Old Question Paper 2071 – Element of Finance Class 12

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Elements of FinanceQuestion Paper – Element of Finance | Old is Gold
year: 2071 (2014) | Subject Code: 606
For: Management(Commerce) Class 12

Candidates are require to give their answer in their own words as far as practicable. The figures in the margin indicates full marks.
Time: 3 hrs | Full Marks: 100 | Pass marks: 35

1. Write in brief about routine finance functions. [5]
2. Write in brief about Deposit Institutions. [5]
3. Write the meaning of cash flow statement. Also explain the cash flow from operating activities with example. [5 + 6 = 10]
4. A company made negotiation with a bank for one year loan of Rs.4,00,000. The bank has offered three alternatives: [3 + 3 + 4 = 10]

(a) A simple interest @ of 15%, with 20% compensating balance.
(b) A discount rate of 14% without compensating balance.
(c) A discount rate 12% with 20% compensating balance.
Required: Annual cost of loan in percentage, for three alternatives.

5. What do you understand by the term capital structure? Write any two factors that are affecting capital structure. [5]
6. The liabilities and capital fund of a company are as under:Authorized capital: Equity share of Rs. 100 each Rs.5,00,000 :  [2 + 3 = 5]

Issued & paid up capital: 3,000 equity shares Rs.3,00,000
Accounts payable Rs.2,00,000
Long term loan Rs.4,00,000
Reserve & Surplus Rs.1,00,000
Bills payable Rs.1,00,000
Required:
(i) Book value per share.
(ii) New book value per share with the remaining shares are also issued.

7. A company limited issued 2000, 10% debentures of Rs. 100 each to be redeemable after 10 years. The corporate tax is 25%. [2 + 3 = 5]
Required:

Cost of dept capital when the debentures are
(i) Issued at par
(ii) Issued at 10% premium

8. The estimated net cash flows of a project which requires Rs. 50,000 investment are as under:

Year
1
2
3
4
Rs
15,000
20,000
15,000
20,000

The cost of capital is 10%
Required: [3 + 4 + 3 = 10]
(i) payback period
(ii) Net present value
(iii) profitability index

9. The information regarding working capital are as under:[2 + 3 = 5]

Inventory conversion period 40 days
Receivable conversion period 20 days
payable deferred period 10 days
Days in year 360 days
Annual credit sale Rs. 72,00,000
Manufacturing cost per day Rs.12,000
Required:
(i) Cash conversion cycle period
(ii) Working capital
What do you mean by permanent and variable working capital? Write in brief. [5]

10. State the reasons for holding adequate inventory [5]
11. The details for materials purchases are as given below: [3 + 4 + 3 = 10]

Annual requirement 4,500 units
Cost per order Rs.300
Cost per unit Rs. 150
Carrying cost 20%
Safety stock 200 units
lead time 2 weeks
Weeks in a year 50 weeks
Required:
(i) Economic order quantity
(ii) total cost of EOQ
(iii) Re-order point

12. The term of sales a firm is 5/20, net 30. The firm made a credit sale if 4000 units at Rs. 50 per unit. Under this policy 40% customers pay on 205th day taking discount and the rest pay on final date.  [2 + 2 + 1 = 5]

Required:
(i) Days sales outstanding
(ii) Average daily sales
(iii) Average account receivable

13. What do you understand by dividend? Also mention the constraints in paying dividend. [2 + 3 = 5]
14. (a) Differentiate between multinational and domestic financial management. [5]
(b) Define spot rate & cross rate with suitable examples. [5]

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