentures
It is estimated that the Price Earnings Ratio of equity, preferences and debenture
financing would be 21, 17 and 14 respectively. Which of the three financing alternatives
would you recommend and why?
21. Evaluate different theories of capitalstructure in detail.
UNIT III
SECTION – A (2 Marks)
1. What is cost of capital?
2. What is cost of equity?
3. Explain cost of retained earnings.
4. Write a note on Capital Asset Pricing Model.
5. Calculate the cost of debt. Debentures are sold at premium of 10% and floatation
costs are 5% of issue price.
6. From the following, calculate cost of equity using CAPM approach: Required
rate of return on risk-free security is 12%. Required rate of retun on market portfolio
of investment is 15%. The firm’s beta is 1.6.
7. What is weighted average cost of capital?


8. Calculate cost of equity if dividend expected = Rs.20, market price of equity share =
Rs.120
9. Calculate the cost of preference share. 10% Preference shares = Rs.20,00,00. Issued
at par and redeemed at a premium of 5% after 10 years maturity period.
10. List any two needs of Cost of Capital in a company.
SECTION – B (10 Marks)

11. Enumerate the significance of Cost of Capital.
12. Explain the problems faced in determining the cost of capital.
13. Explain the CAPM approach for computing the cost of equity. Discuss the merits and
demerits of the approach.
14. Kales Ltd has the following capital structures:
Equity capital Rs.10 each Rs.4,00,000
12% Debentures (Rs.10 each) Rs.2,00,000
The next expected dividend is Rs. 2 per share. The dividend is expected to grow at
6% per annum. Market price of the share is Rs.12. Assume tax rate is 40%. Calculate
weighted average cost of capital using book value as weights.
15. Investment in Initial price Dividends Year-end market Beta risk
Equity Shares of price factor
A Ltd Rs.50 Rs.4 Rs.100 0.80
B Ltd Rs.70 Rs.4 Rs.120 0.70
Govt. Bonds Rs.1000 Rs.130 Rs.1,010 0.99
Risk- free return is 14%. You are required to calculate a) expected rate of returns of
market portfolio and b) expected return in each security using capital asset pricing
model.
16. Following are the details regarding the capital structure of a company:
Type of capital Book value Market value After tax cost
Rs. Rs.
Debentures 50,000 37,000 6%
Preference capital 10,000 21,000 10%
Equity capital 80,000 1,50,000 14%
Retained earnings 60,000 ------- 9%
You are required to determine the weighted average cost of capital using: (i) book value
as weights and (ii) market value as weights.
SECTION – C (20 Marks)

17. What is cost of capital? Discuss how the cost of capital enters into the process of
evaluating capital budgeting proposals? How it is related to the various discounted
cash flow techniques for determining a project’s acceptability?


18. Ganesh Ltd has the following capital structures:

10% Preference capital Rs.100 each Rs.12,00,000
Retained earnings Rs.24,00,000
12% Loan Rs. 9,00,000
The next expected equity dividend is Rs. 3 per share. The dividend is expected to grow
at 7% per annum. Market price of the equity share is Rs.12 per share. Preference share
redeemable after 10 years is currently selling at Rs.95. Debentures redeemable after 5
years are selling at Rs.12. Assume tax rate is 40%. Calculate weighted average cost of
capital using Market value as weights.
19. Leyland Ltd has the following capital structures:

Retained earnings Rs.12,00,000
The next expected dividend is Rs. 2 per share. The dividend is expected to grow at
6% per annum. Market price of the share is Rs.12. Preference share redeemable after
10 years is currently selling at Rs.90. Debentures redeemable after 6 years are selling
at Rs.9. Assume tax rate is 50%. Calculate weighted average cost of capital using
book value and market value as weights.
20. Jacob Ltd has the following capital structures:

The next expected dividend is Rs. 3 per share. The dividend is expected to grow at 5%
per annum. Market price of the share is Rs.15. Assume tax rate is 40%. Calculate
weighted average cost of capital using book value and market value as weights.
UNIT IV
1. What is capital budgeting?
2. Mention any two factors that influence the dividend policy of a firm
3. List out any two significance of Capital budgeting
4. What is pay – back period
5. What is dividend
6. Mention the different types of dividend


7. Current market price =Rs. 15, Cost of equity =20%,,Dividend = Rs.2 calculate the
market price per share under MM model
8. Compute rate of return on average l investment if original investment Rs. 8,00,000,

a. profit after depreciation and tax for 5 years are Rs.2,00,00, Rs.2,00,00, Rs.
1,60,000.
b. Rs. 1,60,000,Rs. 80,000
9. A project cost Rs.2,50,000 and yields an annual cash inflow of Rs.50,000 for 7
years. Calculate its Pay-backPeriod.
10. What is internal rate of return?
6. Write a note on corporate strategy and capital budgeting

