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Code No.V3101/R07 III B.Tech I Semester Regular Examinations November, 2010 MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS (Common for CE, ME, ECE, ECC, ICE & BOT) Time: 3 hours Max.Marks: 80 Answer any FIVE questions All questions carry equal marks Note: Present Value Tables are permitted for the Q.No:7 ***** 1. What is meant by Elasticity of demand? How do you measure it? 2. (a) Discuss the Law of Demand. (b)What are its exceptions? Explain. 3. (a) Compare and contrast between perfect competition and monopoly (b) Illustrate the price determination in case of monopoly. 4. Explain the production function with reference to Law of Variable proportions and substitutability of factors. 5. (a) What is sole proprietorship form of business organization? (b) Explain its features, advantages and disadvantages. 6. If sales are 10,000 units and selling price is Rs. 20 per unit, variable cost Rs. 10 per unit and fixed cost is Rs. 80,000. Find out BEP in units and sales revenue. What is profit earned? What should be the sales for earning a profit of Rs. 60,000/-. 7. ABC Co. ltd. is proposing to mechanize their operations. Two proposals A and B in the form of quotations have been received from two different vendors. The proposal in each case cost Rs. 5, 00,000/-. A discount factor of 12% is used to compare the proposals. Cash flows after taxes are likely to be as under.

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Code No.V3101/R07

Set No.1

Cash flows after taxes (in Rs.) Year 1 2 3 4 5 Proposal ‘A’ 1.50,000 2,00,000 2,50,000 1,50,000 1,00,000 Proposal ‘B’ 50,000 1,50,000 2,00,000 3,00,000 2,00,000

Which one do you recommend under Pay back period and Net Present Value Index methods? 8. (a) What are the important ratios? (b) Explain any four of them with examples to understand the financial statements?

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Code No.V3101/R07 III B.Tech I Semester Regular Examinations November, 2010

Set No.2

MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS (Common for CE, ME, ECE, ECC, ICE & BOT) Time: 3 hours Max.Marks: 80 Answer any FIVE questions All questions carry equal marks Note: Present Value Tables are permitted for the Q.No:7 ***** 1 (a) Define Managerial Economics. (b) Explain the nature and scope of Managerial Economics 2 (a) Discuss the Law of Demand. (b)What are its Exceptions? Explain. 3 (a) What is perfect competition? (b) Explain the equilibrium of firm and industry in both the short-run and long- run under perfect competition. 4 (a) Distinguish between returns to factors and returns to scale (b) Explain laws of returns 5 (a) Define partnership. Explain its features and limitations (b) Differentiate between Sole trader and Partnership 6. Consider the case of the company with the following two investment alternatives each costing Rs. 9, 00,000/-. The details of the cash flows are as follows. Year 1 2 3 Cash flows (in Rs.) Project-I Project-II 3,00,000 6,00,000 5,00,000 4,00,000 6,00,000 3,00,000

The cost of capital is 10 per cent per year. Which one will you choose? (a) Under DCF method. (b) Under NPVI method. 7. XYZ Company has supplied you the following information. No. of units sold 20,000 units Fixed cost Rs. 2, 40, 000 Variable cost per unit Rs. 15

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Code No.V3101/R07 Selling price per unit. Rs. 30 Find out: a. BEP in units b. Margin of safety c. Sales to get a profit of Rs. 2,00,000 d. Verify the results in all the above cases 8. From the following trail balance of Mr. Surya & co as on 31st December 2009. Prepare the Trading account, profit& Loss account and Balance sheet as on date. Particulars Capital Purchases Sales Returns Opening stock Wages Coal & Power Carriage Inwards Salaries Sundry Debtors Sundry Creditors Bills Payable Bills Receivable Plant & Machinery Cash in Hand Cash at Bank Discount Discount received Loans Bank Overdraft Buildings Total Debit (Rs.) 40,000 1,000 20,000 1,000 1,500 3,000 2,000 15,000 10,000 7,500 27,000 15,000 5,00 33,000 1,74,000 Credit (Rs.) 70,000 75,000 2,000 10,000 5,000 2,000 5,000 5,000 1,74,000

Set No.2

Adjustments: a) Closing stock Rs. 30,000 b) Bad debts on sundry debtors Rs. 1,000 c) Deprecation on buildings Rs. 3,000 d) Outstanding salaries Rs. 500 @@@@@

