Download GTU (Gujarat Technological University) MBA 2019 Winter 3rd Sem 3539901 Financial Management Previous Question Paper

Seat No.: ________ Enrolment No.___________

GUJARAT TECHNOLOGICAL UNIVERSITY

MBA(PART TIME) ? SEMESTER III ? EXAMINATION ? WINTER 2019

Subject Code: 3539901 Date:23/12/2019

Subject Name: Financial Management

Time: 10:30AM to 01:30 PM Total Marks: 70

Instructions:

1. Attempt all questions.

2. Make suitable assumptions wherever necessary.

3. Figures to the right indicate full marks.

4. CVIF, CVIFA, PVIF, PVIFA table needs to be proved to students.

Q.1 Explain the terms

(a) Growing Annuity

(b) Growing Perpetuity

(c) ABC Inventory Technique

(d) Operating Leverage

(e) EOQ

(f) WACC

(g) Operating Cycle

14

Q.2 (a) What is Financial Management? Explain the role of Finance Manager. 07

(b) Explain in detail about various long term sources of Finance. 07

OR

(b) A Rs.100 par value bond, bearing a coupon rate of 9 percent will mature after 4

years. What is the value of the bond, if the discount rate is 13 percent?

07

Q.3 (a) Volga is a large manufacturing and marketing company in the private sector. In

2018, the company had a gross sales of Rs. 980.2 Crore The other financial data

for the company are given below.

Particular Rs. In Crore

Net Worth 152.31

Borrowing 165.47

EBIT 43.17

Interest 34.39

Fixed Cost (excluding Interest) 118.23

You are required to calculate

a) Debt-equity ratio

b) Debt ratio

c) Interest coverage

d) Operating leverage

e) Financial leverage

f) Combined leverage

Interpret your result and comment on the Volga?s Debt Policy

07

(b) You are appointed as Financial advisor in existing company who is in dilemma

about adopting dividend policy, advise them in light of factor determining

dividend policy.

07

OR

Q.3 (a) You are appointed as Finance Manager of Company. The company provides

the following data:

Direct Material: Rs. 52 per unit

Direct Labour: Rs. 19.5 per unit

Overheads: Rs. 39 per unit

Selling Price: Rs. 130 per unit

The following additional information are available:

07

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Page 1 of 2

Seat No.: ________ Enrolment No.___________

GUJARAT TECHNOLOGICAL UNIVERSITY

MBA(PART TIME) ? SEMESTER III ? EXAMINATION ? WINTER 2019

Subject Code: 3539901 Date:23/12/2019

Subject Name: Financial Management

Time: 10:30AM to 01:30 PM Total Marks: 70

Instructions:

1. Attempt all questions.

2. Make suitable assumptions wherever necessary.

3. Figures to the right indicate full marks.

4. CVIF, CVIFA, PVIF, PVIFA table needs to be proved to students.

Q.1 Explain the terms

(a) Growing Annuity

(b) Growing Perpetuity

(c) ABC Inventory Technique

(d) Operating Leverage

(e) EOQ

(f) WACC

(g) Operating Cycle

14

Q.2 (a) What is Financial Management? Explain the role of Finance Manager. 07

(b) Explain in detail about various long term sources of Finance. 07

OR

(b) A Rs.100 par value bond, bearing a coupon rate of 9 percent will mature after 4

years. What is the value of the bond, if the discount rate is 13 percent?

07

Q.3 (a) Volga is a large manufacturing and marketing company in the private sector. In

2018, the company had a gross sales of Rs. 980.2 Crore The other financial data

for the company are given below.

Particular Rs. In Crore

Net Worth 152.31

Borrowing 165.47

EBIT 43.17

Interest 34.39

Fixed Cost (excluding Interest) 118.23

You are required to calculate

a) Debt-equity ratio

b) Debt ratio

c) Interest coverage

d) Operating leverage

e) Financial leverage

f) Combined leverage

Interpret your result and comment on the Volga?s Debt Policy

07

(b) You are appointed as Financial advisor in existing company who is in dilemma

about adopting dividend policy, advise them in light of factor determining

dividend policy.

07

OR

Q.3 (a) You are appointed as Finance Manager of Company. The company provides

the following data:

Direct Material: Rs. 52 per unit

Direct Labour: Rs. 19.5 per unit

Overheads: Rs. 39 per unit

Selling Price: Rs. 130 per unit

The following additional information are available:

07

Page 2 of 2

Average raw material in stock: 1 Month, Average material in progress: 0.5

month, Average finished goods in stock: 1 month, Credit allowed by suppliers:

1 month, Credit allowed to debtors: 2 Months, Time lag in payment of wages:

1.5 weeks, overheads: 1 month. 25% of sales are on cash basis. Cash balance is

expected to be Rs. 1,20,000.

You are required to prepare a statement showing the working capital needed to

finance a level of activity of 70,000 units of output. You may assume that

production carried on evenly, throughout the year and wages and overhead

accrue similarly.

(b) Explain the Net Income (NI) and Net Operating Income (NOI) approaches with

graph.

07

Q.4 Zomato Ltd has two mutually exclusive proposal X & Y requiring initial outlay

of Rs. 100,000 each. Both Projects have life of 7 Years with following cash

flows.

Year Project X Project Y

1 7,000 45,000

2 10,000 35,000

3 20,000 25,000

4 25,000 8,000

5 40,000 11,000

6 45,000 10,000

7 50,000 15,000

(a) Calculate NPV if Cost of Capital is 11% 07

(b) Calculate NPV if cost of capital is 16% 07

OR

(a) Calculate PI if Cost of Capital is 11% 07

(b) Calculate PI if cost of capital is 16% 07

Q.5 As an investment advisor, you have been approached by a client called Mr. Vijay

for advice on some financial matters. Mr. Vijay is 40 years old and has

Rs.3,000,000 in bank. He plans to work for 20 years more and retire at the age

of 60. His present salary is Rs.1,800,000 per year. Assume that yearly

expenditure of Mr. Vijay is Rs. 800,000.

Mr. Vijay has decided to invest his bank balance and future savings in a balanced

mutual fund scheme which he believes will provide a return of 12 percent per

year.

Mr. Vijay seeks your help in answering several questions given below. In

answering these questions, ignore the tax factor.

(a) Calculate amount of saving (Balance Mutual Fund) at the age of 60 years of Mr.

Vijay. For simplicity assume that he receive full salary at the end of year.

07

(b) From his saving (Balance Mutual Fund) if Mr. Vijay wants to receive equal

annual amount at the end of each year for consumption for next 20 Year (Life

Expectancy 80 Years), calculate the annual amount.

07

OR

(a) Calculate amount of saving (Balance Mutual Fund) at the age of 60 years of Mr.

Vijay if yearly expenditure of Mr. Vijay is Rs. 1,000,000 & return on Balance

mutual fund is 13%. For simplicity assume that he receive full salary at the end

of year.

07

(b) From his saving (Balance Mutual Fund) if yearly expenditure of Mr. Vijay is Rs.

1,000,000 & return on Balance mutual fund is 13%., if Mr. Vijay wants to receive

equal annual amount at the end of each year for consumption for next 20 Year

(Life Expectancy 80 Years), calculate the annual amount.

07

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This post was last modified on 19 February 2020