Examination Paper of
Financial Management
IIBM Institute of Business Management
IIBM Institute of Business Management
Subject Code-B-103
Examination Paper
Financial Management
MM.100
Section A: Objective Type & Short Questions (30 marks)
Part one:
Multiple choice:
I.Investment is the… (1)
a) Net additions made to the nation’s
capital stocks
b) Person’s commitment to buy a flat
or house
c) Employment of funds on assets to
earn returns
d) Employment of funds on goods and
services that are used in production
process
IIBM Institute of Business Management
IIBM Institute of Business Management
Subject Code-B-103
Examination Paper
Financial Management
MM.100
Section A: Objective Type & Short Questions (30 marks)
Part one:
Multiple choice:
I.Investment is the… (1)
a) Net additions made to the nation’s
capital stocks
b) Person’s commitment to buy a flat
or house
c) Employment of funds on assets to
earn returns
d) Employment of funds on goods and
services that are used in production
process
|
II.
|
Financial
Management is mainly
|
|
concerned
with...
|
(1)
|
a) All
aspects of acquiring and utilizing
financial resources for firms activities
b) Arrangement of funds
c) Efficient Management of every business
d) Profit maximization
III. The Primary goal of the financial
management is….. (1)
a. To maximize the return
b. To minimize the risk
c. To maximize the wealth of
owners
d. To maximize profit
IV. In his traditional role the finance
Manager is responsible for (1)
a. Proper utilization of funds
b. Arrangement of financial
resources
c. Acquiring capital assets of the
organization
d. Efficient management of capital
· This section consists of multiple choices and Short Notes type questions.
· Answer all the questions.
· Part one questions carry 1 mark each & Part two questions carry 5 marks each.
Examination Paper of Financial Management
IIBM Institute of Business Management
V.Market Value of the shares are decided by
(1)
a. The respective companies
b. The investment market
c. The government
d. Shareholders
financial resources for firms activities
b) Arrangement of funds
c) Efficient Management of every business
d) Profit maximization
III. The Primary goal of the financial
management is….. (1)
a. To maximize the return
b. To minimize the risk
c. To maximize the wealth of
owners
d. To maximize profit
IV. In his traditional role the finance
Manager is responsible for (1)
a. Proper utilization of funds
b. Arrangement of financial
resources
c. Acquiring capital assets of the
organization
d. Efficient management of capital
· This section consists of multiple choices and Short Notes type questions.
· Answer all the questions.
· Part one questions carry 1 mark each & Part two questions carry 5 marks each.
Examination Paper of Financial Management
IIBM Institute of Business Management
V.Market Value of the shares are decided by
(1)
a. The respective companies
b. The investment market
c. The government
d. Shareholders
|
VI.
|
The
only feasible purpose of financial
|
|
management
is
|
(1)
|
a. Wealth
maximization
b. Sales maximization
c. Profit maximization
d. Assets maximization
VII. Financial management process deals
with (1)
a. Investments
b. Financing decisions
c. Both a and b
d. None of the above
VIII. Agency cost consists of
(1)
a. Binding
b. Monitoring
c. Opportunity and structure
cost
d. All of the above
IX. Finance Function comprises
(1)
a. Safe custody of funds only
b. Expenditure of funds only
c. Procurement of finance only
d. Procurement & effective use
of funds
X.Financial management mainly focuses
on (1)
a. Efficient management of
every business
b. Brand dimension
c. Arrangement of funds
d. All elements of acquiring
and using means of financial
resources for financial
activities
Part Two:
1. What Is The Financial Management Reform? (5)
2. Why Was The FMR Introduced? (5)
3. What Changes Will The FMR Introduce? (5)
4. What Is Financial Management Information System (FMIS)? (5)
END OF SECTION A
Examination Paper of Financial Management
IIBM Institute of Business Management
Section B: Caselets (40 marks)
Caselet 1
Your employer, a mid-sized human resources management company, is considering
expansion into related fields, including the acquisition of Temp Force Company, an
employment agency that supplies word processor operators and computer programmers to
businesses with temporary heavy workloads. Your employer is also considering the
purchase of a bigger staff & McDonald (B&M), a privately held company owned by two
friends, each with 5 million shares of stock. B&M currently has free cash flow of $24 million,
which is expected to grow at a constant rate of 5%. B&M’s financial statements report
marketable securities of $100 million, debt of $200 million, and preferred stock of $50
million. B&M’s weighted average cost of capital (WACC) is 11%. Answer the following
questions
Questions
1. Describe briefly the legal rights and privileges of common stockholders. (20)
Caselet 2
Casino is a large electrical construction company having a turnover of Rs.100 crores per
annum. Since a few years the company has not been doing well in terms of profits. In order to
find out the reason, a group of independent auditors were deployed to examine the operations
of the company. The item they felt that needed closer attention was the budget control of new
construction work. The audit showed that most electrical designs for new construction were
carried out at the headquarters of the company by a project manager. In preparing a budget for
a new project, he checked the expenses for similar jobs in the past, then simply multiplied them
by various factors. The auditors found that during the past two years, most budgets were
greatly overestimated. Incidentally, it was about two years ago that the project manager was
given the primary responsibility for budgeting. In this role, he would submit his budget to the
Expenditure Control Committee, consisting of higher-level managers who had only a limited
interest in budgeting. It was to this committee that the project manager submitted requests for
additional money whenever needed. Most of the requests were approved.
