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MS-9 JUNE 2013
Written by sales@mbaonlinepapers.com sales@mbaonlinepapers.comMS-9 : MANAGERIAL ECONOMICS
June 2013
SECTION-A
1. Economics has developed several concepts and analytical tools to deal with the question of allocation of scarce resources. Discuss this statement in context of Three Choice problems of an Economy.
2. (a) Define and explain Point Price Elasticity of demand.
(b) For a demand function.
P = 200 — .50Q
Q = 800 — 8p
Calculate Point Price elasticity when P = 40 and Q = 240 and Interpret the result.
3. (a) What are Short - run Cost Functions, and the costs incurred in the short run ?
Give examples.
(b) Describe the relationship between Marginal cost and Average costs.
4. A Multi National Company faces barriers to entry, when it opens its branch in a country. Discuss these barriers to entry.
5. Write short notes on any four of the following :
(a) Opportunity Set
(b) Demand Forecasting
(c) Accounting Method of Cost Function
(d) Peak Load Pricing
(e) Monopolistic Competition
(f) Envelope curve
SECTION-B
Read the case given below and answer the questions given at the end.
THE INDIAN AUDIO MARKET
The Indian audio market pyramid is featured by the traditional radios forming its lower bulk. Besides this, there are four other distinct segments: mono recorders (ranking second in the pyramid), stereo recorders, midi systems (which offer the sound amplification of a big system, but at a far lower price and expected to grow at 25% per year) and hi-fis (minis and micros, slotted at the top end of the market).
Today the Indian audio market is abound with energy and action as both national and international majors are trying to excel themselves and elbow the others, ushering in new concepts like CD sound, digital tuners, full logic tape deck, etc. The main players in the Indian audio market are Philips, BPL and Vidieocon. Of these Philips is one of the oldest and is considered as the leading national brand. In fact it was the first company to introduce a range of international products such as CD radio cassette recorder, stand alone CD players and CD mini hi-fi systems. With the easing of the entry barriers, a number of new international players like Panasonic. Akai, Sansui, Sony, Sharp, Goldstar, Samsung and Aiwa have also entered the arena. This has led to a sea of changes in the industry and has resulted in an expanded market and a happier customer, who has access to the latest international products at competitive prices. The rise in the disposable income of the average Indian especially the upper-income section, has opened up new vistas for premium products and has provided a boost to companies to launch audio systems priced as high as Rs. 50,000 and beyond.
Pricing across Segments
Super Premium Segment : This segment of the market is largely price-insensitive, as consumers are willing to pay a premium in order to obtain products of high quality. Sonodyne has positioned itself in this segment by concentrating on products that are too small for large players to operate it profitably. It has launched a range of systems priced between Rs. 30,000 and Rs. 60,000. National Panasonic has launched its super premium range of systems by the name of Technics.
Premium Segment : Much of the price game is taking place in this segment, in which systems are priced around Rs. 25,000. Even the foreign players ensure that the pricing is competitive. Entry barriers of yester years compelled the demand by this segment to be partially met by the grey market. With the opening up of the market, the premium segment is witnessing a rapid growth and is currently estimated to be worth Rs. 30 crores. Growth of this segment is also being driven by consumers who want to upgrade their old music systems. Another major stimulating factor is the plethora of financing options available, bringing more and more consumers to the market.
Philips has understood the Indian listener well enough to dictate the basic principles of segmentation. It projects its products as high quality at medium price. In fact, Philips had successfully spotted an opportunity in the wide price gap between portable cassette players and hi-fi systems and pioneered the concept of a midi system (a three-in-one containing radio, tape deck and amplifier in one unit). Philips has also realised that there is a section of the rich consumer which values not just power but also sound clarity and is willing to pay for it. The pricing strategy of Philips was to make the most of its image as a technology leader. To this end, is used non-price variables by launching of a range of state of the art machines like the FW series, and CD players. Moreover, it came up with the punch line in its advertisements as, "We Invent For you."
