Ms-41 Question bank (12)
Ms-41 Question bank
Ms-41 june 2011
Written by sales@mbaonlinepapers.com sales@mbaonlinepapers.comMS-41 june-2011
MS-41 : Working capital management
1. Explain the distinguishing features of matching, conservative and aggressive strategies for financing working capital with the help of illustrations. Under which circumstances each of these are suitable ?
2. Discuss the critical variables of Cash flow forecasting and the different forecasting approaches of cash flow.
3. Write notes on :
(a) Commercial Bill market
(b) Commercial Paper.
4. Discuss the features of 'Factoring' and 'company deposits as source of working capital finance. Why is factoring yet to be popular in India ? Give reasons.
5. Omega Ltd. has investigated its cost of funds and their Profitability and found that current assets earn six percent where as fixed assets earn 13 percent. Cost of current liabilities is three percent and average cost of long term funds is 10 percent. The current year balance sheet reveals the following information.
(Rs. in thousand)
|
Liabilities Share capital Term loans Bank overdraft Payables
|
Rs 20000 50000 7000 3000 80000 |
Assets Plant and Machinery Land and Building Stock Cash in Bank and Hand |
Rs 30000 30000 10000 10000 80000
|
You are to comment on overall profitability of Omega Ltd.
The company proposes to lower its net working capital to Rs 7,000 by (a) either shifting Rs 3,000 of its long term loans to bank overdraft or (b) buying one more machine by paying cash. You are to suggest which of these two alternatives should be preferred and why. Do you approve of implementing both the alternatives simultaneously.
6. (a) How would you assess the credit worthiness of a customer ?
(b) A company is manufacturing spare parts and selling it at Rs 10 per unit. Variable cost is Rs 7 per unit. Total sale of a year is 2,40,000 units with per unit cost of production Rs 9. As per present credit policy company allows a credit of 2 months with a 3 percent default and expense of Rs 50,000 for collection. The company has two proposals for replacing the present credit policy with following details.
Proposals Credit period Collection Expense Default
X 1.5 month Rs. 75,000 2
Y 1 month Rs. 1,50,000 1
If the company has a required rate of return of 20 percent which of the two programmes the company should adopt.
7. What is the significance of Inventory control ? Discuss the different models of inventory management.
8. Discuss the relationship between liquidity and profitability and explain how it is measured.
Ms-41 dec 2007
Written by sales@mbaonlinepapers.com sales@mbaonlinepapers.comMS-41 Dec-2007
MS-41 : Working capital management
1. Explain the concepts of gross and net working capital.explain how would you plan the working capital requirement af a firm in the shorl terrn ?
2. Explain the Bierman-McAdams model that helps the financial managers in funds management of a firm. Also discuss the models which guide him in deciding the process of switching funds from marketable securities to cash and vice versa.
3 a) What are lhe basic reasons for which firms hold cash and marketable securities ?
b) Describe the various factors, bath internal and external, that afiect thc flow of cash
4- Describe the system of compulsory loan component in bank credit, as enforced by the Reserve Bank of India. Discuss the salient features of a svndicated credit.
5. What are lhe methods suggested to commercial banks RBI for assessing the working capltal requiremenls of borrowers ?
6- Explain the main methods of granting credit for working capital purposes prevalent in India.
7. Liquidity of an enterprise can be studied in two ways, namely technical liquidity and operational liquidity." Discuss these two methods of liquidity measurement
in detail and also point out the differences between the two.
8. What are lhe factors that determine the liquidity position of an undertaking ? Explain the effects of liquidity on a business enterprise.
9. Wrile short notes on any four of the followins ,
{a} Statutory liquidity ratio
(b) Commitment charge
{c) Return on Assets
{d) Factoring
(e) Collateral
(f) Bill discounting
Ms-41 dec 2008
Written by sales@mbaonlinepapers.com sales@mbaonlinepapers.comMS-41 Dec-2008
MS-41 : Working capital management
1. "Cash Budgeting is considered a suitable device for planning working capital." Explain this statement and discuss the procedure of preparing cash budget.
2. Explain the meaning and significance of Bank Rate. Discuss how the central bank of the country controls credit by bringing about variations in the reserve requirements.
3. How are the customers eligible for credit terms defined ? Which key factors are included in CRISIL's rating methodology for deciding the creditworthiness of a borrowing company ?
4. "Corporates can raise short term funds by issuing commercial papers." Discuss the eligibility requirements, the terms and conditions on which they are issued and the procedure adopted for issuing commercial papers by the companies.
5. Explain the significance of payables as a source of finance. What are the different factors influencing the availability of trade credit ?
6. Discuss the following :
(a) Factors that contributed to the rise of the Euro dollar market.
b) Procedure for discounting of Bills of Exchange.
c) Salient features of syndicated credit.
d) Five different costs to the firm that holds inventory.
7. Distinguish between the following :
(a) Legal mortgages and Equitable mortgages
(b) With recourse and Without recourse factoring
(c) Common stock and Preferred stock
(d) Operating profit ratio and Net profit ratio
8. Write short notes on any four of the following :
(a) Economic Order Quantity
(b) F-S-N Analysis
(c) Forward Exchange contracts
(d) Public Deposits
(e) Leading and Lagging
