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Showing posts with label ICWAI TEST PAPERS. Show all posts
Showing posts with label ICWAI TEST PAPERS. Show all posts

Paper-18 Business Valuation Management TEST PAPERS for REVALIDATION DOWNLOAD




PAPER-18
BUSINESS VALUATION MANAGEMENT
REVALIDATION TEST PAPER-RV/18/BVM/2010
(Answer Question 1 and any FIVE from the remaining)
PART A


1(a) Define in brief
(i) Intellectual Capital
(ii) Brand
(iii) Dividend Yield
(iv) DCF Analysis
(v) Energy Conservation 3*5
(b) State whether each of the following statements is True or False
(i) The return estimated from CAPM provides the WACC of a company
(ii) Value Gap is the difference between the synergy value and purchase
price.
(iii) Brand do not influence Customer Demand.
(iv) The provisions of Accounting Standard do not impact of mergers of
companies.
(v) Intrinsic Value and market price of equity shares are always equal.
2*5

PART B


2(a) Briefly explain the various steps in the valuation of a Brand. 8
(b) What is Human Resource Accounting? What are its benefits? Briefly discuss the two
methods of its measurement? 7


3.(a) Why do many mergers fail?
(b) Why do companies want to measure Intellectual capital?
© What factors are selected for selection of a target in a business acquisition strategy?
5+5+5


4(a) A firm had paid dividend at Rs. 2 per share last year. The estimated growth of the
dividends from the company is estimated to be 5% p.a. Determine the estimated market
price of the equity share if the estimated growth rate of dividends—
(i) rises to 8% and
(ii) falls to 3%.
Also, find out the present market price of the share given that the required rate of return
of the equity investors is 15.5%.
(b) A company is considering, raising Rs. 100 lakh by one of the two alternative methods
viz; 14 per cent institutional term loan and 13% non-convertible debentures. The term
loan portion would attract no major incidental cost. The debentures would have to be
issued at a discount of 25% and would involve Rs. 1,00,000 as cost of issue. Advise the
company as to the better option based on the effective cost of capital in each case.
Assume a tax rate of 35% 8+7.


5(a)Write in brief .about Financial Synergy and Operational Synergy
(b) What are the causes of horizontal merger? 8+7


6. The following are the details of the two merged firms, Nylo Ltd. And Xylo Ltd :
(Rs in Lakhs)
Nylo Ltd. Xylo Ltd.
Revenues 4,400 3,125
Cost of Goods Sold 87.5% 89.0%
(excluding depreciation)
Depreciation 200 74
Tax rate 35% 35%
Working capital 10% of Revenue 10% of
Revenue
Market value of Equity 2000 1300
Outstanding Debt 160 250
Both firms are expected to grow 5% a year in perpetuity. Capital spending is expected to
be offset by depreciation. The beta for both firms are rated BBB, with an interest rate on
their debt of 8.5% (the risk-free rate is 7%)
As a result of the merger, the combined firm is expected to have a cost of goods sold of
only 86% of total revenue. The combined firm does not plan to borrow additional; debt.
(a) You are required to estimate the value of the combined firm, with no synergy,
(b) Estimate the value of the combined firm, with synergy. 15


7(a) Explain what is Tobin’s Q? What are the circumstances when it is most useful?
(b)What are the limitations of EVA? 10+5


8.Write short notes of the following
(a) Categories of Financial Assets
(b) NRV of Inventories
(c) Fair Market Value of Intangible Assets
5+5+5




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Paper-17 Cost Audit & Operational Audit TEST PAPERS for REVALIDATION DOWNLOAD




PAPER-17
COST AUDIT AND OPERATIONAL AUDIT
REVALIDATION TEST PAPER-RV/17/COA/2010
(Answer Question 1 and 5 and any TWO each from the remaining questions of Section I & II)
SECTION I


1.State whether the following statements are True or False
(i) Cost Audit is statutorily recognized form of audit in most of the country.
(ii) Royalty is an item of Cost of Production under the Cost Accounting Record Rules.
(iii) A nomination director is covered by the definition of ‘Related Party’
(iv) The Cost Auditor is appointed by the Board of Directors subject to the approval of
the Central Governnment
(v) Dividend can be declared out of Revaluation Reserve.
(vi) Cost Auditor cannot be appointed as internal auditor of the same company.
(vii) Presently cost audit report should be sent to the Department of Company Affairs
after binding.