BPL stands second only to Philips in the audio market and focuses on technology as its USP. Its kingpin in the marketing mix is its high technology superior quality product. It is thus aimed at being the product-quality leader. BPL's proposition of fidelity is translated in its punchline for its audio systems as, ' d-fi your imagination' (d-fi stands for digital fidelity). The company follows a market skimming strategy. When a new product was launched, it was placed in the top end of the market, and priced accordingly. The company offers a range of products in all price segments in the market witl out discounting the brand.
Another major player, Videocon, has managed to price its products lower even in th premium segment. The success of the Powerhouse (a 160 watt midi launched by Philips in 1990) had prompted Videocon to launch the Select Sound range of midi stereo systems at a slightly lower price. At the premium end. Videocon is making effects to upgrade its image to being "quality-driven" by associating itself with the internationally reputed brand name of Sansui from Japan, and following a perceived value pricing method.
Sony is another brand which is positioning itself as a premium product and charges a higher price for the superior quality of sound it offers. Unlike indulging into price wars, Sony's ad-campaigns project the message that nothing can beat Sony in the quality and intensity of sound. National Panasonic is another player that has three products in the top end of the market, priced in the Rs. 21,000 to Rs. 32,000 range.
Mottos and Stereos : Videocon has a 21% share in the overall audio market, but has been a major player only in personal stereos and two-in-ones. Its history is written with instances where it has offered products of similar quality, but at much lower prices than its competitors. In fact, Videocon launched the Sansui brand of products with a view to transform its image from that of being a manufacturer of cheap products to that of being a company that primes quality, and also to obtain a share of the hi-fi-segment. Sansui is being positioned as a premium brand, targeting the higher middle,
upper income groups and also the sensitive middle class Indian consumer.
The objective of Philips in this segment is to achieve higher sales volumes and hence its strategy is to expand its range and have a product in every segment of the market. The pricing method used by Philips in this segment is providing value for money.
National Panasonic offers products in the lower end of the market, apart from the top of the line range. In fact, it reduced the price of one of its small two-in-ones from Rs. 3,500 to Rs. 2,400, with the logic that a forte in the lower end of the market would help in building brand reliability across a wider customer base. The company is also guided by the logic that operating in the price sensitive region of the market will help it reach optimum levels of efficiency. Panasonic has also entered the market for midis.
These apart, there also exists a sector in the Indian audio industry, with powerful regional brands in mono and stereo segments, having a market share of 59% in mono recorders and 36% in stereo recorders. This sectors has a strong influence on price performance.
1. What major pricing strategies have been discussed in the case ? How effective these strategies have been in ensuring success of the company ? Discuss.
2. Is perceived value pricing the dominant strategy of major players ?
3. Which products have reached maturity stage in audio industry ? Do you think that product bundling can be effectively used for promoting sale of these products ?
4. Which other pricing strategies can be used for audio industry ?
MS-7 JUNE 2013
Written by sales@mbaonlinepapers.com sales@mbaonlinepapers.comMS-07 : INFORMATION SYSTEMS FOR MANAGERS
June 2013
1. (a) Define multi-tasking and time-sharing system. Name different generations of programming languages and their characteristics.
(b) Distinguish between Internet and Intranet. Describe Client and Server architecture.
2. (a) Define MIS. What are the main features of an MIS ? Can you visualize MIS without computers ?
(b) What impact does the implementation of programmed decisio-making have on the management system of an organization ?
3. (a) Why should every organization have a disaster recovery plan to protect itself ? What are the main components of a disaster recovery plan ?
(b) Discuss in detail Information Systems in functional areas and decision-making.
4. (a) Computers are often referred to as "number crunches". Evaluate the statement in the context of financial planning.
(b) What are the technology related challenges in any organization ? Highlight the pitfalls. How integrated software-application can help in this ?
5. (a) "With so many ready made and customized softwares available, the need for a manager is to learn to use them effectively rather than learn to program them". Do you agree ?
(b) Discuss different types of data in database system. What are the developments in database technology with respect to data types ?
6. (a) Differentiate between DSS, MIS and EIS with the help of suitable examples. Why is DSS more of a facility than a system ?
(b) What do you understand by Artificial Intelligence ? What are it's current Applications ?
