B.B.A. LL.B. (Five Years) Sem 4 Financial Management 2015 Jun (100 marks) Question Paper - KSLU

Questions asked in this paper

1. Q1 The Kaveri company is planning to expand its business and accordingly the company desires to increase assets by 50% by the end of the year 2013. The existing capital structure is as given below :
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2. Q2 Explain various factors which influence the capital structure of a company.
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3. Q3 What is working capital ? What are the different classifications of working capital ? What are the merits and demerits of working capital ?
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4. Q4 Shiva Ltd. is planning to invest into a new equipment costing Rs. 80,00,000. The equipment has economic life of 5 years with nil salvage value. The tax rate is 40%. Original cost method is used for depreciation.
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5. Q5 What is Merger ? Explain various reasons for merger.
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6. Q6 A company belongs to a risk class for which the appropriate discount rate is 10%. It currently has 50000 outstanding shares selling at Rs. 100 each. The firm is contemplating a dividend payment of Rs. 5 per share at the end of current financial year. It expects to have a net income of Rs. 5,00,000 and a proposal for making new investments of Rs. 10,00,000. Show that under the MM assumptions, the payment of dividend does not affect the value of the firm.
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7. Q7 M Ltd. decides to takeover X Ltd. Following data is available.
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Write short note any two of the following :

1. Q8 (a) Advantages and limitations of cost of capital.
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2. Q8 (b) Working capital cycle.
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3. Q8 (c) Multinational capital budgeting.
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Solve any two of the following problems :

1. Q9 (a) ABC Company Ltd. has got Rs. 20,000 to invest. The following proposals are under consideration :
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2. Q9 (b) Mr. A has a company which belong to a risk class for which the appropriate capitalisation rate is 10%. It currently has outstanding 5000 shares selling at Rs. 100 each. The firm is contemplating the declaration of dividend of Rs. 6 per share. The company expects to have a net income of Rs. 50,000 and has a proposal for new investment of Rs. 1,00,000. Show that the payment of dividend does not affect the value of the firm.
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3. Q9 (c) From the following data compute duration of operating cycle :
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Typed from the KSLU paper above. The paper is the original. Long reading passages are shortened here to their first and last lines and a summary.