University of Rajasthan

B.B.A (II Sem. ) 205 B.B.A. (SECOND SEMESTER)EXAM.,2013

(Faculty of Commerce)

BBA-205

(10+2+3 Pattern) FINANCIAL MANAGEMENT Third-Paper TIME ALLOWED: THREE HOURS Maximum Marks (1) No supplementary answer-book will be given to any candidate. Hence the candidates should write their answers precisely in the main answer-book only. (2) All the parts of one question should be answered at one place in the answer-book. One complete question should not be answered at different place in the answer book. Attempt any five questions in all. Question Nos. I and 2 are compulsory 1- Answer all ten questions. All questions carry equal marks. (Answer limit up to 50 words each) (i) Define financial management. (ii) What do you mean by wealth maximization? (iii) What is included in financial planning? (iv) What is the meaning of cost of capital? (v) What do you mean by Retained Earning? (vi) What do you mean by post-payback profitability? (vii) What is Profitability Index? (viii) What is Capital Budgeting ? (xi) What is operating cycle period? Draw its chart (x) State the meaning of Net Working Capital II- Answer all FIVE questions All question carry equal marks. (Words limit up to 100 words) 2. (a) What do you mean by financial/investment decisions? Explain. (b) What are the limitations of financial planning? (c) What do you understand by Weighted Average Cost of Capital?

(d) Compare Net Present Value method with Internal Rate of Return method. (e) How is excess working capital dangerous? Attempt any THREE questions. All questions carry equal marks. 1. Discuss the tasks and responsibilities of a modern finance manager. 2. Define a financial plan and explain the characteristics of a sound financial plan. 3. The capital structure of Neha Ltd. Is as under : 2000 6% Debentures of Rs. 100 each (first Issue) 2000 Rs. 1000 7% Debentures of Rs. 100 each (second issue) 1,00,000 2000 8% cumulative Pref Shares of Rs. 100 each 2,00,000 4000 Equity shares of Rs. 100 each 4,00,000 Retained Earnings 1,00,000 The earning per share of the company in the past many year has been Rs. 15. The shares of the company are sold in the market at book value. The companys tax rate is 50% and shareholders personal tax liability is 10% Find out the weighted average cost of capital. 4. A choice is to be made between two competing project proposals which require an equal investment of R.s 50000 and are expected to generaqte net cash flows as under:I II III IV V VI Project I (Rs.) 25,0000 15,000 10,000 NIL 12,000 6,000 Project II(Rs) 10,000 12,000 18,000 25,000 8,000 4,000 The cost of capital of the company is 10%. The following are the present value factors @10% per annum. 5. Write short notes on the following :(i) Economic Order Quantity (ii) ABC Analysis (iii) Safety stock (vi) Re-order point *************