2(a) Define Cost Audit & State it purposes.
(b) What review should be made by a Cost Auditor of Cost Accounting Records?
© Define in not more than one/two sentences:
(i) Non moving Stocks
(ii) Capitalization
(iii) Cost Pools
(iv) Arm’s Length Price 6+6+6


3 (a) Under what conditions, will the appointment of cost auditor for conducting Cost
Audit be appointed in firm’s name? Who will authenticate such reports and how? Can a
proprietory firm also be appointed as a cost auditor? 10
(b) Can Cost Auditor of a company also be its internal auditor? Justify your answer. 5
(c) Can a Cost Accountant who is appointed as the concurrent auditor of a company
accept
appointment as cost auditor of the same company? 3


4. Write short notes(any three) 6*3
(a) Energy Audit;
(b) Audit Committee;
(c) Industrial Sickness;
(d) Management Frauds.

SECTION II


5. State whether the following statements are True or False
(i) Both Authority and responsibility cannot be delegated.
(ii) Dumping is an illegal practice
(iii) In ABC system the concept of Cost Centre is very important.
(iv) Management Audit Report is to be submitted to the Cost Audit Branch.
(v) The Secretariat of the WTO will be headed by a Secretary
(vi) Operational Audit is termed as micro level Management Audit.
(vii) The Audit Committee shall meet at least four a year as per SEBI Listing Agreements


6. (a) Clearly explain the meaning of the two words “Truth & Fairness” as are used in an Audit
Certificate. 8
(b) What is Energy Audit & how is it linked to Environment Audit? 10


7(a) State the Salient Features of an ideal flow chart.
(b)Define Opportunity cost and Imputed cost as per CAS I
© Management Audit & Operational Audit are complementary and supplementary to each other.
6*3


8 Write short notes on (any three):
(a) Industrial Sickness
(b) SWOT Analysis
© Productivity Analysis
(d) Energy conservation 6*3




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Paper-16 Advance Financial Accounting & Reporting TEST PAPERS for REVALIDATION DOWNLOAD




PAPER-16
ADVANCED FINANCIAL ACCOUNTING & REPORTING
REVALIDATION TEST PAPER-RV/16/AFA/2010
(Answer Question 1 and any FIVE from the remaining)
PART A


1(i) A company held 25% of stake in another company and during the year, it withdrew the
investment to the extent of 10%. How should the company account for the investment?
a. treat as investments as per AS-13 for the whole year.
b. Account for as per ‘equity method’ till date of withdrawal of investment and
thereafter as per AS-13.
c. Account for as per ‘equity method’ for the whole year.
(ii) A venturer (who is having 50% share in the joint venture) sold a plant (WDV Rs.75 lacs)
for Rs. 60 lacs to the joint venture. The amount of loss to be recognized in the books of the
venturer would be:
a. Rs. 7.50 lacs
b. Rs. 15 lacs
(iii) A Ltd. purchased 80% shares of B Ltd. on 1st January, 2008 for Rs.1,40,000. The issued
capital of B Ltd. on 1st January, 2008 was Rs.1,00,000 and the balance in the Profit & Loss
Account was Rs.60,000. For the year ending 31st December 2008, B Ltd. has earned a profit
of Rs.20,000 and at the same time, declared and paid a dividend of Rs.30,000. What is the
amount of Minority Interest as on 1st January, 2008 and 31st December, 2008? (Amount in
Rs.)
a. Rs. 32,000 and Rs. 30,000 respectively
b. Rs. 30,000 and Rs.32,000 respectively
c. Rs. 30,000 and Rs.35,000 respectively
d. Rs. 35,000 and Rs.30,000 respectively
(iv) B Ltd. purchased from the shareholders of A Ltd. all the issued shares @ Rs. 14 per
share. A Ltd. had 60,000 shares of Rs.10 each fully paid up. The shareholders of A Ltd. took
over one of the freehold properties of A Ltd. for Rs.60,000 at the book value of the same. The
balance due to them would be satisfied by the issue of an appropriate no. of equity shaers in B
Ltd. at Rs.20 per share. The number of shares to be issued by B Ltd. to shareholders of A Ltd.
are:
a. 42,000
b. 39,000
c. 40,000
(v) With the following facts of an amalgamation, state the total number of shares to be issued
by the Purchasing company (P Ltd.) to satisfy the purchase consideration:
P Ltd S Ltd
No. of shares 10,00,000 1,00,000
No. of shares held by
S Ltd. in P Ltd. 30,000
P Ltd. in S Ltd. 20,000
P Ltd. agreed to issue 2 shares for every 1 share in S Ltd.
a. 1,30,000 b. 1,40,000
c. 1,60,000 d. 1,50,000
(vi) When the carrying amount of a fixed asset is less than its net realizable value, then the
fixed asset in the books should be disclosed at:
a. Carrying amount
b. Net realizable value
c. Management choice
d. None.
(vii) A non-corporate enterprise, whose turnover exceeds Rs.50 crores is a:
a. Level – I enterprise
b. Level – II enterprise
c. Level – III enterprise
(viii) Fixed Production Overheads are allocated to Inventory on the basis of:
a. Actual Capacity
b. Idle capacity
c. Normal Capacity
d. None
(ix) Dividends which were proposed after the balance sheet date is
a. adjusting event as per AS-4
b. adjusting event as required by Schedule VI of The Companies Act, 1956
c. non-adjusting event as per As-4
(x) Which of the following items of income / liabilities will not be included in the segment
income / liability respectively, of a Company which has three business segments namely,
“Paper division”, “Printing division”, and “Publishing division”?
a. Interest or dividend income
b. Loan obtained by the company to purchase an asset for Printing division
c. Both (a) and (b)
d. Neither (a) nor (b). 2*10 marks
(b) A Limited Company finds that the stock sheets as on 31.03.09 had included twice an item the
cost of which was Rs 20,000.
You are asked to suggest, hoe the error would be dealt with in the accounts of tbhe year ended
31.03.2010 5 marks

