Financial Management - 1 Question Paper Dec 2024 [Dibrugarh University BCOM 1st SEM NEP Syllabus]

Financial Management - 1 Question Paper December 2024
Dibrugarh University BCOM 1^st SEM NEP Syllabus

COMMERCE (Minor) – Financial Management-I (MINFIN1)

Marks: 60 (80 for 2023 Batch)

Time: 2 hours (3 hours for 2023 Batch)

Note: The figures in the margin indicate full marks for the questions.

1. (a) Fill in the blanks (4 × 1 = 4)

i) ________ means maximizing the net present value.

ii) The capital invested in total current assets of the business is known as ________.

iii) The length of time required to recover the initial cash outlay on the project is known as ________.

iv) ________ is the distribution of profits of a company among its shareholders.

(b) Write True or False (4 × 1 = 4)

i) A finance manager has to maintain liquidity rather than profitability.

ii) Working capital needs are fluctuating in nature due to seasonal variations in sales.

iii) Discounting methods are also called time-adjusted techniques.

iv) According to Modigliani and Miller (M-M) theory, the dividend policy of a firm is relevant.

2. Write short notes on any three of the following: (3 × 4 = 12)

a) Net Present Value

b) Permanent or Fixed Working Capital

c) Stable Dividend Policy

d) Regular Dividend

3. (a) "Profit maximization is not the adequate criterion to judge the efficiency of a firm." Explain the statement. 10

OR

(b) Discuss the scope of financial management. What are the decision-making areas of finance managers?

4. (a) Explain the concept of working capital. Discuss the advantages of adequate working capital. (4 + 6 = 10)

OR

(b) Estimate the working capital requirements of KH Trading Concern from the following information:

Particulars	Details
Expected level of production	180,000 units
Raw materials to remain in stock on average	2 months
Processing period for each unit of product	1 month
Finished goods remain in stock on average	3 months
Credit allowed to customers from dispatch	3 months

Additional Information:

Cost Component	Percentage
Raw Material	60%
Direct Wages	10%
Overhead	20%
Selling Price per unit	₹ 70
Expected margin on sales	10%

5. (a) What do you understand by capital budgeting? Explain the procedure of capital budgeting in detail. (3 + 7 = 10)

Or

(b). Jain Firm, whose capital cost is 10%, is considering two mutually exclusive projects A and B. The details are as follows:

Year	Project A (₹)	Project B (₹)
Investment Cash Inflow	70,000	70,000
1	10,000	50,000
2	20,000	40,000
3	30,000	20,000
4	45,000	10,000
Total	1,65,000	1,30,000

Compute Net Present Value (NPV) at 10% and Internal Rate of Return (IRR) for the two projects. (5 + 5 = 10)

6. (a) What are the different types of dividends? Explain the factors affecting dividend distribution in a firm. (5 + 5 = 10)

OR

(b) Explain the positive relationship between dividend policy and the value of a firm in the light of Walter's model.

(20 Marks for 2023 batch students)

7. (a) "Dividend is a financing decision as well as distribution of earnings." Do you agree with this statement? Justify how dividend distribution affects the value of the firm. (6 + 4 = 10)

OR

(b) Compare the effect of dividend distribution and retained earnings on the value of the firm.

8. (a) "Retained earnings increase the value of earnings per share (EPS) more than the distribution of dividends." Explain.                 10

OR

(b) Explain Gordon's model and state its assumptions.     (6 + 4 = 10)