- I2MBA2I

S€cond Semester NIBA Degree Examination. Dec.20l4/Jan.2015Business covernment and Society

Tnne: 3 hrs Max. Marks:too\nte: l. th\t!.,a t tHRt rf qu.non.JrontQ-\o-t t,,Q-\t-o-

2.qNo-7ah.l O,\-o.8 aru 0t41t1tu4.

a Define corporare eovemnce. (03 \r'rktb. Dntinguishbc$eenbillofexchaneoxndprorrissorynores (0?\rrrk,.. -Busincss aM gov$inent dotuinate the sEat ma$ olpeople " Explain q,nh the neh ol

doninrnce model OoMrrk,

a

i Dclirc brllofcxch.nleb. L\plaDbasic $eps o1 en!noDrnental audiriN.c C.hcaLly explain countervailue fo.ces modcl.lBGS Elanonship.

a \Lhrt is coroorare socialresponsibllnrlb LxplainlhepoNerdimcnsioDsolbusiness.

b. \\hat are rhe benclits olqold colpoBre eolermnce?. _Ce.tam bctds nalie Ihe emplolcc ro ihii* and act i. unethical wa\s-

ycs, e\plain rcots oluncihical beha!iour.

Nhxr do you m.an by AovernmcntlBiry ou he dnbluish berveen agr.cmcnr and conrmdEaplain in detail seven(erenlimnhdnr orbusines.

ErplaiD.oiioBle !o\ enran.c oblieft o.s

ii) I ntell.cr u a I pDDerrl i(hc itPR,

NIr. Kirn promis.s his son Raman ro get him a bike ifhe get n nr eram Rasan got theDnk iD caan butMr.Krandid.!rbnrgrhebikeforRaaan Can Ranran brnrq anacrion in

'e..-., nenr 'l're

b. 'x b!.,eansolnaudobrainedlion Y s cheque fforldd.nor neeotiabte a.rleoriicasheddl d ba.lorherthx. rhe drrNee bank Y $red rhcbank torco.\e$ion. h rhcbank lable rorconlcrionl (05 Ntrrkt

c rvlrnoj agrees to pny Suns| Rs 1000 and in consideDrion Surrsh lgEes ro ear 20 mneosNrhin nve.rinures k a\a id contmdlllycano Slate the reasons (0sNturrr,

d. X drr a cheque payable to Y .r on ordel llnlirrtunarctv $as losr and ,y:o.s.d \Lb..tL 'r). ro! .dr\e' p:). .. .; c-eq.e. t. rtc b"rL.

dis.hxrscd liom liabiLny) whar \rill be tlE consequcn..s ia rhe daiers si{natures kre

I2MBA2I

CNe St d!:

Angel cd fraNlacluire conpany opcned 6ooking for difercd nodeh of jts proudsball car Mega in late 2010. Thc co.snmer response Nas o\rdr'hetmins. Mosr ot rhebookings verc for the AC modek. DLE and DIX. The DLE modetacconnrcd toi morethan?0 perceft ofrhe bookings.

Angel has plamed to mmence delivery of the venicles by earty 2011. Howeler,delivery schedules for rhe AC models wer upset because olsonc probleB on the roll ourffmi. Accordi.s lo a report iI tbe Eco,Biz tincs dated Il Marcn 2011. Angelofliciakattilbulcd the delay to no d ava i lab ility of an co ndnio. ine kits.

Ankel !id. supplies AC kirs the DLE vesion and Delras is the vendor for the DLxvosion. Incidenlally, Ankel is aho tl[ AC supplier ro Maruti Udyog trd. AnsetoiiciahallegedthatAnUervasbein8pressurcdbyrheconrpetitorrodehythcsupptyofkns.,,tfthiscontibues, Nc xill be rorced k ask Dcltas to supply kits tur rhc Dt! version roo'. aco nrpany o fiic ial said.

a wh\ did Algel and rr.elJin rhe oroblen,..rpptvn.obtcn inre.re,rorA( [n']1 ,0!\trr,0. llte,'.srrorJbont'esLDD'ers'e.'.d..cr+rt.hpttr.'o'rlorrhe.rnarer,uirkrlnc. Evalnate tbe edricalis cs inmlrcd inthdcass. (0s uarktd. Irlouwere tle CEO ofrhis compan]. ho w rvould yo u h! Dd le th n si$aiion? (0s tu,rkn

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second Seme.ler MBA Dcgree E\aminaiion. June 2012

Financial Manasement

.. what arerhc 'oLcs

orfimn.itr imM.sr?

