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Ignou question papers 2020 -2021 | Important Questions || IGNOU Previous Year Question Paper | IGNOU announces the term-end exam date sheet before the IGNOU exam.
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Here we are providing Previous Years solved papers For M.com First year MCO 07: Financial Management for IGNOU students.
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MCO 07: Financial Management
JUNE 2020
Q1. (a) Explain profit maximization and wealth maximization objectives of the firm.
(b) Examine the inter-relationship among investment, financing and dividend decisions.
Q2. (a) What is Capital Budgeting? Briefly explain the steps involved in capital budgeting process.
(b) What are cash flows? How are they different from profit? What is their importance in capital budgeting decision?
Q3. Discuss the different approaches to the valuation of equity shares.
Q4. What is meant by inventory control? Explain the techniques of inventory control.
Q5. Following is the information of X and Y companies:
| Particulars | X (Rs. Lakhs) | Y (Rs. Lakhs) |
|---|---|---|
| Sales | 500 | 1000 |
| Variable Cost | 200 | 300 |
| Contribution | 300 | 700 |
| Fixed Cost | 150 | 400 |
| EBIT | 150 | 300 |
| Interest | 50 | 100 |
| PBT | 100 | 200 |
You are required to calculate (a) operating leverage (b) financial leverage of both the companies and (c) comment on their relative position in respect of risk.
Q6. (a) What are the important factors to be considered in planning a capital structure of a firm?
(b) Explain the M & M view on corporate dividend decisions. What are its basic assumptions?
Q7. (a) What is the importance of determination of cost of capital?
(b) Shipra Ltd. issues Rs. 100 face value preference shares with a dividend of 12% repayable after 10 years. The net amount realized per share is Rs. 92. Calculate the cost of preference share capital.
Q8. What is cash budget? What is the method of preparing cash budget and what are its advantages?
Q9. Write notes on any two of the following:
(a) Capital asset pricing model
(b) Concept of risk and return
(c) Trade credit
(d) Lease financing.
MCO 07: Financial Management
Dec 2019
Q1. (a) How does the financial decision making involve risk-return trade-off? Explain.
(b) How is the goal of wealth maximization a better criterion than profit maximization? Discuss.
Q2. A company has an investment opportunity costing Rs.50,000 with the following expected cash inflows:
| Year | Inflows(Rs.) | PVF(10%) |
|---|---|---|
| 1 | 70,000 | 0.989 |
| 2 | 70,000 | 0.826 |
| 3 | 70,000 | 0.731 |
| 4 | 70,000 | 0.653 |
| 5 | 70,000 | 0.621 |
| 6 | 80,000 | 0.564 |
| 7 | 10,000 | 0.513 |
| 8 | 16,000 | 0.467 |
| 9 | 10,000 | 0.424 |
| 10 | 4,000 | 0.386 |
Q3. Find out the net present value and profitability index by using 10% as rate of discount.
(a) Discuss the factors influencing the capital structure of a firm.
(b) Why is the debt cheapest source of finance for a profit making firm? Discuss by giving examples.
Q4. What is Net Operating Income (N01) approach? What are its assumptions and implications?
Q5. The following is the information of firm:
Sales 5,00,000
Variable Cost 3,50,000
Fixed Cost 1,00,000
Debt (10% ) 2,50,000
Calculate the financial leverage, operating leverage and combined leverage. The firm wants to double its earnings before interest and tax (EBIT). How much of a rise is needed in sales on a percentage basis?
Q6. (a) What is factoring? What are its functions?
(c) What is Securitisation? What are the functions of special purpose vehicle?
Q7. What are the objectives of inventory management? How are they similar to objectives of cash management?
(b) Explain the Economic Order Quantity (EOQ) model of inventory control.
Q8. What is credit policy? Discuss its objectives and variables.
Q9. Write short notes on any two of the following:
(a) Foreign Exchange Market
(b) CAPM
(c) Types of Costs
(d) Venture Capital
MCO 07: Financial Management
June 2019
Q1.(a) Examine the interrelationship among the investment, financing and dividend decisions.
(b) Distinguish between systematic risk and unsystematic risk with examples.
Q2. A company is considering a new project and the following is its data:
Capital Rs. 2,00,000 Depreciation 20% p.a.
Forecasted annual income before charging depreciation for five years is as given below:
On the basis of above information, calculate and compare the following methods:
(a) Payback period
(b) Accounting rate of return
Q3. (a) Critically examine the MM approach-I to capital structure.