PART B


2(a) a firm of contractors obtainred a contract for construction of bridges across river
Mahanadi.The following details are available n the records kept for the year ended on 31st
March,2009.
(Rs in lacs)
Total Contract Price 1000
Work Certified 500
Work not Certified 105
Estimated further Cost to Completion 495
Progress Payment Received 400
To be received 140
The firm seeks your advice and assistance in the presentation of accounts keeping in view the
requirements of AS-7 (Revised) issued by ICAI.
(b) Write short note on Effect on uncertainties of Revenue Recognition. 10+5


3(a) What are the GENERAL PRINCIPLES OF Government Accounting?
(b) State the basic structure in the form of Government Accounts. 8+7


4(a) For the given abbreviation name the terms in full
(i)ICAI
(ii)AS
(iii) IAS
(iv) US GAAP
(v) IFRS
b) S Ltd have six segments with following data
Rs in crore
Particulars A B C D E F
Segment Revenue 250 520 70 50 60 50
Segment Result 50 (190) 10 10 (10) 30
Segment Assets 100 200 75 50 50 25
The Finance Director is of the view that it is sufficient that segment A & B ONLY BE THE
REPORTED.Advise. 5+10


5 (a) The following is the Balance Sheet of P Ltd
Liabilities Rs
Equity Share Capital 2,00,000
Reserve & Surplus 4,00,000
Secured Loan 2,00,000
Unsecured Loan 6,00,000
14,00,000
Assets
Fixed Assets 7,00,000
Investments 4,00,000
(Market Value Rs 9,00,000)
Current Assets 4,00,000
Less: Current Liabilities (1,00,000) 3,00,000
14,00,000
The company consists of three divisions.The scheme was agreed upon ,according to which a new
company B Ltd is to be formed.It will take investments at Rs 9,00 and unsecured loans at balance
sheet value. It is to allot equity share of Rs10 each at par to the shareholders of P LTD in
satisfaction of the amount due under the arrangement. The scheme was duly approved by the
High Court. Pass Journal Entries in the Books of P Ltd.
(b0State any five salient points of distinction between Pooling of Interest Method & Purchase
Method of Accounting for Mergers and Acquisitions. 10+5

5(a) State the scope of disclosure of Accounting Policies as per Accounting Standard.
(b) What is the material effect of changes in Accounting policies. 8+7