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Code No.V3101 /R07

Set No.3

III B.Tech I Semester Regular Examinations November, 2010 MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS (Common for CE, ME, ECE, ECC, ICE & BOT) Time: 3 hours Max.Marks: 80 Answer any FIVE questions All questions carry equal marks Note: Present Value Tables are permitted for the Q.No:6 ***** 1. What is demand analysis? Explain the different factors that influence the demand for a product 2. (a) What is Law of demand? (b) Explain its limitations and why the demand curve is slopping downwards? 3. (a) Define Monopolistic competition. (b) How are the price and output determined under Monopolistic competition? 4. (a) What is break-even point? Explain it through the break-even chart. b) from the following data calculate the break-even point : Fixed cost ----- Rs. 9,000 Selling price ----Rs. 5 per unit Variable cost ---Rs. 3 per unit Suppose the price reduces to Rs. 2 per unit, what would you say about the break-even position? 5 (a) Define public enterprises. (b) What are the features and advantages of public enterprises?

6. ABC company is considering the purchase of a machine from the following: : Machine-I Machine-II Life 3 years 3 years Initial Investment Rs. 10,000 Rs. 10,000 Net Earnings after tax Rs. Rs. 1st Year 8,000 2,000 6,000 7,000 2nd Year 3rd Year 4,000 10,000

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Code No.V3101 /R07

Set No.3

You are required to suggest which machine should be preferred by using the following methods. The cost of capital is 10 per cent. 1) Payback period method and 2) Discounted cash flow method 7. Prepare the trading, profit & Loss account and Balance Sheet for the following as on 31 March’ 2010. Particulars Capital Loans Sales Bills Payable Accounts Payable Purchase Returns Dividend Received Plant and Machinery Buildings Receivables Purchases Discount allowed Wages Salaries Travelling Expenses Freight charges Insurance Commission paid Bank Repairs Investment on loans Opening stock Total Debit Rs. 13,000 17,000 9,650 18,000 1,200 7,000 3,000 750 200 300 100 1,600 500 600 6,000 79,000 Credit Rs. 25,000 5,000 35,000 5,000 4,000 2,000 3,000 79,000

Adjustments: 1. Closing stock Rs. 8,000 2. Depreciation on plant and machinery at 15% and 10% on buildings. 3. Provision for doubtful receivables Rs. 500 4. Prepaid Insurance Rs. 50 5. Outstanding Rent Rs. 100

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Code No.V3101 /R07

Set No.3

8. From the following Information, Calculate: 1. Gross Profit Ratio 2. Net Profit Ratio 3. Inventory Turn over Ratio 4. Working capital turnover Ratio 5. Net worth to debt ratio 6. Return on total assets Ratio Particulars Amount (in Rs.) Sales 25,20,000 Cost of Sales 19,20,000 Net Profit 3,60,000 Inventory 8,00,000 Other Current Assets 7,60,000 Fixed Assets 14,40,000 Net worth 15,00,000 Debt 19,00,000 Current Liabilities 6,00,000 @@@@@

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Code No.V3101 /R07 III B.Tech I Semester Regular Examinations November, 2010

Set No.4

MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS (Common for CE, ME, ECE, ECC, ICE & BOT) Time: 3 hours Max.Marks: 80 Answer any FIVE questions All questions carry equal marks Note: Present Value Tables are permitted for the Q.No:7 ***** 1. Explain how Managerial Economics is linked with other academic disciplines. 2. (a) What is Elasticity of Demand? (b) How do you measure it? 2. (a) Define Monopoly. (b) Illustrate the price determination in case of Monopoly. 4. (a) What is meant by internal and external economies of scale (b) Discuss various types of internal economies available to a firm 5. (a) What do you understand by Joint Stock Company? (b) Explain its features and various forms. 6. If sales are 10,000 units and selling price is Rs. 20 per unit, variable cost Rs. 10 per unit and fixed cost is Rs. 80,000. Find out BEP in units and sales revenue. What is profit earned? What should be the sales for earning a profit of Rs. 60,000/-.

7. ABC Co. Ltd. is proposing to mechanize their operations. Two proposals A and B in the form of quotations have been received from two different vendors. The Proposal in each case costs Rs. 5, 00,000/-. A discount factor of 12% is used to compare the proposals. Cash flows after taxes (CFAT) are likely to be as under.

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Code No.V3101 /R07 Cash flows after taxes (Rs.) Proposal ‘A’ Proposal’B’ 1,50,000 50,000 2,00,000 1,50,000 2,50,000 2,00,000 1,50,000 3,00,000 1,00,000 2,00,000

Set No.4

Year 1 2 3 4 5

Which one do you recommend under Net Present Value Index method? 8. (a) What are the important ratios? (b) Explain any four of them with examples to understand the financial statements? @@@@@

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