7. Explain the assumptions and implications of Walter’s DividendModel.
8. Calculate the market price of a share of Bailey Ltd under a) Walter model b) Gordon
model from the following data
Earning per share Rs.75
Dividend per share Rs.45
Cost of capital 17%
Rate of return of investment 18%
Retention ratio 40%
9. Determine average rate of return for the following investment proposals

Particulars Machine A Machine B
Rs. Rs.
Original cost 56,125 56,125
Additional investment in net working Capital
Estimated life in years 5,000 6,000
Estimated salvage value 5 5
Average income-tax ate 3,000 3,000
Annual estimated income after dep. and tax: 55% 55%
1styear 3,375 11,375
2nd year 5,375 9,375
3rd year 7,375 7,375
4th year 9,375 5,375
5th year 11,375 3,375
36,875 36,875
Depreciation has been charged on straight line basis.


10. A company has an investment opportunity costing Rs.40,000with the following expected net cash
inflows(i.e., after tax and before depreciation):
Year Net cash inflows Rs.
1 7,000
2 7,000
3 7,000
4 7,000
5 7,000
6 8,000
7 10,000
8 15,000
9 10,000
10 4,000
Determine the “Internal rate of return “
Present value factor @ Present value factor @
Year 10% 15%
1 0.909 0.870
2 0.826 0.756
3 0.751 0.658
4 0.683 0.572
5 0.621 0.497
6 0.564 0.432
7 0.513 0.376
8 0.467 0.327
9 0.424 0.284
10 0.386 0.247
11. Varadhan Ltd. is producing articles mostly by manual labour and is considering to
replace it by a new machine. There are two alternative models M and N of new
machine. Prepare a statement of profitability showing the pay-back period from the
followinginformation.
Particulars Machine M Machine N
Estimated life of machine 4 years 5 years
Cost of machine Rs. 9,000 Rs. 18,000
Estimated savings in scrap 500 800
Estimated savings in direct wages 6,000 8,000
Additional cost of maintenance 800 1,000
Addition cost of supervision 1,200 1,800
Ignore taxation.


12. a. Explain the various stages in capital budgetingprocess

b. Discuss the importance of Capital Budgeting.

13. X Co. desires to purchase a business and has consulted you and one point on which
you are askedto advise them is the average amount of Working Capital which will be
required in the first year’s working. You are given the following estimate and are
instructed to add 10% to your computed figure to allow forcontingencies.
Particulars Rs,
(i) Average amount locked up in Stocks:
Stock of finished goods 5,000
Stock of stores and materials 8,000
(ii) Average Credit given:
Inland Sales – 6 Weeks 3,12,000
Export Sales – 1 ½ Weeks 78,000
(iii) Lag in payment of wages and other out goings:
Wages – 1 ½ Weeks 2,60,000
Stores, materials etc – 1 ½ Months 48,000
Rent, royalties, etc – 6 Months 10,000
Clerical, Staff Salary – ½ Month 62,400
Manager Salary – ½ Month 4,800
Miscellaneous expanses – 1 ½ Months 48,000
(iv) Payment in advance:
Sundry expenses (paid quarterly in advance) 8,000
(v) Undrawn profits on the average throughout the year 11,000
Set up your calculations for the average amount of working capital required.


14. A ltd. is considering the purchase of a machine which will perform some operations
which are at present performed by workers. Machines X and Y are alternative
models. The following details are available:
Machine X Rs. Machine Y Rs.
Cost of machine 1,50,000 2,40,000
Estimated life of machine 5 years 6 years
Estimated cost of maintenance p.a. 7,000 11,000
Estimated cost of indirect material p.a. 6,000 8,000
Estimated savings in scrap p.a. 10,000 15,000
Estimated cost of supervision p.a. 12,000 16,000
Estimated savings in wages p.a. 90,000 1,20,000
Depreciation will be charged on straight line basis. The tax rate is 30%. Evaluate the
alternatives according to:
(a) Average rate of return method
(b) Net Present value (c) Profitability index method assuming cost of
capital being 10%. (The present value of Re. 1.00 @ 10% p.a. for 5
years is 3.79 and for 6 years is4.354)
15. VishnuLtdisconsideringtwodifferentinvestmentproposals.Thedetailsareasunder:
Proposal I Proposal II
Investment Rs. 9500 Rs. 20000
Estimated Inflows
Year1 Rs.4,000 Rs.8,000
Year2 Rs. 4,000 Rs. 8,000
Year3 Rs.4,500 Rs. 12,000
Suggest the most attractive proposal on the basis of pay Back period, Net Present value &
ProfitabilityIndex Considering the discount Rate as 12%.
16. A company is considering two mutually exclusive projects requiring an initial cash
outlay of Rs.1,00,000 and life of 5 years. The required rate of return- 10% and tax rate
55%. The projects are depreciated by straight line method. The before tax cash flows
expected are
Year 1 2 3 4 5
Project A 40000 40000 40000 40000 40000
Project B 50000 50000 20000 50000 50000
PV factor at 10% 0.909 0.826 0.751 0.683 0.621
PV factor at 18% 0.847 0.718 0.608 0.515 0.437
Evaluate both the projects by using Payback period method, NPV, ARR, IRR and PI.
Which project should be accepted and Why?
17. Evaluate different techniques risk analysis in capital budgeting