6. AB Ltd. and MB Ltd. decide to amalgamate and to form a new company AM Ltd. The
following are their balance sheets as at 31.3.2009:
Liabilities AB Ltd. MB Ltd. Assets AB Ltd. MB Ltd.
Share Capital 10,00,000 6,00,000 Fixed Assets 7,50,000 2,00,000
(Rs. 100) each Investments:
General Reserve 1,00,000 50,000 1,500 Shares in MB 3,50,000 —
Investment
Allowance 40,000 30,000 4,000 Shares in AB — 5,00,000
Reserve
12% Debentures Current Assets 4,00,000 1,00,000
(Rs. 100 each) 3,00,000 1,00,000
Sundry Creditors 60,000 20,000
15,00,000 8,00,000 15,00,000 8,00,000
Calculate the amount of purchase consideration for AB Ltd. and MB Ltd. and draw up the balance
sheet of AM Ltd. after considering the following:
(a) Assume amalgamation is in the nature of purchase.
(b) Fixed assets of AB Ltd. are to be reduced by Rs. 50,000 and that of MB Ltd. are to be taken
at Rs. 3,00,000.
(c) 2% debentureholders of AB Ltd. and MB Ltd. are discharged by AM Ltd. by issuing such
number of its 15% debentures of Rs. 100 each so as to maintain the same amount of
interest.
(d) Shares of AM Ltd. are of Rs. 100 each.
Also show, how the investment allowance reserve will be treated in the Financial Statement
assuming the Reserve will be maintained for 3 years.


7.Write short note on the following with reference to IAS-30,Impairment of Assets
a. Identification of an asset that may be impaired
b. Measuring recoverable amount
c. Reversal of an Impairment Loss. 15


8(a) What are the advantages of preparation of Value Added Statements?
(b) What is economic value added and how is it calculated? 8+7




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Paper-15 Management Accounting- Enterprise Performance Management TEST PAPERS for REVALIDATION DOWNLOAD




REVISED SYLLABUS 2008
REVALIDATION
TEST PAPER
Final
Group IV
THE INSTITUTE OF COST AND WORKS ACCOUNTANTS OF INDIA
DIRECTORATE OF STUDIES

PAPER-15
MANAGEMENT ACCOUNTING-ENTERPRISE PERFORMANCE
MANAGEMENT
REVALIDATION TEST PAPER-RV/15/EPM/2010
(Answer Question 1 and any FIVE from the remaining)


1.(a) Expand the following abbreviations: 8
(i) CRP
(ii) DBR
(iii) DRP
(iv) PLCM
(v) SQC
(vi) EFQM
(vii) DMAIC
(viii) JUSE
(b) Define the following terms 2*6
(i) V in VAT Analysis
(ii) McKinsey’s 7s Framework
(iii) Bench Marking
(iv) Contribution Approach
(v) Talent Drain
(vi) Bill of Materials
© State the correct Answers: 1*5
(i) Synergy is often expressed as
(A) 2+2=5
(B) 2+2=4
© 2+2<4
(D)2+2>4
(ii) Given:
Cost of risk free debt = 8.5%
Market premium = 6%
Beta = 0.8
what is the cost of equity?
Choice
A) 12.8%
B) 15.3%
C) 11.6%
D) 13.3%
(iii) Which one of the following does not belong to the five general types of risks
companies face?
Choice
A) Technological risks
B) Market risks
C) Operational risks
D) Legal risks
(iv) The cost of coordinat ing the efforts of sub-uni ts is known as
A. Opportuni ty Cost
B. Sunk Cost
C. Transact ion Cost
D. Fixed Cost
(v) -- -- - -- - -- - -- - -- - is a Japanese st rategy of cont inuous
improvement .


2. What is Benchmarking ? Discuss different types of Benchmarking. 15


3. A company has accepted an order for making 15 items of a specialized machine at a
price of Rs. 4 lacs each. The delivery is to be completed within 4 months. The company
works 23 days a month and the normal direct wages per day amount to Rs. 10,000.
However, in case of need, the company can work over time upto 8 days during the said
period at double the normal rate of wages. Overheads amount to Rs. 12,000 per normal
working day but no overheads are charged on overtime working days. The material cost
is Rs. 2,40,000 per machine. The company has estimated that it will take 10 working days
to manufacture the first machine. The company is expected to experience a learning
effect of 90% (b=0.152).The contract stipulates a penalty of Rs. 40,000 per machine
delivered beyond the scheduleof 4 months.
You are required to calculate the costs and advise the company whether it is preferable to
work only during normal working days and pay penalty for any delayed delivery of the
machines or to work overtime to avoid paying penalty. 15