Drillior in l0l0 whar uar rhe compouM gro\rh mr. in tulcntus,. BrienJ explainrh. tactoB aff.dins rhe divid.id polic\.

rinra. t. A,|wet 4t9i FoLtR lult qzeslio s Ircn ano.l to Q.No.7.2. Qnatio Nt. tl i: to ,?ubo.-.3. Pt a tFt tuhlestaot h. Proitet.L Show wotkhtk ttx.s wheNwt ,kcssna.

i) lltou deposir Rs.l0.000 roday ai 60/0 nr olimerey. in ho\! irn) !cr6 {ill rhis

i) Strppose lou coDpanr- cLrienrlt hrs 5000 emplolees and this nuhbs is expeded iogros br- 5% pn r-ear How rnai! enplor"ees silLrou.coinpant have in l0 )€a61

iil) Phoei x lmitd had reveitres ofRs.loo million in 2000 which in ersed ro Rs 1000

\!hat do vou ,nern 6! riorer ,nar(er'tl-lxplainrhc {lifiare approrcher to 6nan.iDg *o ng cipital rcqunci1en6.The PQRcompaiy has the folldsinc capilal nructurc Il'rN1rrch20ll:

Ihe dEres ofthe company sclh tor 120. It is crp.crcd rlft $mlan), \il pay ncxr )! a

dividerd ofll per shares ryhich \ilLsrcrv ar 7% lo,tv.r A$umc 50% tar rate. You a.e

i) CdDrpuie a weighted ave€ee con ol.apitalb.scd on rh! e\isriigcrpil.Linrlurcii) Cohptrt the ne\ seightd avemge con olcapnd ilfi. co\r"nr,a \cs ar addir.nrl

ol ilo lakh dcbr by hsuing 15% dlbentrfts rhis \ouid resuh ln inc,aasi,rg the

erpecrcd dividend ro l:l and leaw the gm\ rarc und,lngcd, 6ui rh. f.icc ofshar.

Ordi,r.r] sha,$ (r.00.000 share,

What ls capitaL nruciure? Whar 0.e the major astrmptions of clpihL nrudure l tortrhd,ErpLaiirhedillerenrrr-p.soliivcnmcnrevaludioftechniqus. OrNhrk,BrielJ- erplaitr the Indian Financial Slsqn

IOMBA23

whlt is copnal budgcting?Discusrheelemenhofgoodcop (0, !h!k,'lhe slected financialdall lirr X. Y and Z comp.nics tbr rhe tear endcd M.rch 3l mc.s

Variable expenses !! 3 perceDtagc ol salcs

DOLDFL

6 21

Pren e node {aenen^ for \ \ ri Z.ompanies

:0,000

What are marlet value*.ighha hool value *eights?

Exp la in the orsan izotio n of finaDce tuDclio n

Thcconofc4iiaLn l2% C,lcularerlrlbLlowing,

iil) Intemal rrre offttumiv) Modified inrenrlarcof dun

Descibe thc SEBI guideli'r!on ESOP

o eil,l Ltd has curetrtly an onlinaryshares oa ll00 ca.h. ThE nanagenontmaiorcxPansion prc8mmme, rhmu8h oEi) EnrLelr tbrouxh odituq shrres

(03y.rks)

107 v5rk9share capital o1125 lakh! conskting of25000is plainins to rrilc rno E lr0 la(hs ro llmnccot lour posible fi nancial plans,

ii) ll0lakhsrhrotr-sh odinarr shares aitl a l0lakhs in 3% loneiem loan

iii) 15 hkhsthroushordlnarlsharesand ll5l hs tlrc€h 9% loan (LT)ir) ll0 hkhs fircugh ordimry shmcs and {10lakhs tluough prctirrenc. sha.es Irith 5%

The companyt erpected errnings before inleEn and hles (EBI'j) rvill he l3 tikhs.Astrmiry , .oe.rate rii d.or50%. d.rcnnln. rhe trPS itr erh ,ltemarive and cornnrenr.RhichdrcrMrivc h be{ od shy'l (ro }h6,

a. Uhardo you fro.n b) CAPM? Mentbn rny tro aduntqesolCAPM.b. lvhalareobjedne5otfinancialmlmgemenrl

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tOMBA23

c Youi comllny has boughr a 1t.25.300 price ofequipnsnr 2 leas ago llsprescm boo[volue ls t37 000.It... hc sold lodar for r1,25.000 (GtnE iar) Hdrere, ifke|t ii ri[Ian five more !ea6 ! prodtrce evccrcd cash reloues (nel otexpcis., bclore ra\cs ot120.000 Ior each olrhe five )c.(. A replarqncnL ma.hinc con I t.80,000 anl is !\pecredro pmdu.e cash aol\ (bebre tore, ofllS.000loreachotrhe nexr five ]eam. Snaieht tinedeprecixrion for 5lcrEcan be cmployed aor borh the nely {d drcod ma.htne. rhe k\ rakis 15"/o .nd rhc nrms Equired r.re ol rerm is t07o. Funhffrnore rs{me that ncirhcrmdchinc h!\ sa\sgc viltre ln ine1e!6.

Detcmine tlr rclclan! cash nors lbr ca.h alternarile.

Casestudr:A profom. $r shectofa.ompan] providcs rlE lotto$iig panicu a6:

El.m.nlsot.on Amounlpsrunir(I)

Selli'rCpilccThetirllosingtu herpani.ula^rrervailablei) Rr! mt$iah.re in nock on an .verage tor one monrhii) Rarv materiak aft in proce$ on an av$.ge lor halla hoith.iii) Fi"khed eoods xre in nock otr an avorase lbrone

'nonrhiv) Credil rlloRed by supplie6 n one monrh.v) Lag in prlme ol\uge! n r+treeks.

vi) Lag in paymEit ofovenr.ds ioie mo h.