The chief auditor felt that the project team tended to "expand" the time needed to complete
the task whenever the members thought the budget made it possible. In other words, they
"adjusted" their productivity to match the money allocated to the project.
The auditors noted that other contractors could do similar jobs for 20% less money.
They concluded that a new control procedure was needed.
· This section consists of Caselets.
· Answer all the questions.
· Each Caselet carries 20marks.
· Detailed information should form the part of your answer (Word limit 150 to 200 words).
Examination Paper of Financial Management
IIBM Institute of Business Management
Questions
1. What do you think of the budgeting process? (10)
2. What kind of control procedure should the auditors recommend? (10)
Section C: Applied Theory (30 marks)
1. Differentiate Between the Financial Management and Financial Accounting? (15)
2. Explain Briefly The Limitations of Financial Ratios? (15)
S-2-010619
· This section consists of Applied Theory Questions.
· Answer all the questions.
· Each question carries 15marks.
· Detailed information should form the part of your answer (Word limit 200 to 250 words).
END OF SECTION C
END OF SECTION B
b. Sales maximization
c. Profit maximization
d. Assets maximization
VII. Financial management process deals
with (1)
a. Investments
b. Financing decisions
c. Both a and b
d. None of the above
VIII. Agency cost consists of
(1)
a. Binding
b. Monitoring
c. Opportunity and structure
cost
d. All of the above
IX. Finance Function comprises
(1)
a. Safe custody of funds only
b. Expenditure of funds only
c. Procurement of finance only
d. Procurement & effective use
of funds
X.Financial management mainly focuses
on (1)
a. Efficient management of
every business
b. Brand dimension
c. Arrangement of funds
d. All elements of acquiring
and using means of financial
resources for financial
activities
Part Two:
1. What Is The Financial Management Reform? (5)
2. Why Was The FMR Introduced? (5)
3. What Changes Will The FMR Introduce? (5)
4. What Is Financial Management Information System (FMIS)? (5)
END OF SECTION A
Examination Paper of Financial Management
IIBM Institute of Business Management
Section B: Caselets (40 marks)
Caselet 1
Your employer, a mid-sized human resources management company, is considering
expansion into related fields, including the acquisition of Temp Force Company, an
employment agency that supplies word processor operators and computer programmers to
businesses with temporary heavy workloads. Your employer is also considering the
purchase of a bigger staff & McDonald (B&M), a privately held company owned by two
friends, each with 5 million shares of stock. B&M currently has free cash flow of $24 million,
which is expected to grow at a constant rate of 5%. B&M’s financial statements report
marketable securities of $100 million, debt of $200 million, and preferred stock of $50
million. B&M’s weighted average cost of capital (WACC) is 11%. Answer the following
questions
Questions
1. Describe briefly the legal rights and privileges of common stockholders. (20)
Caselet 2
Casino is a large electrical construction company having a turnover of Rs.100 crores per
annum. Since a few years the company has not been doing well in terms of profits. In order to
find out the reason, a group of independent auditors were deployed to examine the operations
of the company. The item they felt that needed closer attention was the budget control of new
construction work. The audit showed that most electrical designs for new construction were
carried out at the headquarters of the company by a project manager. In preparing a budget for
a new project, he checked the expenses for similar jobs in the past, then simply multiplied them
by various factors. The auditors found that during the past two years, most budgets were
greatly overestimated. Incidentally, it was about two years ago that the project manager was
given the primary responsibility for budgeting. In this role, he would submit his budget to the
Expenditure Control Committee, consisting of higher-level managers who had only a limited
interest in budgeting. It was to this committee that the project manager submitted requests for
additional money whenever needed. Most of the requests were approved.
The chief auditor felt that the project team tended to "expand" the time needed to complete
the task whenever the members thought the budget made it possible. In other words, they
"adjusted" their productivity to match the money allocated to the project.
The auditors noted that other contractors could do similar jobs for 20% less money.
They concluded that a new control procedure was needed.
· This section consists of Caselets.
· Answer all the questions.
· Each Caselet carries 20marks.
· Detailed information should form the part of your answer (Word limit 150 to 200 words).
Examination Paper of Financial Management
IIBM Institute of Business Management
Questions
1. What do you think of the budgeting process? (10)
2. What kind of control procedure should the auditors recommend? (10)
Section C: Applied Theory (30 marks)
1. Differentiate Between the Financial Management and Financial Accounting? (15)
2. Explain Briefly The Limitations of Financial Ratios? (15)
S-2-010619
· This section consists of Applied Theory Questions.
· Answer all the questions.
· Each question carries 15marks.
· Detailed information should form the part of your answer (Word limit 200 to 250 words).
END OF SECTION C
END OF SECTION B
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