4. (a) Write a note on Cause Effect Diagram. When should it be used?
(b) After inspection of 10 rods,each of length 5 meters,the following no of defects is
found on each rod
45,42,52,46,51,46,50.43,51,49
© Distinguish between proportion defective chart and number defective chart.
5+8+2


5. (a) "Purpose of sensitivity analysis is to identify the critical variable in the project
analysis”-Discuss
(b) X Co Ltd. purchases a component A at a price of Rs 18 per unit. The management
decides to manufacture the component at a marginal cost of Rs. 12 per unit with a
processing time 4 hours in a particular machine. State whether the decision of the
management is correct :
(i) when there is spare capacity in the machine;
(ii) when the machine is at present working to the full capacity by manufacturing another
product M with selling price Rs. 200, marginal cost 110 and processing time 40 hours.
Is the decision of the management correct? 7+8


6. (a) What is lean manufacturing? Briefly describe the Lean/ JIT system?
(b) Briefly describe the operation of an MRP System? 10+5


7(a) Write a note on Total Quality Management.
(b)Discuss the principal four steps in Target costing
©Write a note on Matrix Organization Structure. 5+5+5


8 Write short notes(on any three)
(a) Balance Score Card
(b) Enterprise risk management
(c) Value Chain Analysis
(d) Margin of safety




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Paper-14 Indirect & Direct Tax Management TEST PAPERS for REVALIDATION DOWNLOAD



PAPER-14
INDIRECT AND DIRECT TAX MANAGEMENT
REVALIDATION TEST PAPER-RV/14/TXM/2010
(Answer Question 1 and any FIVE from the remaining)

PART A


1. a) i) Enumerate the list of person / entities treated as “individual” u/s 3 of the Wealth
Tax Act.
ii) Who are the persons / entities to whom Wealth Tax is not applicable u/s 45 of the
Wealth Tax Act?
iii) Is Wealth Tax a debt owed on the valuation date and hence deductible while
computing net wealth?
iv) On what grounds can it be said that partial partition in de-recognised under the
Wealth Tax Act?
v) How far is the exemption of Public charitable trust under the Income Tax Act,
1961 relevant for exemption under Wealth Tax Act?
3*5
b) State with reasons whether the following statements are true or false
i) Waste and Scrap are always treated as excisable goods.
ii) Importers can store imported without payment of duty in public warehouse
or private warehouse 5*2

PART B


2. Given below is the P&L A/C of K,L,M & Associats, a partnership firm for the
previous year 2009-2010.
Particular Rs. Particular Rs.
Purchase
Direct & Indirect Expense
Depreciation
Interest to partners
Salaries to partners
Net Profit
15,45,000
8,00,000
2,00,000
2,00,000
6,60,000
1,40,000
Sales
Interest on Securities
(TDS – Rs.5,000)
35,00,000
45,000
35,45,000 35,45,000
You are further informed
i) Depreciation allowable as per Section 32 is Rs.1,50,000
ii) Purchase include cash purchase of Rs.30,000
iii) A,B,C share profits in the ratio of 4:3:3 C is a sleeping partner
iv) Interest is paid to partners @20% p.a. interest is authorized by partnership
deed
v) Salaries, authorized by partnership deed are paid to all the partners equally
Compute (i) Book profit and
(ii) Total income of the firm in the following cases:-
(a) It is a professional form
(b) It is a business firm
(c) It does not file the return of its income , leading to best judgment
assessment.
(15)


3. An Importer has imported a machine from UK at FOB cost of 10,000 UK pounds.
Other details are as follows:-
a. Freight from UK to Indian Port was 700 pounds
b. Insurance was paid to Insurer insured in India – Rs.6000
c. Design and development charges of 2000UK pounds were paid to a
consultancy firm in UK
d. The importer also spent and amount of Rs.50,000 in India for development
work connected with the machinery.
e. Rs.10,000 were spent in transporting the machinery from Indian Port to
the factory of importer.
f. Rate of exchange RBI: Rs. 68.82 = One UK Pound
g. Rate of exchange as announced by CBE 2C (Board) by Notification u/s 14
(3) (a) (i): Rs.68.70 = One UK Pound
12
h. Rate at which bank recovered the amount from importer Rs.68.35 = One
UK Pound.
i. Foreign exporters have an Agent in India Commission is payable to the
agent in Indian Rupees @5% of FOB price.
Custom duty payable was 10%. If similar goods were produced in India, Excise
duty payable @24%. There is an excise exemption notification which exempts the
duty as in excess of 16%. Education Cess 2% and SAH Education Cess 1%. Find
custom duty payable .
How much Cenvat can be availed by importer, if he is manufacturer? (15)


