M.B.A.

DEGREE EXAMINATION, JUNE 2010 First Semester BA9222 FINANCIAL MANAGEMENT (Regulation 2009) Time : Three hours Maximum : 100 Marks Answer ALL Questions PART A (10 2 = 20 Marks) 1. How is the term finance more comprehensive than money management? 2. How would you have a fresh look at the finance function in business? 3. What is capital rationing? State the principles of capital rationing. 4. What are the components of a capital expenditure management programme? 5. State the advantages of trading on equity. 6. What you mean by an optimal capital structure? 7. State the different types of working capital. 8. How are receivables forecasted? 9. State the various features of term loans. 10. Define the term Venture Capital. PART B (5 16 = 80 Marks) 11. (a) Financial Management is the appendage of the finance function. Comment. Or (b) Discuss fully the organization of the finance functions in a business. Question Paper Code: J6509 132 132 132 J6509 2 12. (a) State the different kinds of capital budgeting proposals. How would you rank them for the purpose of their selection? Or (b) Someshwar industries limited is considering the purchase of a new machine which would carry out some operations, at present being performed by hands, the two alternatives models under consideration are complex and shrilex. The following information is available in respect of both models Complex Shrilex Estimated life in years 10 12 Cost of machines Rs. 6,00,000 Rs. 10,00,000 Estimated savings in scrap p.a. Rs. 40,000 Rs. 60,000 Additional cost of supervision p.a. Rs. 48,000 Rs. 64,000 Additional cost of maintenance p.a. Rs. 28,000 Rs. 44,000 Cost of indirect material p.a. Rs. 24,000 Rs. 32,000 Estimated savings in wages (i) Wages per worker p.a. Rs. 2,400 Rs. 2,500

(ii) No. of workers p.a. not required Rs. 150 Rs. 200 Using method of payback period, suggest which should be purchased. Ignore tax. 13. (a) Calculate financial leverage and operating leverage under situations A and B financial plans I and II respectively from the following relating to the operations and capital structure of ABC ltd. Installed capacity 1,000 Units Actual production and sales 800 Units Selling price per unit Rs. 20 Variable cost per unit Rs. 15 Fixed costs : Situation A Rs. 800 Situation B Rs. 1,500 Capital structure : Financial plan I II Equity Capital Rs. 5,000 Rs. 7,000 Debt Rs. 5,000 Rs. 2,000 Or (b) Explain the approach of weighted average cost of capital and state its limitations. 14. (a) Discuss the factors determining working capital. Or (b) A corporation has presently no safety stock of raw materials of orders 30,000 units every 30 days. Due to recent fluctuations in usage, the company finds it necessary to establish an optimal safety stock. The probability distribution for inventory usage is as follows : Usage (in units) Probability 27,000 0.04 28,000 0.07 29,000 0.17 30,000 0.32 31,000 0.20 32,000 0.10 33,000 0.06 34,000 0.04 It takes 2 days to place an order and receive delivery. The average monthly carrying cost is Re. 1 per unit and the stock outs are estimated to cost Rs. 3 per unit. You are required to find out the optimal safety stock. 15. (a) Bring out the relationship of term financing with the capital market.

Or (b) Discuss the various sources of long-term finance of Indian companies.

M.B.A. DEGREE EXAMINATION, NOVEMBER/DECEMBER 2010 Second Semester BA 9226 APPLIED OPERATIONS RESEARCH FOR MANAGEMENT (Regulation 2009) Time : Three hours Maximum : 100 Marks Answer ALL questions PART A (10 2 = 20 Marks) 1. List the scope of applications of OR techniques. 2. What is sensitivity analysis? 3. List the methods used to arrive at an initial basic feasible solution in a transportation model. 4. How does a travelling salesman problem differ from a routine assignment model? 5. Define zero sum game. 6. What is a mixed integer programming problem? 7. Define simulation. 8. What is meant by EOL? 9. What is the significance of r in a replacement model? 10. List the applications of queuing models. PART B (5 16 = 80 Marks) 11. (a) A person requires 10, 12, and 12 units of a dry and liquid combination of chemicals A, B and C respectively for his garden. A liquid product contains 5, 2 and 1 units of A, B and C respectively per jar. A dry product contains 1, 2 and 4 units of A, B and C per carton. If the liquid product sells for Rs. 3 per jar and the dry product sells for Rs. 2 per carton, how many of each should he purchase in order to minimize the cost and meet the requirement? (16) Or (b) Maximise z = z y x 3 2 5 + Subject to: 0,, 53 343 222 >= <= + <=

