[Nov-22]

GITAM (Deemed to be University)

[MBG-206]
BBA/IMBA, BBA(BA) & BBA(FM) Degree Examination

IV SEMESTER
FINANCIAL MANAGEMENT
(Effective from the admitted batches 2019-20)
Time: 3 Hours Max.Marks: 60
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Instruction: All parts of the unit must be answered in one place only.
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SECTION-A
1. Answer All of the following:
Each answer should not exceed one page. (10x2=20M)
a) Write a short note on Wealth Maximization.
b) Mention the steps in Financial planning.
c) Write a note on the payback period.
d) Mention the steps involved in the Capital budgeting process.
e) Write a short note on EPS.
f) What is optimal capital structure?
g) Name the four sources of working capital.
h) Write a short note on Cash conversion cycle.
i) What do you mean by dividend?
j) State the assumptions of Walter model.

SECTION-B
Answer the following: (5x8=40M)
UNIT-I
2. What is Financial Management? Explain the goals of Financial
Management.
OR
3. What are the functions of modern finance manager? How do they differ
from those of a traditional finance manager?
 UNIT-II
4. Compare and contrast “NPV” method with “IRR”.
OR
5. A firm whose cost of capital is 10 percent is considering two projects
X and Y, the details of cash flows are:
Year Project X Project Y
0 -1,00,000 -1,00,000
1 20,000 45,000
2 30,000 40,000
3 40,000 30,000
4 50,000 10,000
5 60,000 8,000
Total 2,00,000 1,33,000
Compute Net present value and Profitability index at 10 percent.
Year DF @ 10%
1 0.909
2 0.826
3 0.751
4 0.683
5 0.621
UNIT-III
6. Explain the different sources of funds.
OR
7. From the following structure of the company calculate the overall cost of
capital using
a) Book value weight
b) Market value weights
Source Book value Market Value After tax cost
(Rs.) (Rs.) (%)
Equity share capital 45,000 90,000 14
(Rs. 10 each)
Retained earnings 15,000 13
Pref. Share capital 10,000 10,000 10
Debentures 30,000 30,000 5
 UNIT-IV
8. Explain the different sources of finance for funding working capital
or short term finance requirements.
OR
9. A Pro forma cost sheet of a company provides the following particulars:
Element of Cost
Materials 50%
Direct labour 10%
Overheads 10%
The following further particulars are available:
a) It is proposed to maintain a level of activity of 1,00,000 units.
b) Selling price is Rs.10 per unit.
c) Raw materials are expected to be in the stores for an average of
two months.
d) Materials will be in process on average of one month.
e) Finished goods are required to be in stock for an average of two
months.
f) Credit allowed to debtors is three months.
g) Credit allowed by suppliers is two months.
UNIT-V
10. Explain the dividend policies practised in India.
OR
11. The following information is available in respect of Hypothetical Ltd:
Dividend per share (D) at dividend payout ratio of 20% = Rs. 2. As
per Gordon’s model, equity capitalization rate is 15% (at D/P ratio of
20%). Company earns Rs. 10 on every Rs. 100 invested. Determine
the value of its shares (as per Gordon’s approach).

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