Most Important Theory Questions of
Financial Management
(*) means question is repetitive
(**) means question is very important
Scope and Objectives of Financial management
Q1:- Functions of finance manager.
Q2:- (*) Discuss the functions of chief financial officer.
Q3:- Inter-relationship between investment, financing and dividend decisions. Q4:- (**) Explain as to how the wealth maximization objective is superior to the profit maximization objective.
Q5:- (*) Explain the limitation of profit maximization principle of the firm. Q6:- Discuss the changing scenario of Financial management in India. Q7:- Difference between Financial Management and financial accounting.
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Financial Analysis & planning
Q1:- Distinguish between fund flow statement and cash flow statement. Q9:- Explain the limitations financial ratios.
Q2:- Discuss any three ratios computed for investment analysis Q3:- Discuss the financial ratio for evaluating company performance on operating efficiency and liquidity position aspects.
Q4:- (*) Explain the need of debt-service coverage ratio.
Q5:- What is quick ratio? What does it signify?
Q8:- How is return on capital employed calculated? What is its significant? Q6:- What do you mean by stock turnover ratio and gearing ratio? Q7:- (*) Diagrammatically present the DU PONT chart to calculate return on equity.
Concept of Working Capital
[No theory question have been asked]
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Cash/ Treasury management
Q1:- Write short note on Followings
(a) (*)Different kinds of float with reference to management of cash. (b) (*)William J Baumal vs. Miller-Orr cash management model (c) (**) Function of treasury department.
(d) Concentration banking
(e) Lock Box system
Management of Receivables
Q1:- Write short note on the following :
(a)
(**)Factoring
(b)
Commercial paper
(c)
Deep discount bond vs. Zero coupon bonds
Q2:- Briefly explain the meaning and importance of crediting rating. Q3:- Explain the importance of trade credit and accrual as source of working capital. Q4:- Explain the ageing schedule in the context of monitoring of receivables. Q5:- Explain the principle of trading on equity.
Q6:- Explain briefly the accounts receivable systems.
Cost of capital & Capital-Structure
Q1:- (*)State assumption of Modigliani and miller approach to cost of capital Q2:- (*) Discuss the major considerations in capital structure planning Q3:- (*) What is optimum capital structure? Explain.
Q4:- Discuss the dividend price approach and earning price approach to estimate cost of equity capital.
Q5:- Explain the assumption of net operating income approach (NOI) theory of capital structure. Q6:- Discuss the cost of debt equity or EBIT-EPS indifference point while determining the capital structure of accompany.
Q7:- What do you understand by weighted average cost of capital? Q8:- Explain arbitrage process under MM approach.
Q9:- Explain economic value added (EVA).
Q10:- Explain the principle of trading on equity.
Business Risk, Financial Risk and Leverage
Q1:- Discuss the impact of financial leverage on shareholders wealth by using return on-asset (ROA) and return on-equity (ROE) analytic framework.
Q2:- Discuss the relationship between the financial leverage and firm’s required rate of return to equity shareholder as per Modigliani and miller proposition II. Q3:- (*) Difference between Business risk and Financial risk.
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Capital Budgeting and Time Value of Money
Q1:- (*) Explain the relevance of time value of money in financial decision Q2:- Distinguish between Net present value and internal rate of return. Q3:- Discuss the need for social cost benefit analysis.
Q4:- Decision tree analysis is helpful in managerial decisions. Explain with an example. Q5:- Discuss the need for social cost benefit analysis.
Q6:- Define modified internal rate of return method.
Q7:- Explain the multiple internal rate of return.
Q8:- Explain the concept of discounted pay back period.
Q9:- Explain the following terms.
(a) Desirability factor.
(b) Replacement of machine
Type of Financing
Q1:- Write notes on:
(a) (**)Venture Capital financing
(b) (**)Seed capital assistance
(c) Bridge finance.
(d) Debt Discount Bonds.
(e) Ploughing back of profits
(f) Leverage lease.
(g) Concept of closed and open ended leased
(h) Credit rating
(i) Euro issue
(j) Promoters’ contribution.
(k) Packing credit
(l) Post shipment loan
Q2:- What is debt securitization? Explain the basic debt securitization process. Q3:- Discuss the feature of secured premium notes (SPN).
Q4:- Discuss the advantages of preference share capital as an instrument of raising funds.
International Financing
Q1:- Write short notes on the following
(a) Euro convertible bonds
(b) American Depository receipt vs. Global Depository Receipts (c) (*)American Depository receipts
(d) (*)Concept of Indian depository receipts
Q2:- Explain briefly the features of External Commercial Borrowing (ECB). Q3:- Name the various financial instruments dealt with in the international market.
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