B.

Com(PartII)Examination,2010
(10+2+3Patterns) (FacultyofCommerce)

Second Paper: Elements of Financial Management

Objective Part- I
Time : One Hour Max. Marks.: 40

1.

Attempt all questions. Each question carriers 2 marks. Answer should not exceed 20 words. (i) (ii) (iii) (iv) (v) (vi) (vii) Define Financial Management. What do you mean by Financial Analysis? Give the formula of operating ratio. What do you mean by liquidity? Define fund-flow Statement? Discuss the two disadvantages excessive working capital. What is debenture?

(viii) What is line of credit? (ix) (x) 2. what is cash budget? What is Re-order level? Attempt question. Each question carries 4 marks. Answer should not exceed 50 words each. (i) (ii) Describe four characteristics of financial management. Calculate current ratio from the following data relating to companies X and Y: Particulars Assets Cash in hand Cash in bank Debtors Stock Total Amounts of Rupees Company (X) Company (Y) 2,000 2,000 3,000 3,000 7,000 7,000 8,000 8,000 20,000 20,000

Liability Creditors B/P Provision of Taxation

Company (X) 6,000 3,000 1,000 10,000

Company (Y) 7,000 8,000 3,000 18,000

(iii) (iv) (v)

Distinguish between Redeemable preference Shares and redeemable debentures. Explain any four ways of improving efficiency in cash of collection. Following data relate to inventory handling in Tekesh Ltd: Annual consumption Cost price per unit Ordering cost Carrying cost 5,000 units Rs. 100 Rs.500 per order 20% of the cost price

DESCRIPTIVE PART-I
Time Allowed: 2 Hours Max. Marks: 60 Attempt three questions in all, selecting at least one question from each Section. Section-I 3. What is Financial Management? How does a modern Financial Management differ from Traditional Financial management? 5 + 15

4. From the following Balance Sheets and information prepare ; (i) Statement of changes in working capital and (ii) Fund flow statement

Balance Sheet Amount in Rs. Liability Creditors Loan from Mr.A Bank Loan 2008 40,000 25,000 40,000 December, 31 2009 44,000 50,000

Capital Total

1,25,000 2,30,000

1,53,000 2,47,000

Assets Cash Balance Debtors Stock Machinery Land Building Total

2008 10,000 30,000 35,000 80,000 40,000 35,000 2,30,000

Amount of Rs. December, 31 2009 7,000 50,000 25,000 55,000 50,000 60,000 2,47,000

During the year a machine costing Rs.10,000 (accumulated depreciation Rs.3,000) was sold for Rs.5,000 provision for depreciation against machinery as on 31st December, 2008 and 2009 were Rs.25,000 and Rs.45,000 respectively. Net profit for the year amounted to Rs.45,000.

Section-B 5. What is meant by working capital? Explain the determinant factors of working capital in a business or an industry. 8-12

6. The financial position of Menesh Limited in the year 2009 was as follows: Amount in Rs. Sales Variable costs Fixed costs Find out the following: (i) Profit volume ratio (P/V Ratio) (ii) (iii) (iv) Break even point Net profit for the sales of Rs.6,00,000 Required sales for the net profit of Rs.1,40,000 4,00,000 3,00,000 30,000

Section-C 7. Critically examine the Welter's Modal of Dividend Decision. 8. Jareda Ltd. is considered to purchase a machine. Two machines A and B are available at a cost of Rs.60,000 each. Earning after tax are expected as follows: Year Profit after tax (Cash inflows) Machine A Rs. 1 2 3 4 5 25,000 20,000 15,000 10,000 10,000 Machine B Rs. 10,000 15,000 25,000 20,000 20,000