Full Marks – 80
Time – Three Hours
The figures in the margin indicate full marks for the questions.
1. (a) Explain briefly the evaluation of management.
(b) Explain briefly the assumption and objectives in financial management
2. (a) A Co. has made plans for the next year. It is estimated that the company will employ total assets of Rs. 800000; 50 per cent of the assets being financed by borrowed capital at an interest cost of 8% per year. The direct costs for the year are estimated at Rs. 480000 and all other operating expenses are estimated at Rs. 80000. The goods will be sold to customers at Rs. 150% of direct costs. Tax rate is assumed to be 50%.
Net profit margin;
Return of assets;
Assets turnover and;
Return on owners’ equity.
(b) Explain comparative statement analysis as a simple method of tracing periodic changes in the financial performance of a company.
3. (a) Since the rights issue allows the ordinary shareholders to purchase the shares at a price much lower than the current market price, why shareholders’ wealth does not increase? Illustrate your answer.
(b) Explain the pros and of equity financing?
4. (a) What are the benefits and cost of Trade credit in short term financing?
(b) What are the implications of secured and unsecured borrowing in the context of short term financing?
5. (a) What do you mean by futures, forward contract and swaps.
(b) Explain briefly the emerging Derivatives Market Structure in India.