9780 Dat

CHRIST (Deemed to be University), Bangalore
School of Business and Management

END SEMESTER EXAMINATION – December 2022
UG III Semester
Programme Name: BBA/BBA H/BBA F&IB/BBA TTM/BBA DS Max. Marks: 50

Course Name: Financial Management Time: 2 Hrs
Course Code: BBA331
General Instructions:
• All rough work should be done in the answer script. Do not write or scribble in the question
paper except your register number.
• Verify the Course code / Course title & number of pages of questions in the question paper.
• Make sure your mobile phone is switched off and placed at the designated place in the hall.
• Malpractices will be viewed very seriously.
• Answers should be written on both sides of the paper in the answer booklet. No sheets should
be detached from the answer booklet.
• Answers without the question numbers clearly indicated will not be valued. No page should
be left blank in the middle of the answer booklet
Course Outcomes (COs)

The students will able to :
CO1: Understand the basics of the finance function and the concepts of financial management
CO2: Apply the knowledge in financial decisions
CO3: Develop analytical skills to identify financial management problems and solve them.
CO4: Analyze the relationship among capital structure, cost of capital, dividend decisions, and
value of the business.
CO5: Assess a firm’s requirement for long-term assets by applying capital budgeting techniques.
SECTION A Total marks: 15

Q. No Answer the following questions. Each question CO RBTL
carries 5 marks
1 a ."Efficient inventory management is reflected in the CO2 L3
liquidity and profitability of the firm”-Defend the
statement giving relevant justification.
(OR)
b .X.Ltd has a total capitalization of Rs.10 lakhs
consisting entirely of equity share capital of Rs.50 each.
It wishes to raise another Rs.5 lakhs for expansion
through one of its two possible financial plans:-
1. All equity shares of Rs.50 each.
2. All debentures carrying 9 percent interest rate.
Present level of EBIT is Rs.1,40,000 and tax is 50%.
Calculate the EBIT level at which EPS would remain
the same, irrespective of raising funds through equity or
BBA331_Page 1 of 4
debentures.
2 a. Discuss the important role that debtors play in the CO2 L3
total financial picture of your firm and how would you
control them.
(OR)
b. A project costs Rs.500000 and yields annually a profit

of Rs.80000 after depreciation at 12% per annum but
before tax of 50%. Calculate the pay back period of the
project.
3 a.” Walter’s Dividend Policy divides the firm into CO1 L2
different groups”-Explain.
(OR)
b. A firm has sales of Rs.75,00,000, variable cost of
Rs.42,00,000 and fixed cost of Rs. 6,00,000. It has a
debt of Rs.45,00,000 at 9% and equity of Rs.55,00,000.
Calculate the operating leverage and financial leverage.
SECTION-B Total Marks: 20

Q. No Answer the following questions. Each question CO RBTL
carries 10 marks.
4 a. Ashoka Ltd has currently an equity share capital of CO4 L5
Rs.25 lakhs consisting of 25000 shares. Each equity
share is of Rs.100 each. The management is planning to
raise another 20 lakhs to finance a major programme of
expansion through one of the four possible financial
plans which are as follows:
(i) Entirely through equity shares.
(ii) Rs.10 lakhs through equity shares and Rs.10 lakhs
through long term borrowing at 8% interest.
(iii)Rs.5 lakhs through equity shares and Rs.15 lakhs
through long term borrowing at 9% interest.
(iv) Rs.10 lakhs through equity shares and Rs.10 lakh
through preference shares with 5% dividend.
The company’s expected EBIT is Rs.9,00,000. Assume
a corporate tax rate of 46%.Determine the EPS in each
alternative and comment as to which alternative is best.
(OR)
b .Describe the Modigliani-Miller’s approach of

irrelevance concept of dividends. Under what
assumptions do its conclusions hold good?
5 a .On the basis of the following information, determine CO3 L4

the weighted average cost of capital based on market
value. Assume a tax rate of 40%. The dividend on
equity shares is Rs.25 per share.
BBA331_Page 2 of 4
Capital Component Details
(a) Equity Share 10,00,000 equity shares of
Capital Rs.100 each,
market value Rs.250 per
share. Growth
rate of dividend 6%.
(b) Retained Earning Rs.5 crore
(c) Debentures 1,00,000 debentures of
Rs.100 each,
interest rate 15%, current
market valueRs.110 each
(d) Preference Capital 50,000 shares of Rs.100
each, dividend rate 11%,
current market price Rs.90
each.
(OR)
b . Describe the working capital cycle and discuss any
five determinants of working capital.
SECTION-C (Case Study- Compulsory Question) Total Marks:15

Q.N Case Study CO RBT
o6 L
a. A company is considering an investment proposal to CO5 L5
purchase a machine costing Rs.2,50,000.The machine has a
life expectancy of five years and no salvage value. The
company’s tax rate is 40%. The firm uses straight line
method for providing depreciation. The estimated cash flows
before tax after depreciation (CFBT) from the machine are
as follows:
Year CFBT (Rs)
1 60000
2 70000
3 90000
4 100000
5 150000
Calculate: a) Pay-back period b) Average rate of return c)

BBA331_Page 3 of 4
Net Present Value and d) Profitability Index at 10% discount
rate. You may use the following table of present value (PV):
Year 1 2 3 4 5
P.V
factor
at 10% 0.909 0.826 0.751 0.683 0.621
Revised Bloom’s Taxonomy (RBT) Levels :
L1 – Remembering L2 – Understanding L3 – Applying
L4 – Analyzing L5 – Evaluating L6 - Creating
BBA331_Page 4 of 4

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CHRIST (Deemed to be University), Bangalore

School of Business and Management

Programme Name: BBA/BBA H/BBA F&IB/BBA TTM/BBA DS Max. Marks: 50

Course Outcomes (COs)

SECTION A Total marks: 15

b. A project costs Rs.500000 and yields annually a profit

SECTION-B Total Marks: 20

b .Describe the Modigliani-Miller’s approach of

5 a .On the basis of the following information, determine CO3 L4

SECTION-C (Case Study- Compulsory Question) Total Marks:15

Calculate: a) Pay-back period b) Average rate of return c)

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