Tuesday, July 5, 2011

5. Financial Management - Topical Analysis


1.      Answer the following questions  (1988)
1.      Define leverage. Explain its types. Discuss its significance.
2.      Distinguish between fund-flow and cash-flow statement. What are the advantages of preparing cash-flow statements? Also explain the procedure of preparing a cash-flow statement.
2.      Answer the following questions
1.      Discuss the importance of working capital for a concern. Explain the various determinants of working capital in a concern. Also give a brief account of the various sources of working capital available to a firm.
2.      In managing cash, financial manager faces the problem of compromising between conflicting goals of liquidity and profitability. Comment. What strategies should the financial manager develop to solve this problem?
3.      Answer the following questions
1.      Explain the considerations that determine the dividend policy and state the different factors influencing dividend policy.
2.      What are the problems of public sector undertakings in respect of budgeting? What are the existing deficiencies in their present system of budgeting?
4.      Explain with example the relationship existing among Investments, Financing and Dividend decision of a company whose corporate financial objective is to maximize the net present worth of the company. (1989)
5.      Critically examine
1.      Integer programming approach to capital budgeting.
2.      Usefulness of operating cycle concept in working capital management.
3.      Scope for simulation techniques in financial management and decision making.
6.      What do you mean by optimal short term financing? Explain and illustrate the use of linear programming in such financing decisions.
7.      Answer the following questions (1990)
1.      Dividend has nothing to do with current years profit. Offer your views assuming.
1.      Shareholders as owners of corporate property
2.      Company as the owner of the corporate property.
3.      Companys own interest is variance with that of shareholders.
2.      Discuss the economics of sub-contracting. Discuss its use in financing decision in a manufacturing company.
8.      Financial management in public sector involves diversity of approaches. Explain with reference to:
1.      variations in forms of organization
2.      operational differences
3.      accompability requirements.
9.      Answer the following questions (1991)
1.      Debt-equity norms prescribed by financial institutions in India go against the theories of financial leverages. Discuss.
2.      What is the difference between funds flow and cash flow? What are their uses? Why is it considered desirable to have funds flow statements included in the published statements of accounts of companies? Explain.
10.  Answer the following questions
1.      Pay back period is only an index of capital recovery and not a measure of profitability. Discuss. What are the limitations of return of investment as a measure of profitability?
2.      What are the various forms of receivables? Describe the steps necessary for controlling them.
11.  Answer the following questions
1.      Financial management in Public Sector in India is nothing more than funds utilization management.
2.      Elaborate the need and feasibility of installing a costing system in small-scale industries in India.
12.  Answer the following questions (1992)
1.      Describe the determinants of working capital of an enterprise. How far managements attitude toward risk will influence these determinants?
2.      Will it be correct to say the CAPITAL MARKET in India has changed perceptibly? Also explain the changes, if any, in the character and composition of this Financial institution and their role in the functioning of the capital market.
13.  Answer the following questions
1.      In recent past, Indian Capital Market had witnessed a spate of new issues-Equity, Debentures-carrying different terms of offer to public. Discuss the possible causes of variations in the terms of offer.
2.      Explain the influence, if any inflation and cost of capital on dividend policy of a firm
14.  Answer the following questions (1993)
1.      State giving reasons, whether ratio-analyst can be useful in forewarning industrial sickness.
2.      Critically assess the utility of internal rate of return as a criteria for approval of capital expenditure to replace a suddenly burst furnace.
15.  Answer the following questions
1.      Capital structure of a company is determined by cost of capital and the state of capital market. Comment.
2.      Do you think profit considerations alone control capital investment decisions? How is priority for capital expenditure proposal determined?
16.  Answer the following questions
1.      Critically estimate merits and limitations of a policy of high rate of pay out vis-a - vis that of high rate of blow back from the shareholders point of view and rom a firms view.
2.      Define cash budget and its role, if any in managing working capital of a firm.
17.  Do you agree with the view that MBO has not been very successful in developing countries including India? Give reasons in support of your view. (1994)
1.      Answer the following questions
1.      How do you determine cost of equity capital in a growth company?
2.      Explain the salient features of the present value method of project evaluation and examine its rationality.
2.      Answer the following questions
1.      Explain with suitable examples the various issues involved in working capital management and examine the effects of inflation on it.
18.  Discuss the major considerations that determine the dividend policy of a company.
19.  Answer the following questions  (1995)
1.      A higher rate of return on capital employed implies that the firm is managed efficiently Is this true in every situation? Why or why not?
2.      Under what circumstances do the net present value and internal rate of return methods differ?
What method would you prefer and why?
20.  Answer the following questions
1.      It makes sense for companies that pay no taxes to lease from companies that do. Explain.
