The Finance Function
1. What does financial management mean? Explain the major finance function.
2. State in brief any three functions of finance manager.
3. Corporate houses today are increasingly moving towards wealth maximization from profit maximization. Comment on this movement.
4. The objective of financial management is wealth maximization and not profit maximization. Comment.
5. Discuss wealth maximization and shareholder value maximization as objectives of financial management.
6. Describe agency problem in achievement of objectives of financial management.
Analysis Of Financial Statements
1. What is balance sheet what are the basic concepts related to balance sheet.
2. Explain following concepts in context with financial statements:
a) Money measurement concept
b) Going concern concept
3. What is meant by matching concept while preparing income statement?
4. Discuss the income statement, its contents and concepts related to the same.
Ratio Analysis
1. Financial ratios may be classified according to their utility. How?
2. Discuss the significance of liquidity ratios. Explain with examples the interpretation of these ratios.
3. Discuss important profit margin ratios.
4. Illustrate importance and significance of turnover ratios.
5. What are liquidity ratios and what is their significance?
6. What are the limitations of ratio analysis?
7. What do leverage ratios indicate?
8. Explain the significance of capital gearing ratio.
Interpretation of Ratios
1. ‘Ratio Analysis’ is only a tool and not a final decision Discuss.
2. Ratio analysis is only a technique for making judgments and not a substitute for it. Comment.
3. What are the precautions to be taken in trend analysis?
4. What are common-size statements?
Funds Flow Statements
1. Explain the rationale of classification as sources and uses of funds, based on companies of successive year’s balance sheets.
2. What is the purpose of preparing funds flow statement based on changes in working capital?
3. What are the sources and uses of working capital?
4. Discuss the advantages of funds flow statement.
Cash Flow Statement
1. Explain the structure of cash flow statement.
2. What are funds flow statement and cash flow statement? How are they different from each other?
3. What are the uses of Cash Flow Statements?
4. Differentiate between cash flow and funds flow.
5. Cash flow is a special version of funds flow. Discuss.
Capital Structure
1. What are the characteristics of loan funds and equity funds?
2. Explain the methods of measuring cost of debt capital and cost of equity capital with illustrations (Nov 2001)
3. Why is cost of debt normally less than the cost of equity? Is it always so? (Nov 2002)
4. What is the meaning and significance of Weighted Average Cost of Capital? (Nov 2003)
5. Discuss Net Income Approach and Net Operating income Approach to capital structure.
6. What are the main propositions of traditional approach?
7. Explain Miller and Modigliani Position.
8. What is weighted average cost of capital?
Break Even and Leverage
1. What do you understand by the term’ financial break-even point’?
2. What is the relevance of Operating Leverage and Financial Leverage in taking business decisions?
3. Define operating leverage.
4. What do you understand by combined leverage?
5. Explain Margin of Safety.
Working Capital
1. What do you understand by gross working capital and net working capital?
2. Distinguish between permanent and temporary working capital.
3. What is operating cycle? How are its components calculated?
4. Compare usage of long-term and short-term funds for working capital.
5. What are the factors that determine working capital requirements?
6. Explain the concept of working capital. How is working capital affected by
(a) Sales (technology and manufacturing policy and
(b) price level changes?
7. Risk-return trade-off in working capital management. Discuss.
8. What is cash operating cycle?
Cash Management
1. What is cash budgeting? What is time horizon for it?
2. Distinguish between a cash budget and a cash flow statement?
3. How cash inflows can be improved or managed?
4. Discuss importance of Internet in cash management.
5. What are disadvantages of default in payment?
6. How and in which avenues surplus cash may be invested?
7. What are the motives of holding cash?
Receivables Management
1. What is the purpose of maintaining receivables?
2. What are the various costs associated with A/C receivables? (May 2003)
3. Credit policy relate to which dimensions and decisions?
4. Explain the steps involved in credit analysis in detail. (Nov 2001)
5. What are the mechanisms to monitor receivables? Write a short note on each of them.
6. What is delinquency cost and del credre commission? (May 2004)
Working capital finance
1. What is meant by “”Letter of credit”?
2. Explain why Letter of credit is less risky for a banker as compared to cash credit facility.
3. What is the meaning of following terms?
(a) Commercial Papers.
(b) Bills Discounting
4. Explain Inter Corporate Deposits
5. Explain advantages and disadvantages of inter corporate deposits.
6. Explain briefly “factoring” as a method of financing
7. Discuss the advantages and functioning of factoring arrangement.
Long Term Finance
1. What are the various sources of long-term finance?
OR Explain long-term sources of finance
2. Discuss features of equity as funding instrument. What are the advantages and disadvantages of equity?
3. What is preference capital? How is it different from equity? From company’s point of view, what is the advantage of issuing preference capital?
4. Explain how long term loan is obtained from the lenders. What are the security covers involved? Discuss favorable features of term loan.
5. Examine the pros and cons of long term financing by issue of equity and preference shares.
6. Write short notes on:
(a) Debentures. (b) Convertible debentures.
