BBA-13
June Examination 2017
BBA Pt. III Examination
Financial Management
Paper BBA-13
Time 3 Hours Max. Marks 80
Note: The question paper is divided into three sections B and C. Write answers as per given instructions.
Section A 8 × 2 16
(Very Short Answer Questions)
Note: Answer all questions. As per the nature of the question delimit your answer in one word, one sentence or maximum upto 30 words. Each question carries 2 marks.
Which are the three classes of financial functions?
Give the ideal value and formula of Quick Ratio.
What are the objectives of working capital management?
Explain the 'Lock-Box system'.
What is Walter's formula? Explain its effect on the share prices of a firm.
Give difference between operating and financial leverage.
What is meant by the term
001
BBA-13 100 4 (P.T.O.)
BBA-13 100 4
001
(viii) Calculate quick ratio from the following details:
Current Assets Rs. 20,000
Stock Rs. 3,000
Prepaid expenses Rs. 1,000
Working capital Rs. 16,800
Section B 4 × 8 32
(Short Answer Type Questions)
Note: Answer any four questions. Each answer should not
exceed 200 words. Each question carries 8 marks.
Write short notes on following:
Trend Analysis
Operating leverage
To decide to buy an item, the following data are given:-
Annual demand 600 units
Ordering cost Rs. 400
Cost per unit Rs. 15
Inventory carrying cost 40%
Calculate:
Economic order quantity
Discount of 10% is available for order of 500 units. Should
the company take the advantage of the quantity discount?
Discuss the nature and scope of financial management.
What is cash flow statement? Explain the classification of cash
flows.
BBA-13 100 4
001
Explain the following:
Current ratio
Inventory turnover ratio
Gross profit ratio
Debtors turnover ratio
Ram Ltd. Wishes to issue 1,000, 10% debentures of Rs 100
each for which the company will be required to incur the
following expenses:
Underwriting commission
Brokerage 0.5%
Other expenses Rs. 15,000
Calculate cost of debt capital (before tax as well as after tax)
assuming the debt is issued:
at par
at 10% premium
What is optimum capital structure? What factors should be
borne in mind in deciding a capital structure?
What do you understand by 'working capital'? Explain the
determinants of working capital.
Section C 2 × 16 32
(Long Answer type Questions)
Note: Answer any two questions. Each answer should not
exceed 500 words. Each question carries 16 marks.
10) Write explanatory notes on following:
Comparative financial statements
Common size financial statements.
BBA-13 100 4
001
11) What is the distinction in short term and long term financial
needs of a business. Examine the short term sources from
which finance can be raised.
12) Differentiate between the 'Present value method' and Internal
rate of return method' for evaluating capital expenditure
proposals.
13) Following are the balance sheets of a limited company as on
31st March 2013 and 2014.
Balance Sheet
Liabilities 2013
Rs.
2014
Rs. Assets 2013
Rs.
2014
Rs.
Share Capital 54,000 74,000 Good will 3,000 2,520
Reserves 13,000 15,500 Building 50,950 48,000
Profit Loss account 8,600 8,800 Plant 35,000 43,000
Bank loan (long term) 25,000 Stock 25,500 18,800
Creditors 28,000 24,000 Debtors 22,000 16,200
Bills Payable 8,000 8,500 Cash 150 180
Bank 2,100
1,36,600 1,30,800 1,36,600 1,30,800
Additional information:
Dividend paid was Rs. 6,000
Rs. 3,600 was written off as depreciation on plant and
Rs. 2950 on buildings.
Profit on sale of plant was Rs. 3,000.
You are required to prepare funds flow statement and statement
of changes in working capital.