22 Mba Or Financial Management

OR Code No: OR-22/MBA M.B.A. II-Semester Examinations, July-2007. FINANCIAL MANAGEMENT Time: 3 hours

Max. Marks: 60 Answer any FIVE questions All questions carry equal marks ---

1.

Critically state the shift in Finance function during 1990’s.

2.

What do you mean by Working Capital? Discuss the determinants of Working Capital.

3.

Discuss the various models of Cash Management and critically comment on the Miller – Orr model of Cash Management.

4.

Discuss the Walter’s model of dividend payments.

5.

Write Short Notes on any two: a) Average Collection period c) N.I. Approach

b) Inventory Turnover Ratio d) M.M. Hypothesis

6.

The Nageswara Rao & Sons had sales of Rs.95,000 in December. It expects sales of Rs.70,000 in January. Sales levels should increase by 15 percent per month over the next 5 months. Cash sales will be 35 percent of total sales, the remainder collected in the following month. Other cash income is expected to be 5 percent of monthly sales. Wages and salaries will be constant at Rs.35,000. Taxes will be 20 percent of wages and salaries. Rent, utilities, and operating expenses are constant at Rs.4,000, Rs.3,000 and Rs.8,000 per month, respectively. Supplies purchased will be 50 percent of sales. The firm has Rs.10,000 in its bank account and Rs. 25,000 in a money market fund. Prepare a 6-month cash flow forecast.

7.

A firm purchases Rs.1 million of paper rated P-2 by Moody’s. The paper is to yield 14.7 percent annually in a period of 91 days. Sixty days prior to maturity, yields have risen to 16.8 percent on 60-day paper, and the firm sells its paper. How much will the firm receive at maturity?

8.

If a firm is due to receive seven annual payments of Rs.150,000, what is the present value of the stream when money is worth 10 percent? *****