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Xaviers Institute
of Business Management Studies
Marks 100
FINANCIAL MANAGEMENT
Note: Attempt any five questions. All
questions carry equal marks.
1. (A) what do you understand by
Accounting Standards? How do they differ from Accounting Concepts? Why should
the accounting practices be standardized?
(b) Why are the fixed assets shown at
their book value rather than their market value, even if the latter has
appreciated significantly? Give reasons.
2. (a) How would Explain the you
compute the cost of goods sold? Two methods of inventory valuation.
(b) What is depreciation and what is
the rationale behind making a provision for depreciation in the process of
matching income and expenses?
3. What do you understand by Zero Base
Budgeting? How does a Zero Base Budget differ from a Flexible Budget? Discuss
the steps involved in Zero Base Budgeting.
4. Distinguish between: (a) Accounting
Rate of Return and Internal Rate of Return
(b) Profitability Index and
Profitability Ratios
(c) Bonus Shares and Rights Shares
(d) Earnings yield and Dividend yield
5. A manufacturing company produces and
sells products P; Q and R. It has an available machine hour capacity of one
lakh hours, interchangeable among the three products. Presently the company
produces and sells 20,000 units of P and 15,000 units each of Q and R. The unit
Selling Price of the three products P, Q and R is Rs. 25, Rs. 32 and Rs. 42
respectively. With this price structure and the aforesaid sales-mix, the
company is incurring loss. The total expenditure exclusive of fixed charges
(presently Rs. 5 per unit) is Rs. 13.75 lakhs. The’ unit cost ratio amongst the
three products P, Q and R is 4: 6: 7.
Since the company desires to improve
its profitability without changing its cost and price structures, it has been
considering-the following three mixes so as to be within its total available
capacity:
|
Products |
Mix I |
Mix II |
Mix III |
|
P |
25,000 |
20,000 |
30,000 |
|
Q |
15,000 |
12,000 |
5,000 |
|
R |
10,000 |
18,000 |
15,000 |
You are required to compute the quantum
of loss now incurred and advise the most profitable mix which could be
considered by the company.
6. 'The conventional break-even
analysis is based on a number of assumptions.' Explain and illustrate the
concept of break-even analysis and justify the above statement.
7. The following information is available
for XYZ Ltd. for three years.
|
|
Year 1 |
Year 2 |
Year 3 |
|
Gross Profit Ratio |
36% |
33 1/2% |
30% |
|
Stock turnover |
20 times |
25 times |
14 times |
|
Average Stock |
Rs. 38,400 |
Rs. 36,000 |
Rs. 70,000 |
|
Average debtors |
Rs.87,500 |
Rs.7,68,750 |
Rs.2,00,000 |
|
Income tax rate |
50% |
50% |
50% |
|
Net Profit ratio |
6% |
7% |
12% |
|
Maximum credit |
60 days |
60 days |
30 days |
Prepare a statement of profits in
comparative form for all the three years, and evaluate the position of the
company regarding profitability and liquidity.
8. What do you understand by Budgetary Control? Discuss its objectives
and explain the steps that are taken for installing an effective system of
budgetary control in an organization.
9. Distinguish between:
(a) Gross Margin and Return on Investment
(b) Financial Risk and Business Risk
(c) Profit Maximization and Wealth Maximization Criteria
(d) Internal Rate of Return method and Net Present Value method
Dear students get fully solved assignments
Send your semester & Specialization name to our
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