1. What does financial management mean? Explain the major finance function.
2. State in brief any three functions of finance manager.
3. Corporate houses today are increasingly moving towards wealth maximization from profit maximization. Comment on this movement.
4. The objective of financial management is wealth maximization and not profit maximization. Comment.
5. Discuss wealth maximization and shareholder value maximization as objectives of financial management.
6. Describe agency problem in achievement of objectives of financial management.
Analysis Of Financial Statements
1. What is balance sheet what are the basic concepts related to balance sheet.
2. Explain following concepts in context with financial statements:
a) Money measurement concept
b) Going concern concept
3. What is meant by matching concept while preparing income statement?
4. Discuss the income statement, its contents and concepts related to the same.
Ratio Analysis
1. Financial ratios may be classified according to their utility. How?
2. Discuss the significance of liquidity ratios. Explain with examples the interpretation of these ratios.
3. Discuss important profit margin ratios.
4. Illustrate importance and significance of turnover ratios.
5. What are liquidity ratios and what is their significance?
6. What are the limitations of ratio analysis?
7. What do leverage ratios indicate?
8. Explain the significance of capital gearing ratio.
Interpretation of Ratios
1. ‘Ratio Analysis’ is only a tool and not a final decision Discuss.
2. Ratio analysis is only a technique for making judgments and not a substitute for it. Comment.
3. What are the precautions to be taken in trend analysis?
4. What are common-size statements?
Funds Flow Statements
1. Explain the rationale of classification as sources and uses of funds, based on companies of successive year’s balance sheets.
2. What is the purpose of preparing funds flow statement based on changes in working capital?
3. What are the sources and uses of working capital?
4. Discuss the advantages of funds flow statement.
Cash Flow Statement
1. Explain the structure of cash flow statement.
2. What are funds flow statement and cash flow statement? How are they different from each other?
3. What are the uses of Cash Flow Statements?
4. Differentiate between cash flow and funds flow.
5. Cash flow is a special version of funds flow. Discuss.
Capital Structure
1. What are the characteristics of loan funds and equity funds?
2. Explain the methods of measuring cost of debt capital and cost of equity capital with illustrations (Nov 2001)
3. Why is cost of debt normally less than the cost of equity? Is it always so? (Nov 2002)
4. What is the meaning and significance of Weighted Average Cost of Capital? (Nov 2003)
5. Discuss Net Income Approach and Net Operating income Approach to capital structure.
6. What are the main propositions of traditional approach?
7. Explain Miller and Modigliani Position.
8. What is weighted average cost of capital?
Break Even and Leverage
1. What do you understand by the term’ financial break-even point’?
2. What is the relevance of Operating Leverage and Financial Leverage in taking business decisions?
3. Define operating leverage.
4. What do you understand by combined leverage?
5. Explain Margin of Safety.
Working Capital
1. What do you understand by gross working capital and net working capital?
2. Distinguish between permanent and temporary working capital.
3. What is operating cycle? How are its components calculated?
4. Compare usage of long-term and short-term funds for working capital.
5. What are the factors that determine working capital requirements?
6. Explain the concept of working capital. How is working capital affected by
(a) Sales (technology and manufacturing policy and
(b) price level changes?
7. Risk-return trade-off in working capital management. Discuss.
8. What is cash operating cycle?
Cash Management
1. What is cash budgeting? What is time horizon for it?
2. Distinguish between a cash budget and a cash flow statement?
3. How cash inflows can be improved or managed?
4. Discuss importance of Internet in cash management.
5. What are disadvantages of default in payment?
6. How and in which avenues surplus cash may be invested?
7. What are the motives of holding cash?
Receivables Management
1. What is the purpose of maintaining receivables?
2. What are the various costs associated with A/C receivables? (May 2003)
3. Credit policy relate to which dimensions and decisions?
4. Explain the steps involved in credit analysis in detail. (Nov 2001)
5. What are the mechanisms to monitor receivables? Write a short note on each of them.
6. What is delinquency cost and del credre commission? (May 2004)
Working capital finance
1. What is meant by “”Letter of credit”?
2. Explain why Letter of credit is less risky for a banker as compared to cash credit facility.
3. What is the meaning of following terms?
(a) Commercial Papers.
(b) Bills Discounting
4. Explain Inter Corporate Deposits
5. Explain advantages and disadvantages of inter corporate deposits.
6. Explain briefly “factoring” as a method of financing
7. Discuss the advantages and functioning of factoring arrangement.
Long Term Finance
1. What are the various sources of long-term finance?
OR Explain long-term sources of finance
2. Discuss features of equity as funding instrument. What are the advantages and disadvantages of equity?
3. What is preference capital? How is it different from equity? From company’s point of view, what is the advantage of issuing preference capital?
4. Explain how long term loan is obtained from the lenders. What are the security covers involved? Discuss favorable features of term loan.
5. Examine the pros and cons of long term financing by issue of equity and preference shares.
6. Write short notes on:
(a) Debentures. (b) Convertible debentures.
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