'il) +T' outpur is soLd aga tr$ cash

vili) Cmh in hand and at batrk is crpecred ro I'e 125,000.ir) Credii xllo$ed h cuno'ncr N. d. hs

You arc requned to prcpare ! (lieNnr shosi'rg theNorking capnatn.edcdle!el of .crivityoll.01.000 unirs olprdddion.

You may astrme lhlt prcdu.tioi is caricd otr evenlr- rhotrghoui rhe !err.ov.rheadsaccnE similarl) i,rd alimc p&lod of.l Neeks nequivatent ro a Drnrh.

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Second Semesler MB4 Degree Exahioaaioo. Dec

Financlal Management

A.No.71. Ans*el ah, Fout lutt qu.sttons f.M ONo.l to2. Qaestion No. I is coi,palso,!3- Ase oftine eatu. tables is pemiuz.l.

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Distingnisn ooney mdkel Irom capiral nartet.- 0Erplain the role of fmnce neagets in lhe curent economic $endio.O

wtar do you ner oy '.rm Ll m.nasemenr? t,vrite a note on corporale gov.mmce in India. (0? M,k)i) If you delosir Rs,8000 loday al 3% rate of inreiesl, ia how amy yem Nill rhis

aho@t double, under Rule ?2 dd Rule 69?ii) Mr.XwillinveslRs.5000atrheendofeactydarlor6yeds.Calculaieiktut@value

if intcrest rare is 12% per annumiii) An employee is about to reliE. IIis enployei has otrered him lwo posl Etnenenl

options: mualpensionoaRs 100004long she liles edalmpsm paynent ofRr.60000 il cmployee expecrs 1o live for 15 yeds ud 6te ofi erest l5%. Wlichalternaiive should he select? 110 Mrk)

a. \rrba. 's ! apibl nructe' ,torvrk,b .n cd l) evrld.pol'r rd -ealrl mdi!nd.or.bl.dn$of aorCeizrj.n t!io-vrk,c Acodp y has sales ofRs.5,00,000, varisble cost ofRs.3,00,000, fired cosl ofRs.1,00.000

and lonC tem loms of Rs.4,00.000 al l0% rate of ifie&sl, Calculale lhe opealing, financialand conbiled leverase.

a. whai do you oean ESOI?b. Explain rhe laotors aEecling dividend policy ofe org&iationc. PEpae d eslimale oi worring cEpitll requirDenl fod 1ir rbilo$ing

Prcjcded amual sal$ 100000 uilsSelling! @!s dn Rs IPercentase of nel prc6l to sales 25%Average credil period aUowed lo custoDers 8 weeksAvemge clcdil pcriod allow.d by supplios 4 weeksA\eaCe qo.k holo ing .n rems ol sal$ requi"n"lr I)w-.. '

ALl, w 10"" lo-.onrn8encres.20.000 ui6:old on.dn.

b. Explain ihe vaiou cunent ssels tnocing polioies.c rYZLld.ha Lhe tollowin8book \clre copikl:hcM:

tu. lciore,Equry caDilal Ghd6 of Rs.lo eeh) 1512% lrefelence capilal (sntres of Rs. I 00 each) IRerained emings 20ll.s% Debentues (Rs.l00 each) l0ll%Temloans 125

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IOMBA23

The rcxl expected divid.nd on equir, shes is Rs.3.60 per shmi ihe divideid per share isexp.cted io srcw al the rale of ?%. The odket pnce per snd€ is R3.40. Pref*nce shdsre'lemabt rner l0 y@ is crendy selling at Rs.75 per shm. D.b.nn&s EdeeD.bleafi.r six y@s de sellirg al Rs,80 per debonne. TIe in@ne l ofrhe coopey is 40%.Calculare WACC, using booli lalue rciCiris, (r0 Mrrk)

a Dislirrquish {Gl bdker &om,omoo.r.$ mrlei. -tb. what is NPv? llow h it suledor olo o$d €chniques?c Ass@i.g that a nm pays lq at 50%, onpure rhe sfte! ld cosr of copilal, in the

i) A pepetual bond sold ai ptr, coupon nte of inteEsl being 7%ii) A len yetr 8% Rs. 1000 6ond, sold al Rs.950 less 4% udeMiling comBission.iii) Rs.100 pe lalue, pEfelence share sold at Rs.100 with a 9% dividend ed redenptioD

price of Rs.l 10, ila cohpey redeees i. 5 yeds.iv) An ordinary shde selling st s cuEent ndket pne ol Rs.120 md paying a cude

dividend of Rr.9 per shEre, vhich is eapecte d to sow al a rate of 8%. (r 0 M sl!')

Wlar do you n@by loEx ddket? €Wnte a nole on capiral asset pricing nodel.An invesor hol& rbe fouo*ins .onfoli

0.61.012

Rs.1,00.000Rs.1,80.000

what h tne expected 61e of rtm on his poftfolio,expecled retuh on ha*el porfolio is 15%?

iltte risl Eee k 6 ptEent md lne

x

I23

5

3000400050007000

2000300040008000

I rd. is consid.nng a @w prcject, for th. Eoubcrue of pocket video emcs,capilal expendnuie ol Rs.600 b$s ed vorkins capilal of Rs 150 lakhs. Therhe plmi is for an amual !rcducrion ol 12 htn uiis ed capeny uilizalion

2 5 6tl33 90 100

2 al2

The aveEge price p* uir .f the pmdnci k exlected 10 be Rs200, netting acontribulion of 40%. ahe mual fixed cosls. excluding depreciation, ee esliaated to beRs.480 ia$s per mB ftoa the thiid ye& o.*aids; fo! the fitrt and second ycar it wouldbe Rs,240 laltu and Rs.369 iatls 6!eoti!ely. Tle avBase rate of deFeciatioh for ldpurposes h 33.33% otr capitll assers. Td nle 35% cosl ofinc capnal is 15%.

