MEFA.pdf

Code No: V0221

II B.Tech II Semester, Supplementary Examinations, April - 2012

MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS (Com to EEE, EIE, BME)

Time: 3 hours Max Marks: 80

Answer any FIVE Questions All Questions carry Equal Marks

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1. What are the functions, duties and responsibilities of a manager involved in the decision making process?

2. Which is the best method that you would recommend to be used for forecasting business cycles? Substantiate your answer weighing one method against the other.

3. What is the relationship between the marginal product and the average product curves of a variable input?

4. What are the features of a monopoly and a competitive market co-existing in monopolistic competition?

5. Define sole trader. What are the features, merits and demerits of sole trader?

6. PQR Co. Ltd. is proposing to mechanize its operations. Two proposals A and B in the form of quotations have been received from two different vendors. The proposal in each case cost Rs. 6, 00,000/-. A discount factor of 15% is used to compare the proposals. Cash flows after taxes are likely to be as under.

Cash flows after taxes (in Rs.) Year Proposal A (in Rs.)

Proposal B (in Rs.)

1 1.20,000 60,000 2 1,80,000 1,20,000 3 2,20,000 1,80,000 4 1,30,000 2,70,000 5 1,00,000 1,60,000

Which one do you recommend under Net Present Value Index method?

7. Define accounting? Explain the different accounting principles.

8. What are the important ratios? Explain any four of them with examples to understand the financial statements?

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1. Discuss the nature and scope of managerial economics. What are the other related Disciplines?

2. Differentiate extension in demand and increase in demand. Illustrate.

3. What is perfect competition? Explain the equilibrium of firm and industry in both the short-run and long-run under perfect competition.

4. Define production function? What are the types of production function? Explain them in brief.

5. Define public enterprises. What are their features and advantages?

6. XYZ Company has supplied you the following information. No. of units sold 30,000 units Fixed cost Rs. 2, 20, 000 Variable cost per unit Rs. 10 Selling price per unit. Rs. 20 Find out: a) BEP in units b) Margin of safety c) Sales to get a profit of Rs. 3,00,000 d) Verify the results in all the above cases

7. Rank the following investment proposals in order of their profitability according to Pay-Back Period and Discounted Cash flow methods assuming the cost of capital to be 10%.

Project Initial Outlay Rs.

Annual Cash Flow Rs.

Life in years

1 25,000 3,000 10 2 3,000 1,000 5 3 12,000 2,000 8 4 20,000 4,000 10 5 40,000 8,000 12

8. What are the important ratios? Explain any four of them with examples to understand the financial statements?

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1. Define Managerial Economics and point out its chief characteristics.

2. What is meant by Elasticity of demand? Explain giving a suitable illustration. How elasticity of demand determines the price policy of a firm?

3. Consider the case of the company with the following two investment alternatives each costing Rs. 8, 00,000/-. The details of the cash flows are as follows.

Year Cash flows (in Rs.) Project-I Project-II 1 2,00,000 5,00,000 2 4,00,000 3,00,000 3 5,00,000 2,00,000

The cost of capital is 14 per cent per year. Which one will you choose? a) Under NPV method. b) Under IRR method.

4. Explain the following with the help of a table and diagram under perfect competition and monopoly. a) Marginal Revenue b) Average Revenue

5. Evaluate sole proprietorship form of business organization.

6. If sales are 10,000 units and selling price is Rs. 30 per unit, variable cost Rs. 20 per unit and fixed cost is Rs. 90,000. Find out BEP in units and sales revenue. What is profit earned? What should be the sales for earning a profit of Rs.50,000/-

7. Define accounting? Explain the different accounting principles.

8. What are the important ratios? Explain any two of them with examples to understand the financial statements?

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1. What is managerial economics? Managerial economics has both descriptive and prescriptive roles. Explain

2. What is demand function? Explain the determinants of demand.

3. State the law of diminishing returns. Why does a diminishing marginal return to a variable input occur eventually? Can they become negative? If so, why?

4. How are price and output determined under monopoly? Show that under monopoly price is higher and output is lesser than under perfect competition.

5. Compare and contrast between sole trader and partnership.

6. Evaluate joint stock company form of organization.

7. Explain the concept of Liquidity and narrate its importance through suitable examples with assumed data.

8. Define the ratio. Explain the advantages and disadvantages of ratio analysis.

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