>= + zyx zy yx zyx (16) 12. (a) Find the minimum cost distribution plan to satisfy demand for cement at three construction sites from available capacities at the three cement plants given the following transportation costs (in Rs) per ton of cement moved from plants to sites. From To construction sites Capacity (tons / month) 123 P1 300 360 425 600 P2 390 340 310 300 P3 255 295 275 1000 Demand (tons/month) 400 500 800 Or (b) A company is faced with the problem of assigning 4 machines to 6 different jobs (one machine to one job only). The profits are estimated as follows. Solve the problem to maximize the total profits. Job Machine ABCD 13626 27144 33858 46437 55243 65764 13. (a) Solve Max z = y x 4 + subject to : 2x + 4y < = 7, 5x + 3y < = 15, where x and y are positive integers. Or 132 132 132 96515 3 (b) Solve the following game whose payoff matrix is given below. Player B Player A B1 B2 B3 B4

A1 5 10 9 0 A2 6 7 8 1 A3 8 7 15 2 A4 3 4 -1 4 14. (a) The annual demand for a product is 100000 units. The rate of production is 200000 units per year. The set-up cost per production run is Rs. 5000 and the variable production cost of each item is Rs 10. The annual holding cost per unit is 20% of its value. Find the optimum production lot size and the length of the production run. Or (b) A manager has a choice between (i) A risky contract promising Rs 7 lakhs with probability 0.6 and Rs. 4 lakhs with probability 0.4 and (ii) A diversified portfolio consisting of two contracts with independent outcomes each promising Rs 3.5 lakhs with probability 0.6 and Rs. 2 lakhs with probability 0.4. Using the EMV criteria suggest a contract. 15. (a) There are two clerks in a university to receive fees from the students. If the service time for each student is exponential with mean 4 minutes and if the boys arrive in a Poisson fashion at the counter at the rate of 10 per hour, determine (i) The probability of having to wait for service (8) (ii) The expected percentage idle time for each clerk. (8) Or (b) The probability Pn of failure just before age n is shown below for 1000 bulbs. If the individual replacement costs Rs. 1 and the group replacement costs Rs. 0.3 per item, find the optimal replacement policy. n:12345 Pn : 0.3 0.1 0.1 0.2 0.3

M.B.A. DEGREE EXAMINATION, JUNE 2010 Second Semester BA 9226 APPLIED OPERATIONS RESEARCH FOR MANAGEMENT

(Regulation 2009) Time : Three hours Maximum : 100 Marks Answer ALL Questions PART A (10 2 = 20 Marks) 1. Write down the standard form of a LP problem. 2. List the applications of operation research model. 3. Distinguish between a transportation problem and assignment problem. 4. What do you understand by Travelling Salesman Problem? 5. Define Mixed strategy in a game. 6. What is meant by mixed integer programming problem? 7. Name the inventory control systems adopted in practice. 8. Define simulation. 9. What is meant by group replacement policy? 10. List the components of a queueing system. PART B (5 16 = 80 Marks) 11. (a) A firm produces three products. These products are processors on three different machines. The time required to manufacture one of each three products and the daily capacity of the three machines are given below : Machine Time per (minutes) Product Machine Capacity 1 2 3 Minutes/day M1 4 5 4 460 M2 5 - 4 480 M3 4 6 - 450 It is required to determine the daily number of units to be manufactured for each product. The profit per unit for product 1, 2 and 3 is Rs. 50 Rs. 40 and Rs. 70 respectively. It is assumed that all the products produced are consumed in the market. Formulate a LP model maximize the daily profit also determine the optimum production. (16) Or (b) (i) Find the maximum value of (12) 2132xxz+= Subject to : . y graphicall solve , 20 0 0 12 3 30 1 21 2 2 21

