G7974 (Pages : 2) M.B.A, DEGREE (SUPPLEMENTARY) EXAMINATION, AUGUST 2012 Second Semester FINANCIAL MANAGEMENT (2008 and 2009 Admissions) ‘Time : Three Hours ‘Maximum : 60 Marks Part A Answer all questions. All questions carry equal marks. I. (a) Describe the scope of Financial Management in an Organisation. Or (>) “The wealth maximisation objective provides an operationally appropriate decision—criterion” —Comment. Il, (a) Write short notes on : (i) Margin of Safety. (i) BEP. (ii) Contribution, (iv) P.V. Ratio. Or 2 (>). What is annuity ? Explain how can future value of an annuity be determined. III. (a) Discuss the selection of the optimal portfolio based on the Markowitz Model. Or (b) Why is the non-diversifiable risk only relevant risk ? How is such a risk measured ? IV. (a) Dlustrate EBIT-EPS analysis and coverage ratio as an approach to design capital structure. Or (b) Discuss the features of equity shares as sources of Long-term finance. V. (a) Explain the ARR method of capital budgeting with its merits. Or (b) Discuss the utility of cash budget as a tool of Cash Management. (© x 10 = 50 marks) ‘Turn over2 G7974 Part B Answer the following questions. , ‘VI. Calculate the Operating Leverage ratio for each of the three firms from the following price and cost data, For the purpose of your calculations use a base level of sales of 6,000 units in each case. What conclusions with respect to levels of fixed cost and the degree of operating leverage result ? : Firms : A B ie . Sales price per unit Rs. 20 Rs, 82 Rs, 50 . Variable cost per unit 6 16 20 Fixed operating cost Rs. 80,000 Rs. 40,000 Rs, 2,00,000. (1x 10 = 10 marks)