4. a) Detail the implications of ‘Demerger’ with reference to Income Tax.
b) State the factors to be considered in taking a management decision relating to
owning or leasing fixed assets
8+7


5(a). Software is ‘goods’, but unbranded Software is Service” – Comment (10)
(b) 1500 pieces of a product ‘K’ were manufactured during the financial year. Its list
price (ie, retail price) is Rs.250 per piece, exclusive of taxes. The manufacturer offers
20% discount to wholesalers on the list price. During the year, 840 pieces were sold in
wholesale, 510 pieces were sold in retail, 35 pieces were distributed as free samples.
Balance quantity of 115 pieces was in stock at the end of the year. The rate of duty is
16% plus education cess and SAH education cess as applicable. What is the total duty
paid during the financial year? Assume that the manufacture is not eligible for SSI
concession. (5)


6. a) What are the methods under which the arm’s length price, relating to an
international transaction, is determined us 92C?
b) J Ltd., is an Indian Company which is a 100% subsidiary of K Ltd., a foreign
company. K Ltd. Sells its product to J Ltd., at 15$ per unit. At the same time, it sells its
products to an unrelated party at $ 20 per unit. How will the arm’s length price be
determined in this transaction?
8+7


7.(a)Write a note on Exemption granted to SSI
(b) Define Captive Consumption 8+7


8.Write Short Notes on any three of the following:
(a) Slump Sale
(b) Anti Dumping Duty
(c) Basic Principle of VAT
(d) Dutiability of Waste and Scrap 5*3




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Paper-13 Management Accounting - Strategic Management TEST PAPERS for REVALIDATION DOWNLOAD




PAPER-13
MANAGEMENT ACCOUNTING-STRATEGIC MANAGEMENT
REVALIDATION TEST PAPER-RV/13/MSM/2010
Time-3Hours Full Marks-100
ANSWER Q1 & Q6 WHICH ARE COMPULSORY AND ANY OTHER THREE QUESTIONS
FROM SECTION I AND ANY TWO QUESTIONS FROM SECTION II
SECTION I-STRATEGIC MANAGEMENT


1(a) Define the following terms 2*5
(i) Long range Planning
(ii) Forecasting
(iii) Econometric Model
(iv) Human Resource Strategy
(v) Marketing Strategy
(b)(i) SEBI stands for 1*5
a. Securities and exchange body of India
b. Securities and exchange board of India
c. Shares equities board of India
d. Stock exchange board of India
e. Stock exchange board of investors
(ii) The acquisition of HUTCH by Vodafone is an example of
a. Horizontal Integration
b. Forward Integration
c. Vertical Integration
d. Concentric Diversification
8
(iii)The Government encourages industry, investment and FDI by creating SEZ’s. The
term SEZ stands for:-
a. Special Equity Zones
b. Software Export Zones
c. Special Economic Zones
d. Special Entitlement Zones
e. Special Effort Zones
(vi) Value drivers identified in cost leadership model do not include?
a. Sales growth rate
b. Operating profit margin
c. Differentiation
d. Working capital investment
e. Cost of capital
(v) Standard classes of organization structure do not include?
a. Simple structure
b. Machine bureaucracy
c. Professional bureaucracy
d. Capital Structure
e. Adhocracy


2. Growth through concentric diversification into a related industry may be a very
appropriate corporate strategy” Comment. 15


3. State briefly the purpose of a SWOT analysis? What are the major outcomes
from such an analysis? 15


4. Customer now articulates his own option to create a new product, as he has
become “the boss”. How does this reflect change from product orientation to
market orientation? 15


5. Write short notes on:
a. Value migration
b. Profiling customers
c Segmentation 5*3


SECTION II-RISK MANAGEMENT


6 State whether the following statements are true or false(with justification) 2*5
(i) Measures relating to risk profiling are related to the level of operational
efficiency of the company
(ii) CAPM attempts to measure the risk for capital asset of a company
(iii) Risk Management Techniques include among other things the risk premium
payable
(iv) Risk cannot be avoided through insurance but may be considered as a means to
transfer the risk
(v) The concept of certainty equivalent coefficient represents the computation of a
certain amount equivalent to a probable income or loss


