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ACCOUNTING AND FINANCE FOR MANAGERS



POST GRADUATE DIPLOMA IN FINANCIAL


MARKET PRACTICE


Term-End Examination


June 2010


MS-4: ACCOUNTING AND FINANCE FOR MANAGERS



Time: 3 hours                                                                                  Maximum Marks: 100


                                                                                                                  ( Weighting 70%)


 


Note :             Attempt any five questions. All questions carry equal marks. Use of


                     Calculator is allowed






  1. "In managing cash, the finance manager faces the problem of compromising the conflicting goals of liquidity and profitability". Comment on this statement. How would you determine the optimum cash balance in a business organisation?


 




  1. What is meant by appropriate capital structure? Discuss the determinants and features of an appropriate capital structure for a corporate body.


 




  1. (a) How is a statement of changes in working capital prepared for Fund Flow


     Analysis'?


      (b) How is 'cash from operating activities' calculated in cash flow analysis?





  1. Write notes on:



  • Going concern.

  • Return on investment.

  • Management Accounting.

  • Capital rationing.


 




  1. Explain differences between:



  • Prime cost and factory cost.

  • First in, First out and Last in, First out methods of inventory valuation.

  • Fixed budget and flexible budget.

  • Contribution and margin of safety.


 




  1. Discuss the features of accounting information which can be generated from accounting records. How do different users use this information?


 




  1. (a) Following information is available for a company for January and February



                                January               February


Sales (Rs.)                38 lakh                65 lakh


Profits (Rs.)                 -                       3 lakh


Loss (Rs.)                  2.4 lakh              -


Compute:  (i) Break-even sales volume


                (ii)Profit or loss at Rs. 46 lakh sales


                (iii)Sales to earn a profit of Rs. 5 lakh.


(b) Calculate Direct Material Cost Variances Direct Material usage variance and Direct Material Price Variance from the following information:


Finished production during the period                    1000 units


Opening Stock of material                                    1000 kg.


Closing Stock of material                                     2000 kg.


Value of material purchased                                Rs. 1 lakh


Standard rate of material                                Rs. 20 per kg.


Standard quantity of material per unit


of finished product                                                2 kg.


Quantity of material purchased                         4000 units





  1. From the following information draw up a balance sheet:


Gross profit ratio 20%, liquidity ratio: 1.5


Reserve: Share Capital 0.5: 1


Networking Capital Rs. 30 Lakh.


Current ratio 2.5, fixed asset turnover ratio: 2 times


Average Debt collection period: 2 months,


Stock turnover ratio: 6 times (cost of sales/closing stock)


Fixed Asset: Shareholders Net worth 1: 1



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