Advanced Financial Management Question Paper June 2025 [Dibrugarh University BCOM 4th SEM NEP Syllabus]

Advanced Financial Management Question Paper June 2025
Dibrugarh University BCOM 4^th SEM NEP Syllabus

COMMERCE (Core)

Paper: COM (FIN/MKT/BNI/HRM)

Full Marks: 60

Time: 2 hours

The figures in the margin indicate full marks for the questions.

1. (a) Fill in the blanks: (1 × 4 = 4)

(i) The value of the firm can be maximized, if the shareholders’ wealth is ______.

(ii) Cost of retained earnings is the ______ of dividends foregone by the shareholders.

(iii) According to ______ Model, the dividend decision is irrelevant.

(iv) Working capital is also known as ______ capital.

(b) Write True or False: (1 × 4 = 4)

(i) Capital structure is the mix of preference and equity share capital.

(ii) Payback period method measures the true profitability of a project.

(iii) Payment of dividend involves legal as well as financial considerations.

(iv) Net working capital is the excess of current assets over current liabilities.

2. Write short notes on any three of the following: (4 × 3 = 12)

(a) Optimal Capital Structure

(b) Capital Budgeting

(c) Types of Dividend

(d) Need of Working Capital Management

3. (a) "Maximization of profits is regarded as the proper objective of investment decision, but it is not as exclusive as maximizing shareholders' wealth." Comment. (10)

OR

(b) Gohain firm has Sales of ₹ 20,00,000, Variable Costs of ₹ 14,00,000, Fixed Costs of ₹ 4,00,000 and Debt of ₹ 10,00,000 at 10% rate of interest. Calculate Operating, Financial and Combined Leverages. (10)

4. (a) Compute the Cost of Debt Capital in the following cases: (2.5 × 4 = 10)

(i) X Ltd. issues ₹ 50,000, 8% debentures at par. The tax rate applicable to the company is 50%.

(ii) Y Ltd. issues ₹ 50,000, 8% debentures at a premium of 10%. The tax rate applicable to the company is 60%.

(iii) A Ltd. issues ₹ 50,000, 8% debentures at a discount of 5%. The tax rate is 50%.

(iv) B Ltd. issues ₹ 1,00,000, 9% debentures at a premium of 10%. The costs of flotation are 2%. The tax rate applicable is 60%.

OR

(b) Discuss any four important methods of evaluating capital investment project. (10)

5. (a) Explain the various factors which influence the dividend decision of a firm. (10)

OR

(b) What is the Modigliani-Miller approach of irrelevance concept of dividend? Under what assumptions to the conclusions hold good? (6 + 4 = 10)

6. (a) Prepare a statement showing the Working Capital Requirements for a level of activity of 1,56,000 units of production for ABC Engineering Company Private Ltd. (10)

Cost Information per unit:

Raw Materials: ₹ 90

Direct Labour: ₹ 40

Overheads: ₹ 75

Total Cost: ₹ 205

Profit: ₹ 60

Selling Price: ₹ 265

Additional Information:

(i) Raw materials are in stock, on average 1 month.

(ii) Materials are in process, on average 2 weeks.

(iii) Finished goods are in stock, on average 1 month.

(iv) Credit allowed by suppliers, 1 month.

(v) Time lag in payment from debtors, 2 months.

(vi) Lag in payment of wages, 1½ weeks; Lag in payment of overheads, 1 month.

(vii) 20% of the output is sold against cash. Cash in hand/bank expected is ₹ 60,000.

(viii) Assume production is even throughout the year; wages and overheads accrue similarly; 4 weeks = 1 month.

OR

(b) What do you mean by Inventory Management? Explain any two major techniques of Inventory Management. (2+4+4=10)

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