MS-6 JUNE 2013
Written by sales@mbaonlinepapers.com sales@mbaonlinepapers.comMS-6 : MARKETING FOR MANAGERS
June, 2013
SECTION-A
1. What is Marketing Mix? Explain the various Marketing Mix elements taking the example of small sized passenger car.
2. (a) What is consumer behavior ? Elaborate the different types of purchase behaviour in the purchase of a product, giving suitable examples.
(b) Explain the marketing criteria to be used for selection of a brand name. Based on these criteria suggest a suitable brand name for the following Products and Services (any two) :
(i) fruit juice
(ii) Indian fast food chain
(iii) footwear
3. What are the major objectives of pricing ? How do the different stages of PLC affect the pricing decision ? Explain giving suitable example.
4. Write short notes on any three of the following :
(a) Implications of social marketing
(b) Perceptual mapping techniques
(c) Matrix organisation
(d) Primary data Vs Secondary data
(e) Characteristics of organisational consumer
SECTION-B
5. Read the case given below and answer the questions given at the end of the case.
India is among the hottest growth markets for AC makers, just like other consumer goods companies. Daikin entered India in 2000 an as 80:20 JV with Siddharth Shriram group company Siel. In 2004, it bought out Siels's 20% stake to make the Indian firm a wholly owned subsidiary. All these years, Daikin's sold bulk of its ACs to offices and factories and served only the upper middle class homes. Since entry-level products are driving volumes across categories, the company could not afford to stay away from that segment for long. Daikin launched 14 models for homes last year and the starting model was only 10-15% costlier than similar models offered by the competition. Earlier the price gap used to be 50%. Changing lifestyle, increasing disposable income, falling prices and wider availability have all contributed to the rise in air-conditioners sales. Demand is also rising in smaller cities and towns as well as more households join the buoying middle class segment. With introduction of cheaper products, enhanced distribution network and aggressive promotional activities in the last one year, the company claims to have already increased its market share marginally which is encouraging and it wants to become one of the top three room air-conditioners marketers. The company plans to introduce more mass products, which account for more than 80% of the country's room AC market.
Questions : Develop suitable promotional strategies for the company for the following segments :
(a) Home segment
(b) Offices and factories segment
MS-1 JUNE 2013
MS-1 june-2013
MS-1 : MANAGEMENT FUNCTIONS AND BEHAVIOUR
SECTION-A
1. Enumerate various tasks of a professional manager. Describe and discuss any four of them with suitable examples.
2. Identify the various types and nature of decisions a manager is required to take in an organisational situation. Discuss various phases in decision making process propounded by Henry Mintzberg and Herbert Simon.
3. Enumerate and briefly describe various strategies of conflict management. Justify your answer with relevant examples.
4. Why is 'Coordination seen as a problem in organisational set ups ? Describe with examples various approaches to coordination.
5. Write Short notes on any three of the following :
(a) Dimensions of Organisational Culture and Climate.
(b) Antecedents of Organisational change.
(c) Channels of Communication.
(d) Policies and design choices in control.
(e) Determinants of Inter-personal behaviour.
SECTION-B
6. Please read the case and answer the questions given at the end :
Major Mohanty, a retired man from the army, joined as MD in Sunrise Limited, when the company was passing through a very bad period with declining production and productivity, heavy losses and low morale of the employees. Major Mohanty, after having made in-depth, logical and strategic studies of the situation, immediately flagged on what he called 'operation rejuvenation', with exclusive thrust on production and productivity related issues. People related matters were of no consequence for him, for he believed that people, by and large, are dull, lazy, shirkers and non-starters and as such work should be extracted from them only through constant watch, close supervision, complete and rigorous command and control. His style of functioning did yield some results, but before any impact could be seen, he abruptly left the organisation , having got a better assignment in the United States of America.
Major Mohanty was immediately succeeded by Mr. Soni, a man who had made a name for his balanced approach to people and production through participative style of management in his immediate position as the Deputy MD of a large organisation in a similar product line. He was, in fact, commanded for his maximum concern for both people and production, and for bringing about an ideal integration and harmony between the needs of the employees and those of production.