(b) Discuss the determinants of dividend payout ratio.
Q4. Explain the different types of marketable securities and discuss their role in cash management.
Q5. The following is the information of two firms X Ltd. and Y Ltd.
| Particulars | X Ltd. | Y Ltd. |
|---|---|---|
| Sales | 50,000 | 100,000 |
| Variable Cost | 20,000 | 30,000 |
| Fixed Cost | 15,000 | 40,000 |
| Interest | 5,000 | 10,000 |
You are required to calculate different leverages: financial, operating and combined leverage for both the firms and also comment on their risk position.
Q6. (a) What is safety stock? How is it determined? What is the role of safety stock in inventory management?
(b) Discuss the objectives of inventory management.
Q7. What is lease? How is it different from Hire-Purchase? What are its advantages and limitations?
Q8. (a) Write a note on Term Loan.
(b) Discuss the advantages and disadvantages of equity financing.
Q9. Write short notes on any two of the following:
(a) Project Financing Arrangement
(b) Capital market
(c) NPV (Net Present Value)
(d) ABC analysis of inventory control
MCO 07: Financial Management
Dec 2018
Q1. What is financial management? Explain the basic finance functions of financial management. How do they evolve risk-return trade-off?
Q2. What do you understand by DCF techniques of capital budgeting? Explain with suitable examples.
Q3. Explain the various approaches that are used in valuation of equity shares.
Q4. What is 'Arbitrage'? Explain 'Arbitrage pricing theory' and the assumptions of this theory.
Q5. (a) Discuss the factors that influence the capital structure of a firm.
(b) State MM Proposition I and explain its relevance.
Q6. a) How does credit policy influence (1) Sales, (2) Investment in Receivables and (3) Bad debts?
(b) What are carrying costs and ordering costs and why are they important in inventory management?
Q7. Give an overview of project finance and distinguish it from corporate finance.
Q8. ‘Nidhi chemicals’ is operating at a sales level of Rs. 400 Lakh. It has a variable cost of
Rs. 250 Lakh (62% of sales) and fixed expenses of Rs. 100 Lakh. Calculate operating leverage.
What changes in profit do you expect if sales (a) increase by 5% and (b) decrease by 5%.
Show the working also.
(b) Explain the significance of operating leverage.
Q9. Write an explanatory note on any two of the following:
(a) Capital Rationing
(b) Capital Market
(c) Benefits and costs of lease financing
(d) Cash Management
MCO 07: Financial Management
JUNE 2018
Q1. (a) Discuss the three important decision making areas of financial management.
(b) What do you understand by 'risk' and 'return'? What are the different measures of return? Explain.
Q2. (a) "Capital budgeting expenditure is usually an expenditure on a project". Elucidate how do you classify different kinds of projects?
(b) What is NPV method? How do you assess the desirability of any project based on this method?
Q3. (a) While computing cash flows of a project how do we treat the following items.
(i) Interest on debt
(ii) Salvage value
(iii) Taxes
(b) What is weighted average cost of capital?
Explain with example.
Q4. (a) What is dividend? Explain why firms pay dividend.
(b) Explain the concept and rationale of 'share buy-back'.
Q5. (a) What is the need for holding inventory? What are the costs involved in holding inventory?
(b). what is cash forecasting and how does it help in improving cash management?
Q6. (a) Calculate Gross Working Capital and Net Working Capital from the information given
Below:
| Sn | Particulars | Amount |
|---|---|---|
| 1 | Raw Material | 800,000 |
| 2 | Work in progress: Raw Material Direct Material Overheads |
380,000 70000 700,000 |
| 3 | Finished Goods Stock | 900,000 |
| 4 | Debtors | 20,00,000 |
| 5 | Cash at Bank | 300,000 |
| 6 | Creditors | 400,000 |
| 7 | Wages Unpaid | 20,000 |
(b) Explain the different forms of informal credit arrangements.
Q7(a). Techno Ltd issues Rs. 100 face value preference shares with a dividend of 12% repayable after 10 years. The net amount realized per share in Rs. 92. Calculate cost of preference capital.
(b). What are the functions of a 'Forex market'?
Q8. What are bonds? Explain the different types of bonds and their advantages.
Q9. Write explanatory note on any two of the following:
(a) Lease financing
(b) Role of stock exchanges
(c) Financial Leverage
(d) Project financing arrangements
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