B.Com. (Financial Management) SEM II 2018 19 April 2019 PRINCIPLES OF FINANCE Question Paper - Mumbai University | munotes

Questions asked in this paper

1. Q1 Objective Questions:
   • a) State whether the following statements are True or False: - (Any 8) (08 M)
   • 1) Finance decision is concerned with when, where and how funds can be acquired
   • 2) Financial Planning must be flexible and not rigid
   • 3) Shareholder’s Funds synonymous term is proprietary Equity
   • 4) EPS does not affect the capital structure decision
   • 5) A firm’s financial flexibility helps it arranging funds only in bad times
   • 6) there are 4 forms of Capital Structure
   • 7) Firms employ only two types of capital
   • 8) Narrow sense includes share capital, reserves and debt
   • 9) Sweat Equity are issued for exceptional job for exceptional employees or directors of co
   • 10) Secured debentures create a charge on the company
   • b) Match the Following: - (Any 7) (07 M)
   • 1. Personal Finance a) Capitalisation of profits or reserves
   • 3. Capital Budgeting Type of Bank loan
   • 4. David Durand d) Right to fixed dividend
   • 10. Bonus Shares j) and Investment of individuals
2. Q2 a) What are the nature and scope of finance Functions? (08 M)
   • b) Explain the Functions of Financial Management. (07 M)
3. Q2 a) State the role of Finance Manager? (08 M)
   • b) Enumerate the steps in Financial Planning? (07 M)
4. Q3 a) AB 5,00,00,000 for the construction of anew plant. The following three financial plans are
   • 1. co. may issue 50,00,000 ordinary shares of Rs. 10 each
   • 2. The co. may issue 25,00,000 ordinary shares @ Rs. 10 and remaining amount may be collected by issue of 2,50,000. Debentures of Rs. 100 each bearing an 8% rate of Interest
   • 3. co: may issue 25,00,000 ordinary shares @ Rs. 10 each and remaining amount as preference shares of Rs. 10 each bearing an 8% rate of Dividend If the expected EBIT, which the earn is Rs. 40,00,000 then suggest which capital structure the co should select. Assume tax rate to be 50%?
   • b) Explain the remedies of Over Capitalisation? (07 M)
5. Q3 a) Explain the criteria determining Capital Structure. (08 M)
   • b) What are the consequences of Undercapitalisation? (07 M)
6. Q4 a) What are the types of External Source of Finance? (08 M)
   • b) Distinguish Between Equity Shares and Preference Shares. (07 M)
7. Q4 a) Explain state there types? (08 M)
   • b) Explain briefly Borrowings from Banks? (07 M) Paper Subject Code: 76603 Principles of Finance
8. Q5 a) Explain Capital Reserves with their advantages and disadvantages? (08 M)
   • b) Explain Provisions for Depreciation in detail? (07 M)
9. Q5 Write Short Notes on:- (15 M)
   • 1. Objectives of Financial Planning
   • 2. Traditional views of Capital Structure
   • 3. Public Deposits
   • 4. Retained Earnings
   • 5. Treasury Function

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