At rhe end of rhe lhird y€ar. e additional investnent ofRs.100 latls rould 6e reqniredfor the wolkine capilal, Teminal value ofthe lixcd a$els may bc lalen as 10,/0 and lorcE€nt assets 100%. Advise usingN?v (r0 Mrrkr)

tr l) B 4 3 i9 l0MBA2-1

Semesrer MBA Dcgree Examination.Financial Management

20lt

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Note: 1. A,\Ntmt FOUR| qz.stioa hone-t to g-_.z. g-tt is.onputsoa,3. pt/ tabtes tur b. ptor ed.

1 a. wnai is rioe vduo ot monevzb . A: Lmr hr " deoo.jr... jo be de a-Jedr ,",. r," -,.""r" _" " i:,Xt:(ohpo@ded ulJ tl I de i^o ro wrLl dmw tu sooo """r.* ri."..*,"" o/olr0 sir )em! rrom now u4Dl s de si7e.r ,lc Jee /so deposl ,nar q:rt prodl.e

I' l'nq.o( he ersrr ,a,f or tr.nre.helr wtucr r. e\pec.ed

,,,H-c2t00?a inde" ky ohetueo. 1krern.2,op.a.

r,[e" d orte o depo n , rh o, R.. I too ro lnen rccer.e ,elrr oflr 80oa.pnpdu.tJ sto,,a,ooe" o. **p,.A i,,1. ",.-"i.r"l"ll.;

,l6'o wrr.ulede,a,ol!Ldee.. 1ea,e 0,,n,c,d,. s!0. . _ - ". -;"ri;;],c r\pam rhe di,Iere ryls oflnanciat de ron lhfinar'.almrn"semenr. "arot'rrerbj(r**",fftr,l:;

2 a. \|rhar k co*otcaDjEl,b. Srocl c,ndr M.rpr*d rtu o. ,8oo dd a sbdard tr\ drio,., ,r," .,""_,rJ XJ:.e\p(red rc'-r ot j oo ed a quddro o",.arion o. ro,. the@neta.ior beNeen rne &"s o(ts F 0 2r I )ou bn d ponloti. v here Jou pdr rO!o o. )ou ;;;;;,; ;;;;;;:;.;wrrar s rheetp(ttd Ehrn Md st&dedd*Dl,.; f... n.,.r..-i,g,",r."."p,,. "*;;)J;'.,1,' : II;i"f.rr,,,

Eqliry shres t I o,0oo sh@s ofRs.1oo .&h) - tohoooioolopr€foerce shdes [ortu.loo @rr) lpa];6;t2% DebeDiues

O,OO,OoO

le m Le. p,!e o, de corp"n) ",m.s e,.,ro .. 2000.000

r-., o *, --* *o. a u. *.,,.; ",t;;

;.;,:. "..

fl:dh#fi li,".i ":,,''

"., " .,

,r,, mFohp&r,1tr re5000 j" o.acie..compuk.,e""s.-";"i;:;;;;":i:..."i."r, tu\um.nE rha ,n orde,o r,&ce & *peq;n -Itu. ,j e..ompdr .;;;;," ;;.; -tor,r or Rs 10.00.000 beens t4oo. ;ha, "t,l b" ,1. .".ili ;;,;.;; ;".*;ijavemtse co$ ofapjEt" lhis Inecus decsionr'.1o ," n- r: p* +r" i"*._' iistuJr E qpecled h ucreae drvidei nn

o*t.. no. r".ito o n. ro. p., ' e"- -" '" pne or 'qury -* 'il;l;j::

.. Wbal is Eccouting rare of retud?b. Ilod lhe following data .ompule ihe duarior of tE operEling oycle

1OMBA23

5,PMrl-.1,iii,- ,"-.1t:Zi7"r'Xls ,91)*',iq:-,,,,hl9P*.J$<5u

(xs)20,00014,00021,000.

2!!001,40.0001,60.000

32,000r6.000

(tu)21,00418,00024,000

1,35,000-1,80,0002,00.000

50,00018,000

Asme 360 days per,€e for compurarionst puloe'0 The dah elatins to rwo @mp&ies ee s given below :

CodDtuv A (onbmvBcapib tui.oopoo tu iroioo '$&t"l2%Debe ues Rs.4,00,000 Rs.6,50,000(-)'( @,1-.rOLrpLr luirs\ ffitrb 60.000 t.,olJo ;-)o..Sel'ine pnce per sr R.Ji] tuXO. r.r;,,rjedcoq.perMu Rs?.00.000 R..j4,OO,O00 _,1:'Vuiable @qr per @r tu.., Rs7, r,l\ \.6,, .

