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B.Com Computer Applications (Nov-2012) Madras University

Started by vedha.v, Dec 10, 2012, 07:46 PM

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B.Com Computer Applications (Nov-2012) Madras University - B.Com (Computer Applications), Third Year, Semester-V,Financial Management , BPC5A Question paper

Course: B.Com B.Com Computer Applications       University/board: Madras University



University Name: Madras University
Name of the Degree: B.Com (Computer Applications)
Title of the Paper: Financial Management
Month & Year of Examination: November & 2012
Subject Code: BPC5A
Semester: V
Year: Third Year

Time: Three hours
Maximum: 75 marks


SECTION - A
(10 * 2 = 20 marks)


Answer any TEN questions.
All questions carry equal marks.



1. What is financial management?

2. Define cost of capital.

3. What is a statble dividend policy?

4. Define the term working capital.

5. What do you mean by over capitalisation?

6. State any two functions of financial management.

7. What are the steps in financial planning.

8. State the significance of cost capital.

9. Define the term capital structure.

10.What do you mean by financial leverage?

11.What do you mean by retained earnings?

12.What are the components of working capital?

SECTION - B
(5 * 5 = 25 marks)


Answer any FIVE questions.
All questions carry equal marks.


13. The earnings per share of a company are Rs.10 and the rate of capitalisation applicable to it is
10%. The company has before it the options of adopting a payout of 20% or 40% or 80%. Using
Walters formula calculate the market value of the companys share if the productivity of the
retained earnings is 20%.

14. A firm has a sales of Rs.20,00,000. Variable cost is Rs.14,00,000 and fixed cost Rs. 4,00,000
and the debt is Rs. 10,00,000 at 10% rate of interest. Find out the leverages.

15. From the following information calculate the average amount of working capital required.

Per annum
Stock of finished goods and work in programs 10,000
Stock of stores and materials 8,000
Average credit to local customers 2 weeks 1,04,000
Average credit to outside customers 6 weeks 3,12,000
Credit available for payment of purchases 4 weeks 78,000
Credit available for payment of purchases 2 weeks 2,00,000

Add 10% for contingencies.

16. The following information is available in respect of a firm. A company has earnings before
interest and taxes of Rs. 1,00,000. It expects a return an investment at a rate of 12.5%.
You are required to find out the total value of the firm according to the M.M. Theory.

17. A firm issues debentures of Rs. 1,00,000 and realises Rs. 98,000 after allowing 2% commission
to brokers. The debentures carry an interest rate of 10%. The debentures are due for maturity
at the end of 10th year. you are required to calculate the effective cost of debt before tax.

18. Given the following information you are required to compute
(a) capitalisation and (b) capital structure.

Liabilities Rs.
Equity share capital 10,00,000
Preference share capital 5,00,000
Long term loans and debentures 2,00,000
Retained earnings 6,00,000
Capital surplus 50,000
Current liabilities 1,50,000
-
25,00,000
-

19. What are the problems in determining cost of capital?


SECTION- C 
(3 * 10 = 30 marks)


Answer any THREE questions.
All questions carry equal marks.


20. Explain the factors determining the capital structure.

21. Bharathi Ltd. expects an annual EBIT of Rs. 1,00,000. The company has Rs. 4,00,000 in 10%
debentures. The capitalisation rate is 12.5%. The company proposes to issue additional equity
shares of Rs. 1,00,000 and use the proceeds for redemption of debentures of Rs. 1,00,000.
Calculate the value of firm (V) and the overall cost of capital (K0).

22. Prepare an estimate of working capital requirement from the following information.

Projected annual sales 2,00,000 units.

Selling price Rs. 8 per unit.

Average credit period allowed to customers 6 weeks.

Average credit period allowed to suppliers 4 weeks.

Average stock holding 10 weeks.

Allow 10% for contingencies.

23. The companys current balance sheet is as follows:

Liabilities Rs. Assets Rs.
Equity capital 6,00,000 Net fixed assets 15,00,000
(Rs. 10 per share) Current assets 5,00,000
10% long term loan 8,00,000
Profit and loss a/c 2,00,000
Current liabilities 4,00,000
-
20,00,000 20,00,000
-
The companys total assets turnover ratio is 3.0 its fixed operating costs are Rs. 10,00,000
and variable operating cost 40%. The income tax rate is 50%.

24. Following are the details regarding three companies.
A Ltd B Ltd C Ltd
r=15% r=10% r=8%
Ke=10% Ke=10% Ke=10%
E=Rs.10 E=Rs.10 E=Rs.10
Calculate the value of equity share of each of these companies under Walters approach when
dividend pay-out ratio is
(a) 0%
(b) 50%
(c) 60%
(d) 100%

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