Rajiv Gandhi University of Health Sciences, Karnataka
V semester Bachelors in Hospital Administration Degree Examination — APRIL - 2015
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Time: Three Hours Max. Marks: 80 Marks
Financial Management
Q.P. CODE: 1320
(QP contains two pages)
Your answers should be specific to the questions asked.
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Draw neat, labeled diagrams wherever necessary
LONG ESSAYS (Answer any Two) 2 x 10 = 20 Marks
- What is Working Capital Management? Explain different factors influencing Working Capital Management.
- Explain objectives of Financial Management.
- Modern Company Limited is considering the purchase of a machine, which cost Rs.50,000. The machine has a life expectancy of 5 years and no salvage value. The tax rate is 35%. Assume the company uses straight-line method of depreciation. The estimated Cash Flow Before Depreciation and Tax (CFBDT) from the investment are as follows.
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Year 1 2 3 4 5
CFBDT 10,000 10,692 12,769 13,462 20,385
Compute the following.
a) Payback period
b) Average rate of return--- Content provided by FirstRanker.com ---
c) NPV at 10% discount rate
d) Profitability index at 10% discount rate
The PVF at 10% for Re.1 as follows.
Years 1 2 3 4 5
PVF at 10% 0.909 0.826 0.751 0.683 0.621
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SHORT ESSAYS (Answer any Eight) 8 x 5 = 40 Marks
- Explain Payback Period and Accounting Rate Of Return.
- Explain financial decisions in the firm.
- Explain Inventory Management.
- Explain different components of Short-Term Finance.
- Explain Cash Flow and Funds Flow Statement.
- From the following particulars of a Sun Shine Company, compute the Operating Cycle.
Average inventory:
Raw materials - 4,00,000
Work in progress - 6,00,000--- Content provided by FirstRanker.com ---
Finished goods - 8,00,000
Particulars of daily operation
Raw materials consumed - 40,000
Cost of production - 1,00,000
Cost of goods sold - 1,60,000--- Content provided by FirstRanker.com ---
Credit sales - 1,60,000
Credit purchase - 80,000
Total debtors - 8,00,000
Total creditors - 10,40,000
Assume 360 days per year for the purpose. - The installed capacity of a factory is 700 units. The actual capacity is 500 units. Selling price per unit is Rs.10 and variable cost per unit is Rs.6 per unit. Calculate the Operating Leverage in each of the following situations.
When fixed cost are Rs.500
When fixed cost are Rs.1,100
When fixed cost are Rs.1,500 - Joy Limited issues 10 year 9% Redeemable Debentures for Rs.100 each at par of Rs.5,00,000 and incurs issue expenses at 2%. The company is in 40% tax bracket. Calculate the cost of debt assuming that the Debentures are redeemable.
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At par
5% discount
5% premium - From the following particulars, calculate Breakeven Point in terms of units and rupees.
Fixed expenses - Rs.2,00,000--- Content provided by FirstRanker.com ---
Variable cost per unit - Rs.15
Selling price per unit - Rs.20 - From the following particulars, calculate the Weighted Average Cost of Capital.
Sources of Funds Amount Specific Cost of Capital
Equity Share Capital 6,00,000 15%--- Content provided by FirstRanker.com ---
Retained Earnings 3,00,000 15%
Preference Share Capital 2,00,000 10%
Debentures 2,00,000 12%
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SHORT ANSWERS (Answer any ten) 10 x 2 = 20 Marks
- What is Financial Management?
- What is meant by Cost of Capital?
- What is meant by Leverage?
- What is Net Present Value?
- What is meant by Accounts Receivable?
- What is Dividend?
- Name the Money Market Instruments.
- What is meant by Optimum Capital Structure?
- What is meant by Secondary Market?
- Name the motives for holding Inventory.
- What is meant by Gross and Net Working Capital?
- How do you calculate EPS?
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