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Ms-41 Question bank

Ms-41 Question bank (12)

Ms-41 Question bank

Wednesday, 09 December 2015 09:46

MS 41 JUNE 2015

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Term-End Examination
N June, 2015 MS-41

1. Explain the concepts of Gross and Net workingcapital. Discuss in detail different components of working capital.
2. Discuss the different approaches to the determination of working capital needs of an
3. Why do organisations invest in securities ? Discuss the different types of marketable securities under the Debt category.
4. Explain the Cardinal Principles of Lending,followed by Commercial Banks. Discuss the
various methods of creating charge over the assets of the borrower's in case of secured advances.
5. Write short notes on the following :
(a) Syndication of credit
(b) Consortium Advances
(c) Inter-Corporate loans
(d) Commercial papers

June, 2013


 1. Explain the concept of working capital and mention the important objectives of working capital management. Discuss the impact of inflation on working capital.

 2. Explain the walker's approach to investment in working capital. Explain the profitability -solvency tangle in the current asset holding.

 3. Household Appliances Ltd. deals with consumer durables having an annual turnover of

Rs.80 lakhs, 75% of which are credit sales effected through a large number of dealers, while the balance sales are made through show rooms on cash basis. Normal credit allowed is 30 days. The company proposes to expand its business substantially and there is good demand as well. The finance manager proposes the following two plans for a change in the credit policy :



Credit Period

Anticipated Credit Sales Rs. lakhs

Plan I

60 days


Plan II

90 days



The product yields an average contribution of 25% on sales. Fixed costs amount of Rs. 5 lakhs per annum. The company expects a pre-tax return of 20% on capital employed. The finance manager has also recommended increasing the provision for bad debts from the current 1% to 1.5% for Plan I and to 2% for Plan II. Evaluate the merits of the new proposals and recommend the best proposal.


4. Explain the Baumol's model and Miller - orr cash management models.


5. Write short notes on the following :

(a) Prudential norms for credit exposure limit for banks.

(b) Discounting of bills

(c) Syndication of credit

(d) Bridge loans


6. (a) What is meant by Commercial Paper ? Explain the guidelines issued by Reserve

Bank of India for the issuance of commercial paper by companies.

(b) What is factoring of Receivables ? Explain its mechanism and importance.

 7. Explain the cost of liquidity and illiquidity. What is the impact of these costs on the level of the current assets ?

 8. Discuss the types and determinants of trade credit. What are the costs involved in taking credit ?

MS-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 ?

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