Yq m Fquircd ro .acula.e Lfie ope.dLing k\flasa.-finoc,4 er,ae. ou g"a*t_.D.nerer'i.ie beMeD Fir4 md seo1daryru[e,. . {' To" - _ ;0rM,,^,DiscEs

'be eremenB ot sood co?o are go!e@!e

"t-. ,r:: ro" u*r,A lomp v is cobidenns $e ,eoteem*, oi.rs e niri mhine bi(n is ob"otqe ddumble to meet 1he rapidly rising demd lor iis lroduct. The comldy is faced with tsoaftedrtives: (L-i\ To bu) VdLh neA s,hicb n sinild @ rhe RjqLins M. dine *brch cos Rr ?j lai\is.nt'to Bo r Ior Mrc\ine B wtu.1 r more e\pesrle md hs mLcb 8tarer.apary "t "rThecahr0nos froo !he,e m.htu"4aa&rlorr r o

Yed V(hiie' - M&hine B

Ar lhe rd ol his calcdlarions. hoqevnLhe 6r tuce mmager is M,bte to a e6lo whicn mrhin.i. re.nmmen.rYoL re r.qliEd ro frde tbAe.atcllf,ons trJ in lhe i8\r$eFot.o,dr.senmagn abour rhe poposed in!esmenr

2.f1

-3r_cosl

of capiLd is 10%. Ihe tuoce nege! rries to evaluale the nachine by

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IOMBA23

a. Wlat is meet by slable divided policy? @ Msrk)b. You onp&y ha bought a Rs.l?1L00 pie ofequipnol2 yed ago. Its prpsnt book

value is tuj7Q00.It @ be sold 6&y 6. Rs.125,000 (before ta&o. HosBd, iftep! nwill l6t five ilorc yqs md prcduce flpecled 6h @lentrea@i ofexpmse, b.flrF desof Pd.2!,000 tor sch of $e ffve r!4. A r.plenent Mchire cosrs Rs.t,80,Ot)0-sd isexp.ctdd to pbdn@ c6h flows (tefoie kas) oi RS.28,(]OI] for e&h of the neal irve yees.SrEighl-line deprcialion for 5 y€ds 6 b€ ployed for botb rhe rew ed rhe old nachine.Ur ra{ Ele is 35% ed ihe fim requi@d rare of retM is 10%. tunnemoe dsu€ rharneither nachine h6 salltge yalu in five yea6.Detemine the Ei*et csh flo% for each alteMnve.

c. Discss lhe faetors innuencins the woMns epiral rcquircdents of a fm.a. Diflerentiare b€rween money ndket &d cariial ddket. (0r Mrrk,b. Foilowing infomarion is availEble ieladns to nsk frce iate (R, 6d m&er Etum (R-)

Rr C/,)t6t4253112t48265916 1 ll

On tne basis of the above infomarion find ou1 the cost of equiry capiBl on the basis ofcAlM given that rhe beta facror h 0.861 (07 MrrD

c. E\plain i.\e factoB a{fecling dividend policy. O0Mrrk)

Hoitage Camenl Ltd. ii a fdou-manufactuer ol Cmots. Tt n.me msaser ofthe compey is pspaing its *orki6 capiial foecd aor lhe nexr yea. ASd c;tullyscreening all the docurcnts, he collecred ihe tollo*ins infomaiion.

?rod@tion duins de pre ou yed 6 n0,060 uirs. Tlre sms I*el of &rviry isintended 1o be Fairtalned duing cureDt y.d=e expeord ranos of cosr 10 seuins p;ce

Raw matedsls 40% - J_ l'D.re(rkees 2l]ooOyefieads 20%

The las mren,lsordiMilJ Ena'n:n qrores tor i moDds befoe orodudior. Fve.! Mi.olp_odLioi, Rnciro ir ln( proes, to, 2 motrLhs : s 6*med b

-be corisr.ne oi]oo""

mv mal6ial, r,ags md ovedeads. Iilished goods ,emain in w@hou$ for 3 ndnrhs.. rdi alBned b\ neoi*J.r, 4 months .or he ddre ot the oel,veq ot roq adrnd . ddn.dr si.tr o debiqis'1i {ftr$s oor rheoareordnpd cn

Ih; er6bGJta$tJtu( b be neto .5 tu.roo.doo -as in payrelr or @se, .s hdrmonth. Lag payndt ofexloses is also halfm:nfi selli price"is Rs.lo ps"mit. Bolnpnducdon od elB e h . Esule cyclc. Male a provision of t0% for 6nting@y

Assuming y.u6elf ro be lhe finoce nmger for Heribge Csment Lld. esdmale lhesorkins capital requiEnenrs of the mnpMy (10 Mark)

3 6fl

b. Explain the difeEnt appoaches lo fDedng mrkine capiral Equnmenr' _

c. Di$uss ihe wioB f&toB Elevar in plming rhe capitsl sfucrue of a im.

