Master of Commerce (M.Com.) MCom Accountancy SEM III ADVANCE ACCOUNTANCY COURSE III ADVANCED FIN. MGT Question Paper - Mumbai University | munotes

Questions asked in this paper

• Please check whether you have got the right question paper
• 2. Figures to the right indicates full marks

1. Q3 Use of simple calculator is allowed
2. Q4 Working notes should form a part of the answer
3. Q1 The following is incomplete Balance Sheet of JK Ltd. together with additional information. You are required to complete the missing figures in the Balance Sheet using ratio analysis Balance Sheet of JK Ltd as at March, 2018
   • i) Ratio of Long-term loan to net worth
   • v) Gross Profit Margin : of goods sold
4. Q1 Lenova Public Limited Company proposes to use the following accounting ratios to project its Balance Sheet for next year. You are required to prepare the Projected Balance Sheet for the year 2017-18: Estimated Sales for next year Rs. 4,50,000 Sales to Net Worth 4 times Total Debt to Net Worth 0.65:1 Current Liabilities to Net Worth 0.25:1 Sales to Inventory 5 times Average Collection Period 36 days (year at 360 days) Fixed Assets to Net Worth 75% 15 marks
   • Q.P. Code : 40215
5. Q2 The existing capital structure of Sky Ltd. is as follows: Equity Shares of Rs. 100 each 40,00,000 The company earns a return before Interest and tax at 12% and the tax on income is 50%. Company wants to raise Rs. 25,00,000 for its expansion programme for which it is considering following alternatives: 15 marks
   • a) Issue of 20,000 equity shares at a premium of Rs. 25 per share
   • b) Issue of 10% Preference shares
   • c) Issue of 9% Debentures Which alternatives would you consider to be the best on the basis of EPS?
6. Q2 The Paramount Company’s most recent Balance Sheet follows: The company’s total assets turnover ratio based on sales is 4.0. Its fixed operating costs are Rs. 1,00,000. Its variable operating costs ratio is 40%. Income-tax rate is 40% You are required to : Calculate all three types of leverages 15 marks
7. Q3 Panacea Ltd. has the following capital structure; Rs. in Lacs The market price of the company’s equity share is Rs. 44. It is expected that the company would next year pay a dividend of Rs. 8.80 per share on the face value of Rs. 10. The company’s growth prospects are 7% per annum. Assuming corporate taxation @ 30% you are required to; 15 marks
   • i) Compute weighted average cost of capital based on the existing capital structure
   • ii) Compute the new composite weighted average cost of capital if the company raises additional capital of Rs. 150 lacs as under: Rs. in Lacs This would increasing the expected dividend to Rs. 9.60 per equity share and leave the growth rate unchanged at 7% and the anticipated market price of the equity shares would rise to Rs. 48
   • Q.P. Code : 40215
8. Q3 Barbeque Ltd. wishes to raises additional funds of Rs. 20,00,000 for meeting its investment plans 4,00,000 in the form of retained earnings available for investment purposes. The following are further
   • ii) Cost of debt:
   • iv) Dividend Pay out 50% of earnings
   • v) Expected growth rate in dividend 10%
   • vii) Rate of income tax 50% You are required to determine:
   • i) Pattern for raising the additional finance
   • ii) Post tax average cost of additional debt
   • iii) Cost of retained earnings and equity
   • iv) Weighted average after tax cost of additional finance
9. Q4 A) Select the appropriate option from the following and rewrite the full sentence. 8 marks
10. Q1 is not a function of a finance manager
    • a) Marketing b)
    • c) Forecasting d) Financing
11. Q2 The discount rate should be to decrease the given future value
    • a) Decreased b) Increased
12. Q3 Return on capital employed relationship between
    • a) Net operating profit and loan b) operating profit and capital employed
    • c) profit d) Gross profit and total assets
13. Q4 Cost of aspecific source of capital is
    • c)~ Historical cost d) None of the above
14. Q5 The factor which is not relevant for determination of debt equity mix
    • a). Taxation b) Nature of Asset base
    • c) Industry Norms d) Viability of Cashflows
15. Q6 Financial leverage implies application of debt capital for maximizing
    • c) Debt d) EPS
16. Q7 -Investment is made with.a view to earn
    • a) b) Interest
    • c) Income d) None of the above
17. Q8 Current ratio is 2.5 working capital is Rs. 60,000 current assets will be
    • Q.P. Code : 40215
    • B) State whether the following statements are True or False. 07
18. Q1 Capital budgeting is the function of finance
19. Q2 multiplied by the compound factor to find out the future value
20. Q3 Interest on debentures reduces tax liability
21. Q5 Traditional approach assumes that optimum capital structure exist
22. Q6 Operating leverage is calculated by dividing contribution by EBT
23. Q7 Aninvestor does not expect liquidity of investment
24. Q4 Write short notes. (any three) 15 marks
    • a) Functions of Finance
    • b) Current Ratio
    • c) Weighted Average Cost of Capital
    • d) Business Risk

Read from the scan above, so a character or two may differ. The scan is the original.