In the present company also, Mr. Soni continued his policies of participative management with equal concern for both production and people. With a view to reviving the company back to health, he instituted some major changes. First of all, he decentralised the organisation so that the subordinates could exercise their discretion and initiative in decision making, as also their imagination and creativity in performing other managerial functions. Further he empowered the junior managers to incur expenditure upto an approved limit without seeking prior approval of the higher
management. The communication system was also improved to facilitate free flow of upward and downward communication. Mr.Soni also adopted several measures to reduce costs and wasteful expenditure. He banned donations to charitable institutions, but increased the amount being spent
on the welfare activities of the employees. Will Mr.Soni's managerial style prove to be effective in ensuring a bright future of the company ? Some employees are of the view that a lot of things are being done, but they might not be effective in the long run. Others disagree with them, and say, 'Okay, we will give it a trail'.
Questions :
(a) Was Major Mohanty a theory 'X' or a theory 'Y' Manager ? Explain with reasons.
(b) Is Mr. Soni a theory 'X' or a theory 'Y' Manager ? Will you advise Mr.Soni to change hiS presumptions about the nature of people at work ? Give reasons in support of your advice.
(c) How do you describe Mr. Soni's managerial style in the light of 'Managerial Grid' of Blake and Mouton ? Can it be regarded as the best style of management ?
Support your answer with arguments.
(d) Identify the possible problems that can arise from Mr.Soni's way of institutionalizing the changes in rules and regulations.
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Ms-41 june 2007
Written by sales@mbaonlinepapers.com sales@mbaonlinepapers.comMS-41 june-2007
MS-41 : Working capital management
1. Explain the concepts of gross and net working capital. Explain how would you plan the working capital requirement af a firm in the short term ?
2. Explain the Bierman-McAdams model that helps the financial managers in funds management of a firm. Also discuss the models which guide hlm in deciding the process of switching funds from marketable securities to cash and vice versa.
3. a) What are lhe basic reasons for which firms hold cash and marketable securities ?
Ms-41 june 2008
Written by sales@mbaonlinepapers.com sales@mbaonlinepapers.comMS-41 june-2008
MS-41 : Working capital management
1, Explain the concepts of gross and net working capital. How would you plan the working capital requirements of a firm in the long term ?
2. Why do firms hold cash and marketable securities ? Discuss the various methods through which firms recognise and manage the uncertainty associated with cash flow variation.
3. XYZ Ltd. is evaluating a project casting Rs. 96 lakhs interest @ 10%o p.a. payable every month}. Find out the worrking capital requirement of the project based on the follorving information :
i Sales : Rs. 25,00,000 per month (20% cash 80% on one month credit)
{ii) Cost structure : Rs . 17,00,000 Per month consisting of
a) 30% material cost (Payable after 30 days)
b) Wages 15% (Payable in the beginning of a month)
(c) Fixed overheads 55o/o including depreciation @ 10% on project cost. The remaining fixed overheads ar€ payable uniformly every month.
iii) Selling costs : Rs. 3,00,000 Per month.
iv) Inventory required : Finished Goods - 45 days sale.
Materials - 15 days requirement.
(v) There is a working capital limit of Rs' 7,50,000 sanctioned by the bank.
4. (a) Describe the terms and commercial paper may be India. Also explain the commercial paper. conditions on which issued by companies in procedure for issuing commercial paper
(b) What do you understand by factoring of receivables ? Discuss its mechanism and advantages.
5. Briefly discuss the following statements :
(i) Overextension of trade credit is a major factor responsible for financial difficulties of most companies that fail.
(ii) Credit policy can also be used to change the product life cycle and investment pattern.
(iii) The hedging principle provides on important guide regarding the appropriate use of short term credit for working capital financing.
(iv) The basic challenge before a finance manager in the management of working capital is that of Liquidity vs. Profitability.
6. A company's requirements of an item costing Rs' 10 per unit is 6,300 units per annum. The ordering cost is Rs. 10 per order and the carrying cost is Re' 0'26 per unit per annum. The following is the schedule of discount applicable to the company :
|
Order size |
% discount |
|
1-999 |
0 |
|
1000-1499 |
0.10 |
|
1500-2499 |
0.15 |
|
2500-4999 |
0.30 |
|
5000 and above |
0.50 |
Determine the economic order quantity without discount and with discount.
