Business Finance
Financing of Working Capital Question 1.Answer the following:Differentiate between Factoring and Bilis discounting. (Nov 2009, 2 marks), ( May 2015,4 marks) ORDistinguish between factoring and bill-discounting. (May 2013, 4 marks)ORWhat is ‘Bill discounting’? How does it differ from ‘Factoring’? Explain. (Nov 2017, 4 marks)Answer:Difference between Factoring and Bill Discounting Basis of Difference Factoring Bill Discounting […]
Management of Receivables and Payables Question 1.The credit manager of XYZ Ltd. is reappraising the company’s credit policy. The company sells its products on terms of net 30. Cost of goods sold is 85% of sales and fixed costs are further 5% of sales. XYZ classifies its customers on a scale of 1 to 4. […]
Management of Inventory Question 1.A Ltd. uses inventory turnover as one performance measure to evaluate its production manager. Currently, its inventory turnover (based on cost of goods sold ÷ inventory) is 10 times per annum, as compared with industry average of 4. Average sales are ₹ 4,50,000 p.a. variable costs of inventory have consistently remained […]
Treasury & Cash Management Question 1.Enumerate the activities which are covered by Treasury Management. (Nov 2002, 3 marks)ORAnswer the following:Explain briefly the functions of Treasury Department. (May 2008, 3 marks)ORAnswer the following:Write a short note on functions of Treasury Department. (May 2009, 2 marks)ORAnswer the following:Explain briefly the functions of Treasury Department. (Nov 2016, 4 […]
Introduction to Working Capital Management Question 1.An engineering company is considering its working capital investment for the year 2003-04. The estimated Property Plant and Equipment and current liabilities for the next year are ₹ 6.63 crore and ₹ 5.967 crore respectively. The sales, and earnings before interest and taxes (EBIT) depend on investment in its […]
Dividend Decisions Question 1.What are the determinants of Dividend Policy?Answer:Determinants of Dividend Policy: Many factors determine the dividend policy of a company. The factors determining the dividend policy are as follows:(i) Dividend Payout RatioA certain share of earnings to be distributed as dividends has to be worked out. This involves the decision to payout or […]
Financing Decisions Leverages Question 1.What do you understand by Business Risk and Financial Risk? (Nov 2009, 2 marks)Answer:Business RiskIt refers to the risk associated with the firm’s operations. It is uncertainty about the future operating income. That is, how well can the operating income be predicted? It can be measured by standard deviation of basic […]
Financing Decisions Capital Structure Question 1.Answer the following:What is Optimum Capital Structure? Explain. (Nov 2007, 2 marks)ORAnswer the following:Discuss the concept of ‘Optimál Capital Structure.” (Nov 2008, 2 marks)Answer:Capital structure is optimum when the value of the firm is maximum and Cost of capital (debts & equity) is minimum and so market price per share […]
Cost of Capital Question 1.Explain the significance of Cost of Capital. (Nov 2019, 4 marks)AnswerThe cost of capital is important to arrive at correct amount and helps the management or an investor to take an appropriate decision. The correct cost of capital helps in the following decision-making: 1. Evaluation of Investment options The estimated benefits […]
Financial Analysis and Planning Ratio Analysis Question 1.Answer the following:What is quick ratio? What does it signify? (Nov 2008, 2 marks)Answer:Quick ratio also termed as “acid test ratio” is one of the best measures of liquidity.It is worked out as follows:Quick Ratio = Quick Assets Quick liabilities In the above formula:Quick Assets = Current Assets – InventoriesQuick liabilities […]