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    Question Bank FM

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    List of important theoretical questions in Financial Management paper in the MBA degree offered by the University of Madras

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    Question Bank FM

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    N Rakesh
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    List of important theoretical questions in Financial Management paper in the MBA degree offered by the University of Madras

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    List of important theoretical questions in Financial Management paper in the MBA degree offered by the University of Madras

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF or read online from Scribd
    Download as pdf
    5K views4 pages

    Question Bank FM

    Uploaded by

    N Rakesh
    List of important theoretical questions in Financial Management paper in the MBA degree offered by the University of Madras

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF or read online from Scribd
    Download as pdf
    of 4

    IMPORTANT QUESTIONS IN FINANCIAL MANAGEMENT

    MASTER OF BUSINESS ADMINISTRATION


    UNIVERSITY OF MADRAS
    Prepared by: N Rakesh, Chennai

    Scope, Objectives, Decisions

     State the objectives in conventional and modern approaches in financial


    management
     “The objective of a finance manager is to maximize the wealth of the owners of
    the organization”. Prove
     How is the wealth maximization approach superior to the profit maximization
    approach.
     What do you mean by agency costs.
     What are the functions of a finance manager in the current situation.
     What do you understand by the basic financial decisions? How do they involve
    risk-return trade off?
     What are the major types of financial decisions that a business firm makes?
     Explain the finance functions.

    Financial Analysis & Financial Planning

     What are the types of financial analysis? Briefly explain


     What guidelines would you follow in financial statement analysis
     What are the objectives of financial statements
     Distinguish between operating and non-operating revenues
     Briefly explain the steps in financial planning
     Briefly explain the tools of financial forecasting
     What are the utilities of financial forecasting
     What are the functions of balance sheet
     What is meant by current assets? Give examples

    Ratio Analysis

     What are liquidity ratios.


     What is debt-service coverage ratio? How is it calculated
     State the limitations of ratio analysis.

    Break-even analysis

     What assumptions underlie Breakeven Analysis


     What is Operating leverage? State the formula for calculating the degree of
    operating leverage.
     State the impact of operating leverage on profits.

    Page - 1 -
     What do you understand by Breakeven point. What are the uses of breakeven
    point
     How would you compute the breakeven point.
     What are the limitations of cost volume profit analysis.

    Capital Budgeting

     What do you understand by mutually exclusive projects


     What do you understand by profitability index (PI)? Which is a superior ranking
    criterion profitability index or net present value? Why?
     How would you calculate accounting rate of return? What are its limitations
     Why do individuals show a time preference for money? State the reasons.
     Distinguish between profit and cash flows
     Explain the merits and demerits of time adjusted methods of evaluating
    investment proposals
     Under what circumstances do the Net Present Value (NPV) and the Internal Rate
    of Return (IRR) methods differ? What method would you prefer and why?
     Explain the mechanics, merits and demerits of different capital budgeting
    techniques.

    Working Capital Management

     Discuss the concept of working capital cycle. Why is it important.


     What are the principal motives for holding cash
     What is Lock box system?
     What is concentration banking system?
     Write short note on Baumol Model for cash management
     Efficient cash management will aim at maximizing the availability of cash
    inflows by decentralizing collections and decelerating cash outflows by
    centralizing disbursements. Discuss.
     Discuss in detail the various short term and long term cash forecasting techniques
     What are the five C’s of credit analysis? How do they relate to the process of
    evaluating credit risk.
     What are the important decision variables which influence the level of
    receivables? Briefly explain.
     Define the economic order quantity. How is it computed.
     How is the reorder point determined
     What are the risk and costs of holding inventories? Briefly explain.
     Briefly explain the various tools and techniques used for inventory management

    Working Capital Financing

     Discuss the important forms of working capital advance given by banks


     Describe the important features of the Chore committee recommendations.
     Describe the important features of the Marathe committee recommendations.

    Page - 2 -
     Explain the major recommendations of Tandon committee.
     What are term loans? What are their features.

    Cost of Capital and Capital Structure

     What is the effect of leverage on the cost of capital under the Net Operating
    Income (NOI) Approach
     ‘According to Net Income approach the overall cost of capital would decrease as
    the value of the firm increases’- Explain.
     Illustrate the difference between valuation of a bond and of a preference share
    with an example
     How would the cost of debt be calculated.
     Explain the concept of financial Leverage
     What is financial leverage? State the formula for the calculation of degree of
    financial leverage.
     Explain the various methods of computing cost of equity capital
     What is capital structure? Explain the features of an appropriate capital structure.
     Briefly explain the factors determining the capital structure of a firm
     Define cost of capital. Explain its significance in financial decision making.
     How is the weighted average cost of capital calculated?
     Explain the importance of EBIT-EPS Analysis. How is it useful to a finance
    manager.

    Dividend Theories and dividend policy

     Is there any similarity between the Walter’s Model and the Gordon’s Model
     Compare bonus issue and stock split

    Sources of Finance

     Discuss the salient features of debentures as a source of finance


     Distinguish between preference shares and debentures.
     Briefly explain the advantages of raising funds by issuing preference shares
     How debentures are classified based on convertibility? Briefly explain each one.
     Explain the pros and cons of equity financing.

    Budgetary Control

     What is Budgetary control? Explain its objectives.


     Explain the purpose of preparing cash budget. Present with an illustration the
    receipts and payments method of preparing cash budget.
     Distinguish between zero base budgeting and traditional budgeting.
     What are the functions of a cash budget.
     Explain the limitations of budgetary control.

    Page - 3 -
    Financial Information System

     Write a note on Financial information System (FIS).


     Explain the various kinds of financial information to be provided to the finance
    manager.

    Page - 4 -

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