2.      The certainty equivalent approach is theoretically superior to the risk adjusted discount rate. Do you agree? Give reasons.
21.  Answer the following questions
1.      Break-even analysis is a great stuff but lacks practical realism. Discuss.
2.      How can the appropriate level or working cash balance be determined? How does uncertainty affect this problem?
22.  Answer the following questions (1996)
1.      Define and explain the significance of operating and financial leverage analysis for a financial executive incorporate profit and financial structure planning.
2.      Discuss the usefulness of fund flow statement for the management. Would it also be useful to outsiders?
23.  Answer the following questions
1.      How is the weighted average cost of capital calculated? What weights should be used in its calculation?
2.      Examine critically the effects of inflation on working capital management.
24.  Answer the following questions
1.      What are the determinants of the dividend policy of corporate enterprises? Does it affect the value of a firm?
25.  Explain bonus shares. When are they issued? What is their rationale?
26.  Answer the following questions (1997)
1.      Explain essential Financial Ratios exclusively useful for ascertaining profitability trends of a firms business.
2.      Explain Incremental Cost and incremental Revenue/Income. Discuss their role in appraising investment (capital expenditure) projects.
27.  Answer the following questions
1.      Assess the validity of the statement that cost of capital calculation and determining financial structure of a firm are inter-related functions.
2.      How is the size of working capital determined? Give appropriate example.
28.  Answer the following questions
1.      Indian capital market now extends bend national territory. Comment and examine its impact on the working of Indian Stock Exchanges.
2.      Discuss the pros ad cons of a policy of retaining profits to meet financial requirements of the firm vis-a - vis the policy of higher payout.
29.  Answer the following questions (1998)
1.      What is cash budgeting? What is its purpose? Why is it that despite cash budgeting some of the enterprises in India are reportedly facing liquidity crisis? How can the problem of liquidity crisis he overcome?
2.      How is capital expenditure proposal appraised? How should one choose between modernisation, expansion and diversification? How can the related risks be minimised?
30.  Answer the following questions
1.      The traditional principles of sound financial planning of a new enterprise seem to yield to new innovative design as is evident from a new petrochemical companys issue of convertible debentures worth several hundred crores. How far do you think this is desirable in the control of Indian economy. You are to discuss only the pros and cons of traditional financial planning vis-a - vis innovative financial planning.
2.      Syndicated placement of new equity/debenture issues is a bane of Indian securities market.
Discuss the issue in the context of the latest developments witnessed by Indian Capital market.
31.  Answer the following questions
1.      How is size of working capital determined? Do you think the working capital required by any enterprise is a static amount? Give detailed reasons for your answer.
32.  The management of a company has adopted a policy of sacrificing the present investment opportunities yielding say 20% return per annum with a view to invest, some 8 years later expecting 40 % annual return. Comment on the wisdom of this policy giving both favourable and unfavorable aspects.
33.  Discuss various techniques of capital budgeting using suitable projects where these techniques are most appropriate (1999)
34.  Answer the following questions
1.      The break-even analysis is a useful device in profit planning. Give your views.
2.      Give your opinion on Sales Mix. Would it be really important for the cost-volume profit inter-relations to allocate fixed cost to individual product lines?
35.  Answer the following questions
1.      Give your opinion on financial management problems in Public Sector in India.
2.      What are the merits of performance budgeting?
36.  Answer the following questions
1.      What are the considerations that decide the size of working capital in a concern?
2.      Give your views on management of cash, inventories and receivables.
37.  Net Present Value v/s Internal Rate of Return (2000)
38.  Economic Value chain for the third millennium
39.  Complementary relationship of financial and operating leverages.
40.  Cost of equity is a required rate of return.
41.  Role of Operating cycle in determining the size of working capital
42.  Why should risk he considered while appraising the projects for investment decisions? Explain the methods used for adjustment, and incorporation of risk in capital expenditure (capital budgeting).
43.  Cash Management Models
44.  Working capital management deals with decisions regarding the appropriate mix and level of current assets and current liabilities. Elucidate the statement along with describing the factors which are taken into account in determining the working capital needs of the firm (60).
45.  The dividend policy is irrelevant for valuation (2003)
46.  The overall capitalization rate of the firm (K0) does not change with any degree of financial leverage. Elucidate and debate (60).
47.  Capital Asset Pricing Model (2004)
48.  An optimal combination of the decisions relating to investment, financing and dividends will be to maximize the value of the firm, to its shareholders. Discuss with examples (60).
49.  Capital Market (2005)
50.  Venture Capital
51.  To what extent are firms able to establish a definite long-run dividend policy? How do these policies affect market value of a firms securities? Discuss with examples (60).
52.  Capital Budgeting (2006)
53.  Financial analysis is the X-ray of a business firm. Argue the statement. In your opinion, which is the best method of financial analysis (60)?
54.  Is working capital different from management of cash? In what ways? What are the factors which influence working capital requirements? Discuss the models of cash management (60).(2007)
  

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