Financial Management Important Questions for Upcoming Exam (Both CBCS and NON CBCS Pattern)

Q. Explain the objectives and importance of financial management in modern era.  2012, 2013, 2014, 2015, 2016

Q. What it financial management/Business finance? What are its features? Explain its scope.  2014, 2018

Q. Discuss the role and responsibilities of modern finance manager in an establishment. Discuss some of the crucial financial problems that a decision maker faces today.   2013, 2014, 2016, 2017, 2018

Q. Explain various objectives of financial management. (Profit maximisation and wealth maximisation)               2012, 2013, 2014, 2015, 2017

Or

Q. “Maximization of Profit is regarded as the proper objectives of investments but it is not as exclusive as maximizing shareholder’s wealth” – Explain.                             2016

Q. Compare and Contrast between profit maximisation and wealth maximisation objectives of financial management.

Q. “Finance has changed from a field that was concerned primarily with the procurement of funds to one that includes the management of assets, the allocation of capital and valuation of firm”. – Give your views on this statement.

Q. Explain the concept of working capital. Why it is needed? What are the factors affecting working capital requirement of a firm.                             2015, 2016, 2017SN, 2018

Q. What are the advantages of adequate working capital? What shall be the repercussions if a firm has (i) redundant working capital and (ii) inadequate working capital?      2017

Q. Explain various methods for determination of working capital.

Q. Explain various sources of long term and short term working capital of a firm.     2012

Q. Practical Questions: Estimation of Working Capital Requirement, Preparation of Balance Sheet, and Calculation of Net operating cycle. (Every year one question is asked)

Q. Short notes:

Ø  Working Capital                       2014

Ø  Financial forecasting and planning                  2016

Ø  Working capital management and its significance                   2016, 2018

Ø  Net operating Cycle

Ø  Trade Credit

Ø  Capital Gearing                                        2017

Q. What do you mean by Investment Decisions? What are its characteristics? Discuss various techniques of investment decisions.                           2012

Q. Explain the significance of investment decisions.                      2013

Q. What do you mean by Cost of Capital? How it is determined? Explain its significance. What are the problems associated with determination of cost of Capital?                           2016

Q. What is meant by cost of capital? What are the components of the cost of capital? How is the cost of new equity issues determined?     2017, 2018SN

Q. What do you mean by the term Leverage? What are its various types? Explain their features.             2012

Q. What is ‘financial leverage’? How does it magnify the revenue available for equity shareholders? Discuss the relationships between financial leverage and debt financing. 

Q. What do you mean by ‘financial leverage’? Distinguish between financial leverage and operating leverage. Do you think that they are related to capital structure?

Q. What do you mean by Capital structure and Optimal Capital Structure? How it is determined? Explain its significance.                                2017

Q. Define capital structure. Using imaginary figures show how to determine the value of firm under (1) the net income (NI) approach and (2) the net operating income (NOI) approach.             

Q. Write short note on:

Ø  Various Capital Budgeting Techniques: 2013, 2014, 2015, 2016, 2017, 2018

Ø  Weighted average cost of capital

Ø  Trading on Equity/Financial Leverage            2012, 2013, 2014

Ø  Optimal Capital Structure                                    2017

Ø  Capital Budgeting Decisions                               2016

Q. Practical: Calculation of Leverage, Calculation of Payback period method, NPV, Rate of Return, Capital Structure, Cost of Equity and Debt Capital.

Unit 4: Dividend Policy

Q. What is Dividend and Dividend Policy? What are various types of dividend and dividend policies?   2014SN, 2015, 2016, 2017

Q. What are the factors affecting dividend decision of a firm?                   2014

Q. Explain the MM theory of dividend distribution. Mention its assumptions. What are the major criticisms to this theory of irrelevance?                 2012, 2013, 2015, 2016, 2018

Q. Explain the Walter’s theory of dividend distribution. Mention its assumption. What are the shortcomings to this theory?                                2017

Q. What do you mean by ploughing back of profits? Mention the purpose of creating it. What are the factors that influence the ploughing back of profit?                                2012, 2013, 2014

Q. “Retained earning does not involve any cost”. Do you agree? Discuss the advantages and limitations of retained earnings/ploughing back of profit.

Q. Write Short notes on:

Ø  Stable Dividend policy                          2012, 2017

Ø  Optimal Payout Ratio                            2013, 2017

Ø  Dividend Payout Ratio                          2014