 + x xx x x xx (ii) Write the dual for the problem (4) Minimize 4 3 2 1 3 2 x x x x z + + = Subject to : 0,,, 10 2 20 3 2 15 3 2 4321 4321 321 321 +++ =++ ++ xxxx and x x x x xxx xxx 12. (a) Find the basic feasible solution of the following transportation problem by VAM. Also find the optimal transportation plan (16) 1 2 3 4 5 Available A 4 3 1 2 6 80 B 5 2 3 4 5 60 C 3 5 6 3 2 40 D 2 4 4 5 3 20 Required 60 60 30 40 10 200 Total Or (b) (i) Explain transshipment model. (6) (ii) A company has surplus truck in each of the cities A,B,C,D and E and one deficit truck in each of the cities 1,2,3,4,5 and 6. The distance between the cities in kilometers in shown in matrix below. Find the assignment to trucks from cities in surplus to cities in deficit so that the total distance covered by vehicle is minimum. (10) 123456 A 12 10 15 22 18 8 B 10 18 25 15 16 12 C 11 10 3 8 5 9

D 6 14 10 13 13 12 E 8 12 11 7 13 10 13. (a) (i) Solve the following 2 n game by method of sub - game (8) Player B B1 B2 B3 Player A A1 1 3 11 A2 8 5 2 (ii) Reduce the following game by dominance property and solve it (8) Player B 12345 I13274 Player A II 3 4 1 5 6 III 6 5 7 6 5 IV 2 1 6 3 1 Or (b) Explain the branch and bound and cutting plane algorithms for pure and mixed integer programming problem. (16) 14. (a) (i) Explain decision making under uncertainty. (4) (ii) A company has a demand of 12,000 unit / year for an item and it can product 2000 such items per month. The cost of one setup is Rs. 400 and the holding cost /unit/ month is Rs. 50. Find the optimal lot size and the total cost per year, assuming cost of one unit as Rs.5. Also find the maximum inventory, manufacturing time and total time. (12) Or (b) (i) Discuss the application of simulation techniques for decision making. (4) (ii) The demand for an item uniform at a rate of 50 units per month. The fixed cost is Rs. 80 each time a production is made. The production cost is Rs. 5 per item and the inventory carrying cost is Rs. 0.50 per item per month. If the shortage cost is Rs. 2.5 per item per month, determine how often to make a production run and of what size it should be? (12) 15. (a) Ships arrive at a port at the rate of one in every 4 hours with exponential distribution of inter arrival times. The time as ship occupies a berth for unloading has exponential distribution with an average of 10 hours. If the average delay of ships waiting for berths is to be kept below 14 hours, how many berths should be provided at the port? (16) Or (b) The cost of machine is Rs. 16,100 and its scrap value is Rs. 1,100 the maintenance costs found from experience are as follows Year : 1 2 3 4 5 6 7 8 Maintenance : 300 450 600 800 100 1200 1500 2000

When should the machine, be replaced. (16)

M.B.A. DEGREE EXAMINATION, NOVEMBER/DECEMBER 2010 Second Semester BA 9222 FINANCIAL MANAGEMENT (Regulation 2009) Time : Three hours Maximum : 100 Marks Answer ALL questions PART A (10 2 = 20 Marks) 1. What do you understand by time value of money? 2. What are the functions of finance? 3. What are the needs of capital budgeting? 4. What is meant by inflation? 5. What is operating leverage? 6. What are the different types of dividend that can be paid by a company? 7. Name the popular methods available for forecasting working capital requirements. 8. List out any four important working capital ratio? 9. What do you mean by debenture? 10. What do you understand by venture capital funds? PART B (5 16 = 80 Marks) 11. (a) What are the main functions of financial management? Explain. Or (b) List out and explain the methods of measuring the changes in the value of money. 12. (a) What do you mean by economics of capital budgeting? Explain. Or (b) How is the cost of different types of capital measured? Illustrate and explain. 13. (a) Explain the consideration involved in evolving a balanced capital structure of a corporation? Or (b) What are the various factors influencing dividend policy? Explain. 14. (a) Explain the various determinants of working capital in a concern. Or (b) Explain the importance and scope of accounts receivable management. 15. (a) What are the functions of Indian capital and stock market? Explain briefly. Or

(b) Write short notes on the following : (i) Hire purchase (8) (ii) Long term sources of finance. (8)