B.Com In Investment Management SEM IV 2019 20 Oct 2019-20 INV. MGT. FINANCIAL MANAGEMENT II Question Paper - Mumbai University | munotes

Questions asked in this paper

• 2) Figures to the right hand side indicate full marks

1. Q3 Suitable assumptions and working notes should form the part of your answer
2. Q1 Answer any Eight from the following: Match the following 3)Cash budget 3 8)Debenture interest to zero 9)Common stock B State whether the following statements are true or false(Answer any Seven): [07] 8 marks
   • a. Trade credit is a source of working capital
   • b. Longer the production cycle larger will be the of working capital Trade creditor is a short term source of finance Higher rate of stock turnover improves liquidity Credit policy provides information about the period of credit allowed to customers Carrying cost is the cost of placement of an order
   • g. Fixed budget is drawn for multiple level of activities
   • h. Strategic Financial Management always shows a short term view
   • i. Combined leverage should be as high as possible J Credit sales result in accounts receivable Following details are available from the records of a firm. Prepare a cash budget for the [15]
   • (a) sales are on cash
   • (b) of the credit sales are collected next month and the balance in the following
   • (c) Period of credit allowed by suppliers 2 months
   • (d) Delay in payment of wages month. N
   • (e) Delay in payment of overheads month
   • (f) Cash and Bank Balance on 1.04.2017 is expected to be Rs. 10,000
   • (g) Plant and Machinery will be installed in February 2017 at a cost of Rs. 90,000 The monthly installment of Rs. 2,000 are payable from April 2017 onwards
   • (h) Advance to be received for sale of vehicle Rs. 10,000 in June
   • (i) Dividend from investments Rs. 5,000 is expected to be received in June 2017
   • (j) Advance Income Tax to be paid in June 2017 Rs. 4,000
   • B. A manufacturer operates three sales divisions X, Y, Z, which sell three branded products A, B and C. The budget committee needs a sales budget for the next year the following information : Budget sales units for current year: Actual sales units for the current year based on actual sales to the date and estimated sales for the balance of the year are: The selling prices per unit of A, B and C are Rs. 5, Rs. 10, and Rs. 20 respectively applicable for all the divisions The discussions with divisional sales managers have product “A” is and if the price is increased by 10%, even then it finds a ready market: product “C” is overpriced and the price of it can be reduced by 5%. By incorporating these changes, the sales will be as follows: You are required to prepare the budget for the current year as well as budget for he marketing manager of A Ltd. is giving a proposal to the Board of directors of the [15] j -ompany that an increase in the credit period allowed to customers from the present ; one month to two months will bring 25% increase in sales volume in the next year. The following is the current operational data he board request you to give your expert opinion on adoption of the new policy inthe} ext year subject to the companies required rate of return on investment is 25%, alculate Opportunity cost on total cost
   • D)Average stock level from the following particulars Minimum period for receiving the goods :8 days Maximum period for receiving the goods: 16 days Normal period for receiving the goods :12 days A firm has sales of Rs.20,00,000, Variable cost Rs.14,00,000 and fixed cost Rs.4,00,000.It has debt capital finance of Rs, 1 0,00,000 at 10%
3. Q2 If the firm had to decline sales by 50% , What percent drop would it have in EBIT Electronics Devices Ltd. sells goods to domestic market on a gross profit of 25% on [15] ales without considering depreciation. It estimates for the next year are as follows Wages (0.5 month in arrear) 800 Manufacturing expenses(1 month in arrear) 1200 Sales promotion expenses (payable quarterly in advance) 160 Administration expenses( 1 month in arrears) 400 he company maintains one months stock of raw material and finished goods .A cash balance of Rs.20 lakhs is maintained. You are required to work out the working capital equirements of the company
4. Q4 B. Board of directors of Century Ltd. requests you to prepare a statement showing the requirements of working capital for a forecast level of 1,04,000 units -Following information is made available Overheads selling and distribution 15 marks
   • b) Raw material in stock Average 4 weeks
   • c) average 4 weeks
   • d) Finished goods in stock average 4 weeks
   • e) Credit allowed to debtors 8 weeks
   • f) Credit allowed by suppliers average 4 weeks
   • g) Cash at Bank is expected to be Rs.50,000 Find out MPBF under all methods suggested by Tandon committee
   • A) What are the principles of sound financial planning? 8
   • B) Distinguish between debt finance and equity finance. 7
5. Q5 Write short notes on (any three) 15 marks
   • A) Financial leverage
   • B) Budgetary control

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