UNIT V
1. What is working capital?
2. What is operating cycle?
3. Explain the two concepts of working capital.
4. What do you understand by fixed and variable working capital?
5. What is meant by receivable management?
6. Calculate the average age of receivables:
Credit sales for the year 2010 60000
Accounts receivable as on 1.1.2010 7000
Accounts receivable as on 31.12.2010 5000
7. What is core current assets
8. What is net working capital
9. Mention the methods of estimating working capital requirement
10. What is gross working capital.

11. Explain in detail different sources of working capital.
12. Explain the methods of forecasting the working capital requirements of a firm.
13. What is credit policy? What are the elements of a credit policy?
14. From the following information, extracted from the books of a manufacturing company,
compute the operating cycle in days and the amount of working capital required:
Period covered 365 days

Average period of credit allowed by suppliers 16 days
Rupees in ‘000
Average total of Debtors outstanding 480
Raw material consumption 4,400
Total production cost 10,000
Total Cost of Sales 10,500
Sales for the year 16,000
Value of Average Stock maintained:
Raw Material 320
Work-in- Progress 350
Finished Goods 260


15. From the following particulars. Calculate (a) Net operating cycle, (b) Number of operating
cycles in a year, (c) The amount of Working Capital.
Details
Period Covered 360 days
Average period allowed by suppliers 30 days
Average period allowed to debtors 45 days
Raw material consumed during the year Rs.6,00,000
Average stock of raw material Rs.50,000
Work in progress inventory Rs.5,00,000
Average Work in progress inventory Rs.30,000
Finished goods inventory Rs.8,00,000
Average finished goods stock held Rs.40,000
Total cost of sales Rs.8,40,000
Section C (20 Marks)
16. What factors would you take into account in planning the working capital requirements of
a firm?
17. Determine the Working Capital at cash cost required to finance the production of 30,000
units per annum from the following details:
Selling price per unit Rs.80
The expected ratios of cost to selling price are:

Raw material 40%
Direct wages 20%
Overheads 20%
Raw material ordinarily remains in stores for 3 months before production. Finished
goods remain in the ware house for 2.5 months.
Every unit of production remains in process for 2 months. 30% of the sales are for
cash. Cash balance is expected to be Rs.1,00,000.
Credit allowed to debtors is 2 months from the date of dispatch and credit allowed by creditors
is 3 months from the date of delivery of raw materials. Lag in payment of wages ½ month. In
work in progress material is introduced full in the beginning and other conversion cost at 50%.


18. The Board of Directors of B Ltd requests you to prepare a statement showing the working
capital requirements forecast for a level of activity of 1,56,000 units of production.
The following information is available for your calculation.
Rupees per unit
Raw Materials 90
Direct Labour 40
Overheads 75
205
Profit 60
Selling Price 265
1) Raw Materials are in stock on average one month.
2) Materials are in process, on average half month.
3) Finished goods are in stock, on average on month
4) Credit allowed by suppliers – one and half month
5) Time lag in payment from debtors – 2 months. 20% of the output is sold against cash.
6) Lag in payment of wages – one month.
7) Lag in payment of overheads – one month.
8) Cash in hand and at bank is expected to be Rs.6,00,000.
9) It is to be assumed that production is carried on evenly throughout the year.
10) Wages and overheads accrue evenly throughout the year.
19. X Co desires to purchase a business and has consulted you and one point on which you
are asked to advise them is the average amount of working capital which will be required
in the first year’s working. You are given the following estimates and are instructed to add
10% to your computed figures to allow for contingencies.
Figure for the year
(i) Average amount locked up in stocks: Rs.
Stock of finished goods 5,000
Stock of stores and material 8,000
(ii) Average credit given :
Inland sales - 6 weeks 3,12,000
Export sales – 1 ½ weeks 78,000
(iii) Lag in payment of wages and other outgoings:
Wages - 1 ½ weeks 2,60,000
Stores materials etc. – 1 ½ months 48,000
Rent, royalties etc. – 6 months 10,000
Clerical staff salary – ½ month 62,400
Manager salary - ½ month 4,800
Miscellaneous expenses - 1 ½ months 48,000


