FACULTY OF MANAGEMENT
M.B.A. II Semester Examination, May June 2017
Subject: Financial Management
Course No. 2.3
Time: 3 Hours Max.Marks: 80
Note Answer all the questions.
PART A (10x2 20 Marks)
[Short Answer Type]
1. Write short notes on the following.
Objectives of Financial Management.
Profit maximization
Project Management
Sensitivity analysis
Optimal capital structure
EBIT-EPS analysis
Types of working capital
ABC analysis
Dividend policy V/s Share value
Motives for mergers
PART B (5X12 60 Marks)
[Essay Answer Type]
Answer all the questions.
Discuss the significance and implications of Finance functions.
OR
What is time value of money and state its utility in the management of finances.
Explain the relative merits and demerits of various discounted cash flow techniques.
OR
From the following information, suggest which machine is acceptable based on payback
method, IRR and Net present value with 10% cost of capital.
Year 1 2 3 4 5
Machine-A 15,000 20,000 25,000 15,000 10,000
Machine-B 5,000 15,000 20,000 30,000 20,000
Investment on Machine-A Rs. 60,000, Machine-B Rs. 50,000.
OU 2260 OU 2260
Code No. 9090

Discuss the assumptions and applicability of capital structure theories.
OR
Following are the details regarding the capital structure of a company.
Type of Capital Book Value

Market Value

Specific Cost

Debentures 40,000 38,000 5
Preference capital 10,000 11,000 8
Equity capital 60,000 1,20,000 13
Reserves 20,000 9
You are required to determine the weighted average cost of capital using book value
and market value as weights and state which is preferable.
Discuss the significance and determinants of working capital requirements of a
company.
OR
Examine the policies and recent trends in payment of Dividends of Indian
Companies.
How to evaluate financial implications in respect of corporate mergers and take
overs.
OR
Discuss the essentials for good corporate governance in Indian business
environment.