I(ar

I2MBA25a. what is trading aniqulr? ($r\brkr)b. Whal h fimn.lal modeling, what are the diilere tyIcs ofn.a.cial nDdeli (07\r!rl,c The toinagemen(olAlla ltd. has called for a statemcnt showins the rorkirF capiftlnceded

lo frnance a level af:tctiaity of3.00,000 unils ofouiput ror rhc ycar. The cost strudure forrhe coDpanyt pndtrd. for the ab

i) Pasi e&erience indicales rhal rav mrenah are held in stock on an aterage tnr nvo

ii) Work-iD-lrogres (100 percenl completc in regard (i dalmah and 50 percent forlabour and ove read9 will approxinately be ro halfa monrh\ Droduction

iii) Fi.ished goodsrenain in Narehonse on an alerdec ror a month.iv) Supplies ofmterials exrend a months cfedit.!) Two tuirhsoEdit isallowedto debtoA. calculatio n o f debtos roybe made atselling

vi) Anininumcashbalanceof Rs.25,000 Gc\pecied to bemalntaincd!ii) The prodndion pancm n assumed to be even durine tne rrear.Preparc rnc sbtemenr showine, rbe rvorking capnaL reqnirenenr olthe company O0viikt

a wh a nnancial ensineerinx?b. what n stable dividend policy? Whyc. Afln Ltd. ias Rs2,00,000 ro inven

should a ftm lollow such(03illrrk,

rPolicY? (o7Nlrrks)areunJer.onridcrxil.n Th.

70.000 3

30.000D 50.000 t5,000

50.000 t2,000RanI the a!o!e projech on

ii) Pioftrb,litr indexme rod.

b. Wnat hrelevant cash flo\r?Also mertiontlrconceproli..renentalcash uoNs.c Whrt are rhe morives hehi mer".'\'

10"" preler en.e share 'apiral I 00 000

t.00.000t0.00 000

Thc con olcqrir: catnalolrhc c.n!!n_! rcLine,l ern rr! oo A. urrer..tJ\

I2MBA25

7 b. The relev.nt financialinfomation for ABC Lrd. for the year etuied 3I" Decenber.2OI3 is

I -20t124

24 12

l4

112wlar nrhe lengrnolopealingcycle d the cash cyclc? A$me 365 days io a yed

oo Mrrs)

A company n considerin8 an investmnl proposalto install a ne\y milling conrol ar a con oIRs.50.000. The facility has a life expectancy of5 yeaE and no salsge ulue. The tax mre is35 penent. Atue the nm uses srBight line depEciarion and dE saDe is altowed tur raxpuAoses. Tbe esrimated cash nows before dcpreciation and lax (CFBI nom the inveshent

(FBT(tu.)10.00010.692

l r2.7698,462

5 un,l85

ii) Alerase Ere of renm.iii) Nel Presenl valuc (NPV) ar l0 percent dncoutmte mdiv) Pmlitabihy irdex at l0 percent dncount nte. e0 M,rrt

12MBA.]1

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Third Semester MBA DegreeStrategic

'. .lii : rExamidation- D€c.2014/.1ad.2015Manasement

PART_Aa whrt is the inrponmce olslratesy inbusines?b w e in dekil rhe poc{s oisrraregic nanagemenr.c Whal ..e-the l.veh of $mr.gic mdaeenEnr? Enablish

conir,ny\ slrulely aDd ns business nodel

i. Explain nnmcixl and eDlegi. obrecdesotab Explain lhe ronceptolbah.cc koro rard mdc. E\tlxin Michell ! Pofteas nre lorccs inodcl

Not.t '1. Ahstr.t ar! fHR E E full qaesno"s lron Pafr A.2. Pa B ann ?att C arc tonptlsot!.

(0r lvl3rk,(07 rrr'rk,

the relarionship between a(r0Mrrrt

finn \Yiln e)siltles. (0r lkrk$ils vaious pebpectir€s. (07 NI.rkOo a. ompetltile dnrlyr i and ili idph.alions on

(l0llark,

a wh doy.u undeEtandbyrhe tenn PlsTanrlysis"l (03Mr nb Whal a,t KSFS? Discuss veiouslwes olKSFs. (07n.*,r. whar dr. rhe rdt61ry domi)ut econonic Iralls accordine ro Mi.herl Poner? Explar silh

uexonlleol0nylddu(ryollour.hoice. (totur*,

a. Dcli.eraluechain turdbcnchmrkirE (0r \rr ,b. \\]ial do you unde^rdJ by.onpelen.ej core conpeEnce and disrinctive compelencel

Lrphinwirhheb olexaorples OrNr,rk,c Erplaii CIi\ 9 cell Dlamin! model o0Nhrk,

a. whai are rhe ldvanrager olajoi vcnrure? (rD NI! ,b. Explain the geneic nrategE! adopred atbusines level. (0? Nfilk,c whar ar.lhe vlious oprions lbrenterin8 and comperins in loreigrDarkes? Explain.