(iv) Payment in advance:

Sundry expenses (paid quarterly in advance) 8,000
(v) Undrawn profits on the average throughout the year 11,000
Set up your calculation for the average amount of working capital required.
20. A firm sells 40,000 units of its product per annum @ Rs.35 per unit. The average cost per
unit is Rs.31 and the variable cost per unit is Rs.28. The average collection period is 60
days. Bad debts losses are 3% of sales and the collection charges amount to Rs.15,000.
A firm is considering a proposal to follow a stricter collection policy which would reduce
bad debts losses to 1% of sales and the average collection period to 45 days. It would,
however, reduce sales volume by 1,000 units and increase the collection charges to
Rs.25,000.
The firm’s required rate of return is 20%. Would you recommend the adoption of the new
credit policy? Assume 360 days in a year for the purpose of your calculation.


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LOYOLA COLLEGE (AUTONOMOUS)

CHENNAI – 600 034.

EVEN SEMESTER (2021-22)

S. No. S_Code Subject Name Page No

1 UCO 2501 Business Law

2 UCO 2302 Statistics for Decision Making

3 UCO 4501 Cost Accounting

4 UCO 4502 Entrepreneurship Development

5 UCO 4601 EXIM Procedure & Documentation

6 UCO 4602 Financial Reporting & Analysis

7 UCO 4603 Managing Innovation

8 UCO 4604 Service Marketing

9 UCO 4403 Stock Market Operations

10 UCO 4404 Supply Chain Management

11 UCO 6501 Management Accounting

12 UCO 6502 Financial Management

13 UCO 6503 Human Resource Manageent

DYNAMIC QUESTION BANK

SECTION- B (10 Marks)

Prepared by Prof. S. Charles Jail Singh, Dr P. Smitha, Dr K. C. Mini Mathew,

DYNAMIC QUESTION BANK

14. Enumerate the importance of financial Management.

SECTION- C (20 Marks)

1. What is Indifference point EBIT?

SECTION- B (10 Marks)

Prepared by Prof. S. Charles Jail Singh, Dr P. Smitha, Dr K. C. Mini Mathew,

DYNAMIC QUESTION BANK

12. The following data relates to Seetha Ltd:

13. The following are the date relating to R Ltd.,

14. (i) Kay Ltd’s existing capital structure is as follows:

15. The following are the date relating to Ram Ltd.,

Prepared by Prof. S. Charles Jail Singh, Dr P. Smitha, Dr K. C. Mini Mathew,

DYNAMIC QUESTION BANK

16. ShaaLtd’s existing capital structure is as follows:

(b) Equity shares @ Rs.100 each Rs.20 lakhs

SECTION- C (20 Marks)

17. Elaborate different factors affecting capital structure

18. The existing capital structure of Reliance Ltd is as follows:

19. The following are the information related to AB Ltd:

Prepared by Prof. S. Charles Jail Singh, Dr P. Smitha, Dr K. C. Mini Mathew,

DYNAMIC QUESTION BANK

The company has undistributed reserves of Rs. 6,00,000. It is in need of Rs.2,00,000

20. ReagreLtd’s Capital Structure consists of the following:

21. Evaluate different theories of capitalstructure in detail.

Prepared by Prof. S. Charles Jail Singh, Dr P. Smitha, Dr K. C. Mini Mathew,

DYNAMIC QUESTION BANK

SECTION – B (10 Marks)

SECTION – C (20 Marks)

Prepared by Prof. S. Charles Jail Singh, Dr P. Smitha, Dr K. C. Mini Mathew,

DYNAMIC QUESTION BANK

18. Ganesh Ltd has the following capital structures:

19. Leyland Ltd has the following capital structures:

20. Jacob Ltd has the following capital structures:

Prepared by Prof. S. Charles Jail Singh, Dr P. Smitha, Dr K. C. Mini Mathew,

DYNAMIC QUESTION BANK

8. Compute rate of return on average l investment if original investment Rs. 8,00,000,

SECTION- B (10 Marks)

6. Write a note on corporate strategy and capital budgeting

9. Determine average rate of return for the following investment proposals

Prepared by Prof. S. Charles Jail Singh, Dr P. Smitha, Dr K. C. Mini Mathew,

DYNAMIC QUESTION BANK

Prepared by Prof. S. Charles Jail Singh, Dr P. Smitha, Dr K. C. Mini Mathew,

DYNAMIC QUESTION BANK

12. a. Explain the various stages in capital budgetingprocess