7 .Discuss the relationship between the 'profitability' and liquidity, and its impact on the working capital decisions, with the help of an example.
8. Distinguish between the foliowing :
(a) Permanent working capital and Variable working capital
(b) secured advances and Guaranteed advances
(c) Legal mortgages and Equitable mortgages
{d} Eurodoilar market and Eurobond market
Ms-41 june 2009
Written by sales@mbaonlinepapers.com sales@mbaonlinepapers.comMS-41 june-2009
MS-41 : Working capital management
solved papers of ms-41 from mehta solutions
Ms-41 june 2010
Written by sales@mbaonlinepapers.com sales@mbaonlinepapers.comMS-41 june-2010
MS-41 : Working capital management
1. Explain the concepts of Working Capital. Discuss the various factors that affect the requirement of Working Capital of a business entity.
2.Why do firms hold cash and marketable securities ? Discuss the internal factors that affect the cash flows of firms.
3. Discuss the guidelines issued by the Reserve Bank of India regarding the issuance of commercial paper by companies in India. Also explain the procedure for issuing commercial paper.
4. Discuss the various methods of creating charge over the assets of the borrower in favour of the lender bank. Distinguish between Legal Mortgage and Equitable Mortgage.
5. Discuss the salient features, merits and demerits of :
a) Cash credit system
b) Loan syndication
6. (a) What do you understand by Prudential Norms for exposure limits ?
(b) Explain the Turnover Method of assessing working capital needs.
7. Write short notes on any four of the following :
a) Foreign financial markets
b) Consortium lending
(c) Baumol model
d) Derivative Usance Promissory Notes
e) Letter of Credit
(f) Euromarkets as a source of financing
8. Zen Sports, a manufacturer of atheletic equipment, is currently selling Rs. 50,00,000
annually to dealers on 30-day credit terms. Management believes that sales could be
substantially increased if dealers carried more inventory; however dealers are unable to finance their inventory. As a result, the management is considering changing credit policy. The average collection period is now 30 days. Variable cost is 70% and fixed cost is Rs. 5,00,000. Required (pre-tax) rate of return on investment is 20%. The following information is available :
|
Credit policy |
Average collection period |
Annual sales Rs |
|
A B C D |
45 days 60 days 75 days 90 days |
5600000 6000000 6500000 7200000
|
a) Determine which policy Zen should adopt ?
b) Discuss the implicit assumptions made by the incremental profit/incremental investment approach to decision making.
Ms-41 june 2011
Written by sales@mbaonlinepapers.com sales@mbaonlinepapers.comMS-41 june-2011
MS-41 : Working capital management
1. Explain the distinguishing features of matching, conservative and aggressive strategies for financing working capital with the help of illustrations. Under which circumstances each of these are suitable ?
2. Discuss the critical variables of Cash flow forecasting and the different forecasting approaches of cash flow.
3. Write notes on :
(a) Commercial Bill market
(b) Commercial Paper.
4. Discuss the features of 'Factoring' and 'company deposits as source of working capital finance. Why is factoring yet to be popular in India ? Give reasons.
5. Omega Ltd. has investigated its cost of funds and their Profitability and found that current assets earn six percent where as fixed assets earn 13 percent. Cost of current liabilities is three percent and average cost of long term funds is 10 percent. The current year balance sheet reveals the following information.
(Rs. in thousand)
|
Liabilities Share capital Term loans Bank overdraft Payables
|
Rs 20000 50000 7000 3000 80000 |
Assets Plant and Machinery Land and Building Stock Cash in Bank and Hand |
Rs 30000 30000 10000 10000 80000
|
You are to comment on overall profitability of Omega Ltd.
The company proposes to lower its net working capital to Rs 7,000 by (a) either shifting Rs 3,000 of its long term loans to bank overdraft or (b) buying one more machine by paying cash. You are to suggest which of these two alternatives should be preferred and why. Do you approve of implementing both the alternatives simultaneously.
6. (a) How would you assess the credit worthiness of a customer ?
