Description
question bank
QUESTION BANK
BBA 309
FINANCIAL MANAGEMENT
(BBA-V--M1/M2/E1/E2)
Q.1. Define Working Capital. Describe the factors that affect working capital requirement of a
company?
Q.2. Write short notes on the following:
a !perating Cycle
b "ecei#able $anagement
c !#er%tra&ing an& 'n&er%tra&ing
Q.(. )*+ ,t&. wants to replace its e-isting plant. .t has recei#e& three mutually e-clusi#e
proposals ./.. an& .... 0he plants un&er the three proposals are e-pecte& to cost "s. 2/12/222 each
an& ha#e an estimate& life of 1 years/ 3 years an& ( years respecti#ely. 0he company4s require&
rate of return is 125. 0he anticipate& net cash inflows after ta-es for the three are as follows:
Year !"a#$ I (%&) !"a#$ II (%&) !"a#$ III (%&)
1 62/222 1/12/222 1/(2/222
2 72/222 82/222 1/12/222
( 72/222 61/222 22/222
3 72/222 (1/222 %
1 1/62/222 % %
Which of the abo#e proposals woul& you recommen& to the management for acceptance using
9:; technique for e#aluation.
Year !VF (10')
1 2.828
2 2.627
( 2.6222 share of "s. 122
each
6/22/222
125 Debentures 6/22/222
165 0erm loan 23/22/222
1
Determine the Weighte& a#erage cost of capital of the company. .t h& been paying &i#i&en&s at a
rate of "s. 22 per share >g?2. .ncome ta- rate is 325.
Q.1. @AC ,t&. has a capital of "s.12/22/222 in equity shares of "s. 12 each. 0he shares are
currently quote& at par. 0he company proposes to &eclare a &i#i&en& of "e.1 per share at the en&
of the current financial year. 0he capitaliBation rate for the risk class to which the company
belongs is 125. What will be the market price of the share at the en& of the current year/ if
a Di#i&en& is not &eclare&
b Di#i&en& is &eclare&
c @ssuming that the company pays a &i#i&en& an& has earne& net profit of "s. 1/22/222 an&
wants to make new in#estment of "s. 12/22/222/ &uring the perio&/ how many new shares
shoul& be issue&? 'se $$ $o&el.
Q.7. :repare an estimate of net working capital requirement of +ero Company from the &ata
gi#en below:
E$()a$e* +,$ -er .#($ ,/ -r,*.+$(,# A),.#$ -er .#($ (%)
"aw materials 122
Direct ,abour 32
!#erhea&s 62
222
@&&itional information:
Celling price per unit "s. 232
,e#el of acti#ity 1/23/222 units per annum
"aw materials in stock a#erage 3 weeks
Work%in%progress >@ssume 1225 stage of completion a#erage 2 weeks
of materials an& 125 for labour an& o#erhea&s
Dinishe& goo&s in stock a#erage 3 weeks
Cre&it allowe& by suppliers a#erage 3 weeks
Cre&it allowe& to &ebtors a#erage 6 weeks
,ag in payment of wages a#erage 1.1 weeks
Cash at bank is e-pecte& to be "s. 21/222. @ssume that pro&uction is sustaine& &uring 12 weeks
of the year.
Q.
question bank
QUESTION BANK
BBA 309
FINANCIAL MANAGEMENT
(BBA-V--M1/M2/E1/E2)
Q.1. Define Working Capital. Describe the factors that affect working capital requirement of a
company?
Q.2. Write short notes on the following:
a !perating Cycle
b "ecei#able $anagement
c !#er%tra&ing an& 'n&er%tra&ing
Q.(. )*+ ,t&. wants to replace its e-isting plant. .t has recei#e& three mutually e-clusi#e
proposals ./.. an& .... 0he plants un&er the three proposals are e-pecte& to cost "s. 2/12/222 each
an& ha#e an estimate& life of 1 years/ 3 years an& ( years respecti#ely. 0he company4s require&
rate of return is 125. 0he anticipate& net cash inflows after ta-es for the three are as follows:
Year !"a#$ I (%&) !"a#$ II (%&) !"a#$ III (%&)
1 62/222 1/12/222 1/(2/222
2 72/222 82/222 1/12/222
( 72/222 61/222 22/222
3 72/222 (1/222 %
1 1/62/222 % %
Which of the abo#e proposals woul& you recommen& to the management for acceptance using
9:; technique for e#aluation.
Year !VF (10')
1 2.828
2 2.627
( 2.6222 share of "s. 122
each
6/22/222
125 Debentures 6/22/222
165 0erm loan 23/22/222
1
Determine the Weighte& a#erage cost of capital of the company. .t h& been paying &i#i&en&s at a
rate of "s. 22 per share >g?2. .ncome ta- rate is 325.
Q.1. @AC ,t&. has a capital of "s.12/22/222 in equity shares of "s. 12 each. 0he shares are
currently quote& at par. 0he company proposes to &eclare a &i#i&en& of "e.1 per share at the en&
of the current financial year. 0he capitaliBation rate for the risk class to which the company
belongs is 125. What will be the market price of the share at the en& of the current year/ if
a Di#i&en& is not &eclare&
b Di#i&en& is &eclare&
c @ssuming that the company pays a &i#i&en& an& has earne& net profit of "s. 1/22/222 an&
wants to make new in#estment of "s. 12/22/222/ &uring the perio&/ how many new shares
shoul& be issue&? 'se $$ $o&el.
Q.7. :repare an estimate of net working capital requirement of +ero Company from the &ata
gi#en below:
E$()a$e* +,$ -er .#($ ,/ -r,*.+$(,# A),.#$ -er .#($ (%)
"aw materials 122
Direct ,abour 32
!#erhea&s 62
222
@&&itional information:
Celling price per unit "s. 232
,e#el of acti#ity 1/23/222 units per annum
"aw materials in stock a#erage 3 weeks
Work%in%progress >@ssume 1225 stage of completion a#erage 2 weeks
of materials an& 125 for labour an& o#erhea&s
Dinishe& goo&s in stock a#erage 3 weeks
Cre&it allowe& by suppliers a#erage 3 weeks
Cre&it allowe& to &ebtors a#erage 6 weeks
,ag in payment of wages a#erage 1.1 weeks
Cash at bank is e-pecte& to be "s. 21/222. @ssume that pro&uction is sustaine& &uring 12 weeks
of the year.
Q.