MCO-7: Financial Management

Question No.1. (a) “ Financial Management is more than procurement of funds.” Explain.

(b) How is wealth maximization a better criterion than profit maximization?

Question No.2. (a) What is capital budgeting decision? Why is it significant for a firm?

(b) Explain the features of an appropriate capital structure.

Question No.3. (a) Define cost of capital. Explain its relevance in financial decision making of a firm.

(b) Explain different approaches to the computation of cost of equity capital.

Question No.4. From the following information of Company ‘A’ & Company ‘B’, compute (1) Operating leverage (2) financial leverage and (3) combined leverage.

Particulars	Company A (Rs.)	Company B (Rs.)
Equity Capital	6,00,000	3,50,000
12% Debenture	4,00,000	6,50,000
Output per annum (in units)	60,000	15,000
Selling Price per unit	30	250
Fixed per annum	7,00,000	14,00,000
Variable Cost per unit	10	75

Question No.5. (a) Discuss the factors affecting the dividend policy of a company.

(b) Explain the methods of monitoring receivables.

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