(b) A company is manufacturing spare parts and selling it at Rs 10 per unit. Variable cost is Rs 7 per unit. Total sale of a year is 2,40,000 units with per unit cost of production Rs 9. As per present credit policy company allows a credit of 2 months with a 3 percent default and expense of Rs 50,000 for collection. The company has two proposals for replacing the present credit policy with following details.
Proposals Credit period Collection Expense Default
X 1.5 month Rs. 75,000 2
Y 1 month Rs. 1,50,000 1
If the company has a required rate of return of 20 percent which of the two programmes the company should adopt.
7. What is the significance of Inventory control ? Discuss the different models of inventory management.
8. Discuss the relationship between liquidity and profitability and explain how it is measured.
Ms-41 dec 2007
Written by sales@mbaonlinepapers.com sales@mbaonlinepapers.comMS-41 Dec-2007
MS-41 : Working capital management
1. Explain the concepts of gross and net working capital.explain how would you plan the working capital requirement af a firm in the shorl terrn ?
2. Explain the Bierman-McAdams model that helps the financial managers in funds management of a firm. Also discuss the models which guide him in deciding the process of switching funds from marketable securities to cash and vice versa.
3 a) What are lhe basic reasons for which firms hold cash and marketable securities ?
b) Describe the various factors, bath internal and external, that afiect thc flow of cash
4- Describe the system of compulsory loan component in bank credit, as enforced by the Reserve Bank of India. Discuss the salient features of a svndicated credit.
5. What are lhe methods suggested to commercial banks RBI for assessing the working capltal requiremenls of borrowers ?
6- Explain the main methods of granting credit for working capital purposes prevalent in India.
7. Liquidity of an enterprise can be studied in two ways, namely technical liquidity and operational liquidity." Discuss these two methods of liquidity measurement
in detail and also point out the differences between the two.
8. What are lhe factors that determine the liquidity position of an undertaking ? Explain the effects of liquidity on a business enterprise.
9. Wrile short notes on any four of the followins ,
{a} Statutory liquidity ratio
(b) Commitment charge
{c) Return on Assets
{d) Factoring
(e) Collateral
(f) Bill discounting
More...
Ms-41 dec 2008
Written by sales@mbaonlinepapers.com sales@mbaonlinepapers.comMS-41 Dec-2008
MS-41 : Working capital management
1. "Cash Budgeting is considered a suitable device for planning working capital." Explain this statement and discuss the procedure of preparing cash budget.
2. Explain the meaning and significance of Bank Rate. Discuss how the central bank of the country controls credit by bringing about variations in the reserve requirements.
3. How are the customers eligible for credit terms defined ? Which key factors are included in CRISIL's rating methodology for deciding the creditworthiness of a borrowing company ?
4. "Corporates can raise short term funds by issuing commercial papers." Discuss the eligibility requirements, the terms and conditions on which they are issued and the procedure adopted for issuing commercial papers by the companies.
5. Explain the significance of payables as a source of finance. What are the different factors influencing the availability of trade credit ?
6. Discuss the following :
(a) Factors that contributed to the rise of the Euro dollar market.
b) Procedure for discounting of Bills of Exchange.
c) Salient features of syndicated credit.
d) Five different costs to the firm that holds inventory.
7. Distinguish between the following :
(a) Legal mortgages and Equitable mortgages
(b) With recourse and Without recourse factoring
(c) Common stock and Preferred stock
(d) Operating profit ratio and Net profit ratio
8. Write short notes on any four of the following :
(a) Economic Order Quantity
(b) F-S-N Analysis
(c) Forward Exchange contracts
(d) Public Deposits
(e) Leading and Lagging
Ms-41 dec 2009
Written by sales@mbaonlinepapers.com sales@mbaonlinepapers.comMS-41 Dec-2009
MS-41 : Working capital management
1. As the difference between the cost of short term financing and long term financing becomes smaller, which financing plan aggressive as conservative becomes more attractive ? Would the aggressive or conservative approach be preferable if the costs were equal ? Why ?
2(a) Explain the role of Cash Forecasting in cash management. Describe briefly any two methods of cash forecasting.
(b) Explain the Miller-Orr model with the help of a suitable example.
3. Discuss the different methods of creating a charge over the assets of the borrower which could be used by banks for safeguarding their interests.
