Monday, May 20, 2019

Gauhati University Question Papers: Financial Management (Nov-Dec’ 2013)

Full Marks: 80
Time: 3 hours
(The figures in the margin indicate full marks for the questions)
1. Give the meaning of the following terms:                                           10

a)         Leverage.
b)         Pay-back period.
c)          Profitability Index.
d)         Capital budgeting.
e)         Watered capital.
f)          Capital gearing.
g)         Gross working capital.
h)         Dividend.
i)           Share valuation.
j)           Ploughing back of profit.
2. Answer the following questions in about 30 words each:                            2x5=10
a)         State two factors influencing capital structure.
b)         What do you mean by financial leverage?
c)          Write the methods of capital budgeting.
d)         Write the disadvantages of excessive working capital.
e)         State the different types of dividend policy.
3. Answer the following within 150-200 words:                                          5x4=20
(a) What are the recurring finance functions?
State the limitations of financial management.
(b) What is the difference between capital structure and capitalization?
Write the significance of cost of capital.
(c) What are the factors that determine the needs of working capital?
(d) Distinguish between gross working capital and net working capital.
4. Answer the following questions in about 600 words:                                        10x4=40
(a) “Profit maximization is not the adequate criterion to judge the efficiency of a firm”. Explain the statement. 10
What is meant by financial management? Explain the importance of financial management.                                                                                                                                                      10
(b) State the symptoms of over capitalization. What are the effects of over capitalization?   10
What is balanced capital structure? Why should a firm aim at a balanced capital structure?                                                                                                                                        10
(c) What is the significance of profitability index? How is it useful in projects having different sizes?                                                                                                                                         10
From the following information of Capital project, determine.
1)         Pay-back period.
2)         Present value index. (Cost of capital is 10%)
Initial Capital Investment Rs. 12,000
Annual cash inflow Rs. 2,000
Life in years 8
Present value of Re. 1 received annually for 8 years is Rs. 5,3349.
(d) Discuss the factors which determine the dividend policy of a firm.


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