(r0Nl,rk,

r Deire n rdgi. codrolb According to you as a mmagenrenr noie$ional. \hd i

corporatc so.ial ft spo.sibililylc \lhal arc the unoN chalknges in dniegy in]phnr.frarion?

a. Thnh rbout-\,ourpost smduatejob search as a strategic dccision. How sould rhe nodel oislrarcgic tueagenenl, be helpful to you in enti&i.s urd securins tte rost promisins

b. "TIc issu* rhar toxnagcs.onfonl *hcnconducdig rhe sbuleen ianagencnr pr.ccs qilld,llir auco i4 ro nle conpetilive etrvnounents dren nmr lacc, ihe iltenal stEngll1s andwexkne$cs rhey po$e$ i lhc rNNbcrololhcrbusineses theirnrmop.rale". Discuss

o0\hrl,

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PART C

Dr Sukumar inhenred hn lkhcr's Dey s lxb in Delhi in lgg5 Tlll100l. he o!rned rt labs irthe NationalCapitalRegion flCR) Hr anlbnion sas ro rum il iDio a Narional chlr Thenunber incEased ro 7 in l00l acros rhc counlry. lncludi.g the r.!uisition ofplxrinnn lxbin Muhbai. The nunber is likel_v tu Eo tu 50 rrilhh ? I !ea$ lion 2l xltresdnr lnrusionoaRs.23 crcEs lor a 269/0 stake br- ohrdr.apn,lhas irs g.o\ nmle:y

The lrb *nh a Evenue olRs75 crcres is anong top 6ree parhologi.al l&s in lidia \ithAi|nlic (Rs.77 core, and Prcific (Rs.55 crorct. Yer ils markel shtre is .nly 29r, orRs.3,500 crores ma(et. The rop 3 fims .ommantl only 691 as againn 40 4s.ri, by then

There are about20.000 b 1,00,000 stand alone labs e.Baged in rourine talhological busnlr$in rrdia. with i; syster orrnandarory li.ensing and Egslmtion. Thal is nhy Dr. suktrnr'has nor gone 6r acquislion orlonr yenrures. He doe\ nor find rrnv crlsring oboeroiesneetin8qualily sla.dads.Hissix hbshave beenrccredncd iaronrllj- \here on rnin.v Ldgehospilals halc nol dhnght of accedilalior. T[c college ot Atuen.an parhologncaccEdihtionofDey\ lab $ould help ii 1o rcach clienrsoulside India

lr Dey\ hb, $e bio{hemnq and blood iesline cquipnents aE srnn,zcd e\ er}, da!. -rhe

bd coding and aulonared regisrralion ofpati.irs do nor low ant ldcni! inlx upi t\enrourine tesh aE conducled wilh hisnly sophisicar.d sysretos Technicll expefsc cnrbles$en to can] our 1650 vari.ryoftc$s. S0Ncday repoit aft availabl. lirr sonples reachirgby I p m md br- 7 an ne\r dr) tur$tuples nor 500.olLe.lion c.Dnes locd.d acro\s rLecounlry. Thcir rcchnicirns woik rou.d rhc.lockl unLike conrr.rilo6. HoDr senrc.s rnrcollecrion dd repofiins is also alailable.

TleE n a hug! unudlizcd capaciry. Now n is lryinC 1o lop other segmm6.20ol" ofrs tolrlbusines.dne! thousl its han hbo.rtoy Nhich acts as aElerencc lab lorninny leadinghospillh.NewndgilabsaEbeinebuillroercmnprcclinicalandmulti.ceDneclinicalrrk

a Whar do you unddutMd bl rhe rem virionl Nhar rision Dr.Srkutuar h.\ ar dre rirne otinheriraiceofDe]\hb)Hmnteenaclieved? (os\hrrr)

b. Iorgrosth.trhalbusinessstdregyhasbeenalopledbyDrSukumar? (0srkit,c Whar a lhe ma*ethg slraleayolDr. Suktrmarro orcnake irs conpetitor? (0s Nri{,d lnyouropinionwharcotrldbcrhcbiggesrweakressinDrSukuhalsbusinesrnrarcgy'l

(0s:\l,it,

.. whai do you nean by coQoole Coyemsnce?b Explain rhe diferenr sources of lons tem tunds.c. Exphinthe objcctives ollinancial management.

IOMBA23

2012Second Semester MBA Degree Examination, DecemberFinancial Management

!22:,

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ii:"i;

Max. M ks:100

Nol.tt.Ahs et an! FOUR quenions,fron QNd I to O No.7.2.Q.No. a is .ohpulsoty.

5.00,000 1,00,0006.00,000 1,50,0006.50,000 1.25,000

2.00.0002.20.000

c. XYZ lld.. is a establishcd cohpany which rcqunes a turrhe! sun ofRs 30,0(].0().) for nsexpansion sdhene. Ap{t liom thc oiiginalequiy capit olRs l0,l)O,ol)O otRs tOO each.Tne dneclos havc rhe follo*in-s plan for exp sion :

i) whole lmount to be raised though equity shares.ii) Rs l0,00,000inequnyshaesand balance amunr i. 8y0 deb.nruEs.iii),^ll in dehentures @ 8%.i!) Rs 10,00,000 in l2% prelerence slEes md balance inequny.The expected EBIl is Rs 8,00,000 and td mre aFpli.able is 50%. Amlyse rhe oplions lndselect the besl option 00MrL!)

a. whal do r.u meanbrco$ofcapirai?b. lhc fbllorins inlornation is dvailable for Ssacal Lld..