4. Distinguish between the following :
a) Permanent working capital and variable working capital.
b) Options and warrants.
c) VED Analysis and F-S-N Analysis.
d) Public deposits and certificate of deposits.
5. Alpha company's present annual sales amount to Rs. 30 lacs at sale price of Rs. 12 per unit. Variable costs are Rs. 8 per unit and fixed costs amount to Rs. • 2.50 lacs per annum. Its present credit period is one month which is proposed to be extended to eithër 2 or 3 months, whichever appears to be more profitable. The following estimates are made for the purpose :
|
Credit policy |
1 month |
2 months |
3 months |
|
Increase in sales (%) |
Nil |
8 |
30 |
|
% of bad debts to sale |
1 |
3 |
6 |
Fixed cost will increase by Rs. 50,000 annually after any increase in sales above 25% over the present level. The company requires a pre tax return on investment of at least 20% for the level of risk involved. What will be the most rewarding credit policy in case of Alpha company under the above circumstances ?
6. (a) What do you understand by Commercial Paper ? Explain the important guidelines
issued by Reserve Bank of India for the issuance of Commercial Paper.
(b) What is the meaning of the term factoring ? Explain its significance and mechanism and distinguish between with recourse factoring from without recourse factoring.
7. What do you understand by Trade Credit ? Is Trade Credit a free of cost source of financing working capital requirements ? Give reason. Discuss the different factors that determine the availability of Trade Credit to a firm.
8. Write short notes on any four of the following :
a) Decision tree model
b) Selective credit controls
(c) Gross profit ratio
d) Baumol model
e) C's to determine creditworthiness of a customer
(f) Euro Currency Market
Ms-41 dec 2010
Written by sales@mbaonlinepapers.com sales@mbaonlinepapers.comMS-41 Dec-2010
MS-41 : Working capital management
Solved papers of MS-41 From mehta solutions
Ms-41 dec 2011
Written by sales@mbaonlinepapers.com sales@mbaonlinepapers.comMS-41 Dec-2011
MS-41 : Working capital management
1. The cost sheet ABC Ltd. provides the following data.
Cost per unit
Raw material Rs. 50
Direct Labor 20
Overheads
(including depreciation of Rs. 10) 40
Total cost 110
Profits 20
Selling price 130
Average raw material in stock is for one month. Average material in work-in-progress is
for half month. Credit allowed by suppliers; one month; credit allowed to debtors : one month Average time lag in payment of wages : 10 days ; average time lag in payment of overheads 30 days.
25% of the sales are on cash basis. Cash balance expected to be Rs. 1,00,000. Finished goods lie in the warehouse for one month.
You are required to prepare a statement of the working capital needed to finance a level of the activity of 54,000 units of output. Production is carried on evenly throughout the year and wages and overheads accrue similarly. State your assumptions, if any, clearly.
2. Explain with examples the ratios which can be used for assessing :
(a) Efficiency of working capital
(b) Structure of working capital
(c) Liquidity of working capital elements
3. (a) With help of illustrations explain risk return trade off in working capital management.
(b) Explain the various approaches a company may follow to arrive at appropriate level of investment in current assets.
4. Management of inventory must meet two-opposing objectives. Discuss them. How is balance brought between the two objectives, Illustrate with examples.
5. Explain the following sources of working capital finance :
(a) Inter-corporate loans
(b) Company deposits
6. Explain the following cash management models :
(a) Baumol model
(b) Miller and Orr model.
7. (a) What are credit standards that are used in credit policy decision ?
(b) A company has an average collection period of 60 days with sale of 2 lakh units @ Rs, 30 with variable cost of Rs. 20 and average cost per unit Rs. 25. The company is not offering any cash discount and all sales are on credit. It is considering a proposal given by its consultant to allow a 2 percent discount for payments within 10 days. It will increase sales by 2500 units and average collection period will be reduced by 15 days.
Incidently working capital needs will increase by Rs. 1 lakh. If the company makes half of the sales at cash discount and desires a return of 20 percent on investment, should the proposal of consultant be accepted ?
- Explain the features of different forms of bank credit prevailing in India. Distinguish between pledge and hypothecation.
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