MS-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