7. What is risk? Discuss different types of risks? What are the characteristics of
insurance contract? 15


8. Risk MANAGEMENT Strategies are seven fold-Identify them and discuss
any three of them. 15


9. Write a short note on
(i) Project Risk Management
(ii) Risk and Uncertainty
(iii) Diversification of Risk 5*3




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Paper-12 Financial Management & International Finance TEST PAPERS for REVALIDATION DOWNLOAD




PAPER-12
FINANCIAL MANAGEMENT & INTERNATIONAL FINANCE
REVALIDATION TEST PAPER-RV/12/AFM/2010
SECTION I-CAPITAL MARKET ANALYSIS
(Answer Question 1 and any FIVE from the remaining)
PART A


1.(a) Define in brief:
i) Factoring
ii) Put Option
iii) Capital Rationing
iv) Financial Leverage
v) Commercial Paper
vi) Rights issue
vii) IRR
viii) Redeemable Debenture
ix) Financial Restructuring
x) Systematic Risk 2*10
(b) Distinguish between Economic Value Added & Economic Profit 5

PART B


2.(a) What are the main stages in the Capital Budgeting Process?
(b) AB Ltd is considering to buy an equipment and it has two options.The cost of the equipment
is Rs 1,00,000.
Option I-To buy with borrowed funds at a cost of 18% pa, repayable in five equal instalments of
Rs 32000.
Option II-To take equipment on lease on an annual rental of Rs. 32,000.
The salvage value of the equipment at the end of five year period will be zero.The company uses
straight line depreciation. Assume tax @ 10%
Which of the two options would you recommend? 5+10


3(a) What is meant by Balance Score Card?
(b)Calculate the value of the share of a company, if its beta is 1.5,the previous Dividend was
Rs2/- per share and the growth rate is expected to be 8%.The Risk free return is 10% and the
market portfolio earns a return of 15%.
© The Risk free return is 6% and return on market portfolio on stock is 13%, Calculate beta.
5+5+5


4(a) Comment on the emerging role of the Financial Manager in India.
(b) How does financial leverage increase the potential reward to the shareholders?
© What are the commonly employed measures of financial performance?
5+5+5


5(a) If the value of a Malaysian Ringgit (($/MR) was 0.2632 and the value of an Indian
rupee($/Rs) was 0.02212.Find the value of a Malaysian Ringitt interms of Indian Rupee?
(b)From the following quotes of a bank ,determine the rate at which Yen can be purchased with
Rs
Rs/Pd. Sterling-75.31-33
Pd Sterling/Dollar-1.563-565
Dollar/Yen-1.048/52(Per 100Yen)
© A spot rate is DM=$0.3302-10.Another spot rate is FF=$0.1180-90.Compute the direct quoteof
FF in Germany. 5+5+5


6.XYZ & Co has three financial plans before it,Plan I,Plan II & Plan III.Calculate Operating and
Financial Leverage for the firm on the basis of the following information and also find out the
highest and lowest value of combined leverage:
Production-800 units
Selling Price Per Unit-Rs15/-
Variable Cost Per Unit-Rs10/-
Fixed Cist
Situation A-Rs1000/-
Situation B-Rs2000/-
Situation C-Rs3000
Capital Structure Plan I Plan II Plan III
Equity Capital Rs5000/- Rs7500/- Rs2500/-
12% Debt Rs5000/- Rs2500/- Rs7500/-
15 marks


7(a) The turnover of R Ltd is Rs60 lacs of which 80% is on credit.Debtor are allowed on month to
clear off the dues.A factor is willing to advance 90% of the bills raisedon a credit for a fee of 2%
a month plus a commission of 4% on the total amount of debts.R Ltd as a result of this
arrangement is likely to save Rs21600/- annually in management costs and avoid bad debts at 1%
on credit sales.
A scheduled bank has come forward to make an advance equal to 90% of the debts at an interest
of 18% pa. However its processing fee will be at 2% on debts.
Would you accept factoring or offer from the bank?
(b)What are the factors affecting dividend policies? 10+5


8.Write short notes on any three of the following:
(a) SWOT Analysis
(b) Leveraged Buy Outs
(c) Bill of Entry
(d) Future Contract 5*3




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