Rs(MillionAvenle io(l of mq mrreridl rnLl sloresAve*ge {ork in pmcess i.lentor}A\€raec nnished soods invenlory\\eraAe accounrs re!enabbAlehse accounls payable 180Aveiage nw nEterial and sroEs purchased on dedir lDd

Aveage Bort h proce$ value olraw mie als

A\crase costolsoods sold Dr dav

calculalc duration olopcmting cvcle.l.f1

IOMBA23

c. The Balancc sheerolABC companyisrllen below:

EauitvcaDnal(Rs l0 Der share) 90.000 1.2i,0001.20.000 75.000

10.000

I00,000The Company's rolal aset tmover ratio is l, ih litdoperaling co$ is

uri,ble operatingcosr is50% ofsales. The lncofte lA lale is 50%, Youir Cd.(ula'.'neirlle'.rr npeolle\eEse..-orrhe.omoalJ.il Deiemri.erhe likelr levelofEBlT ifEPS isRs 2.

a. Whar do you mean b) capial nructue? (03 Mrl,b. DifeEntiaie het$€en priMry mtukfi and sccondary Miker (0r Mrrl,c. Unired Indust es Lrd., has an investme budget o{ Rs I00 lakhs tbr 2005 2006. h has

shon listed rxo prcjech A and B rner conpleting lhe mrket and technical appraisals. lhemanaecFcir ira.is lo conplele ilmncial appmisals belore mking rhe i.veslmenrs. Fufthcrpaniculas resardins thd t*o poiect m sivenbelo*:

Average annual cdh unflo{s bcfoe depieciation 21

Thd rhk fie mtio is 6% md thec. Exllain the fados delemininC

The conpmy ibllorvs sraighr line me$od ofcbdgins depreciarion. us rdare Equned b calcutale payback period and lnteml rate ol rcturn oltheolAnnuityofRe. I for ten yea^ at dineEnt discounl ntes n gilen below:

a. Whardoyouneanby hrex mekell @rM,iktb. XYZ Ltd., hds R\ l0 crore bonds outstanding. Bank deposit eens 10% p.r lhc bonds rill

be redeemcd atci l5 yeas lor $hicn puryose lhe company whhcs ro create a sinking rundHow touch anount should he deposned lo the sinling tund each year so thar XYZ Lid..$ould have in fie sinling iund Rs 10 cores 10 retire its e.rne issue orBonds? (07 M,rkt

c. Explain ile Jndors eolerning capilal st4rclurc decision. o0nrrik)

l0 ll 12 14

A uilv\alue for l0 reas 5.6502

. Dislineuish bctsccn dive^ifilble and non diveBifiable iisli.b. Caiculatc lhe expeded rate oldum lnr eeh secuity using CAPM,

t.2

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IOMBA23

b. What is srab le di! idend po lic],? Explain. @7Mrrks)c. As a financial analyst ofa l&ge eleclonics company. Yon are rquned 10 dcrcmrnrc ine

seiehred average cosr ofcapiral ofthe.omplny usins luket lalue weigtG. The tbllowins

Tbe conpany s presenl bookDrbenrures(R5 100 pcr debemure)Preleren(e shares (Rs 100 ner shrre)EquiN sh es(Rs l0 Dersharc) Rs l0-00.000

All rhes sccLunies se loded in the clpnal mdkets. Reccd prices are I

Debentures Rs ll0 per debenture, preferencc shms Rs I20 per sbae md equiq shues

Anicip.tcd exedll firancins opponunities tre li) Rs 100 pd debenlue E,leemable al par ; l0 years naturily 1l% coupon rare l%

noalarion cosr . sale pricc Rs 100.ij) Rs 100 preae.ence shaEs redeenable at par I l0 yeds mlurity 12% divide.d rere. t%

floalation cost. sale price Rs 100.iii) Equity shares Rs 2 p.r sharc floararioncosrs. sale price Rs 22ln addiiion, the dilidend expected on the equiry shaE ar the end ol the )€ar is Rs 2 pcrshare tlhe anticipared grouh Ete individendsis 7% and the nm has the pmcrice olpayingall iis etuninss in the fonnofdilidcnds.lhe coQoore tax rarc is is%. (o M,rri

CASESTUDY:

a. Ojus enterpriss is delemining lhe cash now br a prcjcct involrine the crsh tlo* for aprojcct inlolling rcplacebent old old machine by a new @chine. The old nachinebouehl a few yem aeo hd a booklalue ofRs 11,00,000 &d it can be sold !o Ealize !DosL!d sahase value olRs i,00,000. lt has a rcmilins lifc olfive yeais aller qhich ns netsan€se value is e&ecEd lo be Rs 1,60,000. lr is being depftciared annually at a Ele ol2t%under rhe *rirren dosn lalue nrethod Tne NorkiDe capilal required irr $e old rachine hRs 4.00.000. The new machine costs lts 16,00,000. lr n expecled to Etch a ner salvagc\zlue orRs 8-00,000 aner 5 yeas whcn il villno longer be Equned. 1he deprcciation nlealplicable 10 ir is 2s% under wiuen down value merlod. The ]rer trorking c$nal rcquncdfrx the ne{ mchine is Rs i,00.000, The new mchine is cxpccrcd to bring a saving.lRs 3,00,000 mually i. manu&cturins cosls (other $an dcticcialion), The rax rareapplicable torhc lirm is 40%. Find the ilcremenral altei t cash io{s,$ocided Nirh rhe

cost of cquirr and debr conpone"t, .f ir, ""pir"l

f", dif1i,..1r;[i:T)r

Debt as a oo aE. orrohlcaonJL

I66r rhe company. Td ralc is 50%.SuEeest lhe besr debl : equi|,