Ms-41 Question bank (11)
Ms-41 Question bank
Ms-41 dec 2007
Written by sales@mbaonlinepapers.com sales@mbaonlinepapers.comMS-41 Dec-2007
MS-41 : Working capital management
1. Explain the concepts of gross and net working capital.explain how would you plan the working capital requirement af a firm in the shorl terrn ?
2. Explain the Bierman-McAdams model that helps the financial managers in funds management of a firm. Also discuss the models which guide him in deciding the process of switching funds from marketable securities to cash and vice versa.
3 a) What are lhe basic reasons for which firms hold cash and marketable securities ?
b) Describe the various factors, bath internal and external, that afiect thc flow of cash
4- Describe the system of compulsory loan component in bank credit, as enforced by the Reserve Bank of India. Discuss the salient features of a svndicated credit.
5. What are lhe methods suggested to commercial banks RBI for assessing the working capltal requiremenls of borrowers ?
6- Explain the main methods of granting credit for working capital purposes prevalent in India.
7. Liquidity of an enterprise can be studied in two ways, namely technical liquidity and operational liquidity." Discuss these two methods of liquidity measurement
in detail and also point out the differences between the two.
8. What are lhe factors that determine the liquidity position of an undertaking ? Explain the effects of liquidity on a business enterprise.
9. Wrile short notes on any four of the followins ,
{a} Statutory liquidity ratio
(b) Commitment charge
{c) Return on Assets
{d) Factoring
(e) Collateral
(f) Bill discounting
Ms-41 dec 2008
Written by sales@mbaonlinepapers.com sales@mbaonlinepapers.comMS-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
Ms-41 dec 2009
Written by sales@mbaonlinepapers.com sales@mbaonlinepapers.comMS-41 Dec-2009
MS-41 : Working capital management
1. As the difference between the cost of short term financing and long term financing becomes smaller, which financing plan aggressive as conservative becomes more attractive ? Would the aggressive or conservative approach be preferable if the costs were equal ? Why ?
2(a) Explain the role of Cash Forecasting in cash management. Describe briefly any two methods of cash forecasting.
(b) Explain the Miller-Orr model with the help of a suitable example.
3. Discuss the different methods of creating a charge over the assets of the borrower which could be used by banks for safeguarding their interests.
4. Distinguish between the following :
a) Permanent working capital and variable working capital.
b) Options and warrants.
c) VED Analysis and F-S-N Analysis.
d) Public deposits and certificate of deposits.
5. Alpha company's present annual sales amount to Rs. 30 lacs at sale price of Rs. 12 per unit. Variable costs are Rs. 8 per unit and fixed costs amount to Rs. • 2.50 lacs per annum. Its present credit period is one month which is proposed to be extended to eithër 2 or 3 months, whichever appears to be more profitable. The following estimates are made for the purpose :
|
Credit policy |
1 month |
2 months |
3 months |
|
Increase in sales (%) |
Nil |
8 |
30 |
|
% of bad debts to sale |
1 |
3 |
6 |
Fixed cost will increase by Rs. 50,000 annually after any increase in sales above 25% over the present level. The company requires a pre tax return on investment of at least 20% for the level of risk involved. What will be the most rewarding credit policy in case of Alpha company under the above circumstances ?
6. (a) What do you understand by Commercial Paper ? Explain the important guidelines
issued by Reserve Bank of India for the issuance of Commercial Paper.
(b) What is the meaning of the term factoring ? Explain its significance and mechanism and distinguish between with recourse factoring from without recourse factoring.
7. What do you understand by Trade Credit ? Is Trade Credit a free of cost source of financing working capital requirements ? Give reason. Discuss the different factors that determine the availability of Trade Credit to a firm.
8. Write short notes on any four of the following :
a) Decision tree model
b) Selective credit controls
(c) Gross profit ratio
d) Baumol model
e) C's to determine creditworthiness of a customer
(f) Euro Currency Market
