Financial Management Question Bank


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Question

Chapter 1- Introduction to Financial Management

1) What is the scope of financial Management?
2) Explain the goal of financial management?
3) What are the financial management objectives?
4) What are the financial management objectives with reference to Hierarchical Arrangement?
5) Explain the role of Finance Manager?
6) Explain types of risks?

Chapter 2 – Working Capital Management

1) Explain types of working capital?
2) State factors determining working capital requirements?
3) State complete working capital cycle?

Chapter 3 – Receivable Management

1) State the types of costs associated with Receivable Management?
2) State the steps in Credit Analysis?
3) Explain 5 Cs of credit in receivable management?
4) State the following notes-
i) Credit rating
ii)Del Credre Agent and Del Credre Commission
iii) Opportunity cost
iv) US Sub-Prime Crisis
v) Credit Granting Decision
vi) Credit Reports

The following is the list of University Questions from Nov 2001- 2008 of Financial Management.

2mks:-
1) Distinguish between permanent working capital and temporary working capital.
2) What is “Business risk”?
3) What do leverage ratios indicate?
4) Explain “Inter corporate deposits”
5) What are liquidity ratios and what is their significance?
6) Why is cost of debt normally less than the cost of equity? Is it always so?
7) What is meant by “Letter of credit”?
8) What are common size statements?
9) 3 functions of finance manager
10) What is the meaning and significance of Weighted Average Cost of capital?
11) What is the difference between hypothecation and pledge?
12) What is cash operating cycle?
13)What is conservative approach concept?
14) What is weighted average cost of capital?
15) What is margin of safety?
16) What is owned fund?
17) Cost of debt
18) Trading on equity
19) Profit maximization
20) Different risks involved in financial management
21) What is break even point?
22) Explain the concept of conservatism
23) What is ICRA?
24) Letter of credit
25) Non-diversifiable risk
26) Float
27) Entity
28) Financial leverage
29) Common size statement

10mks:-
1) Explain the methods of measuring cost of debt capital and cost of equity capital with illustrations.
2) Explain the steps involved in credit analysis in detail
3) A businessman is anticipating cash surplus in the next 3 months in the range of Rs. 50000,Rs. 70000 and Rs. 100000.Suggest some investment avenues to him wherein he can park his funds and also maintain his liquidity position.
4) What are the motives for holding cash?
5) What are the factors that determine working capital management?
6) Explain – Commercial papers and Bill Discounting
7) Explain the concept of working capital. How is working capital affected by sales, technology and manufacturing policy and price level changes
8) Ratio analysis is only a technique for making judgements and not a substitute for it. Comment.
9) Explain the pros and cons of long term financing by issue of equity and preference shares
10) Discuss various cash management models
11) Explain in brief the sources of long term and short term finance
12) What are financial statements? Importance and parties
13) Explain the importance of leverage. Distinguish b/w operating leverage and financial leverage
14) Explain in brief the importance of cash management
15) Evaluate the merits and demerits of issue of equity shares as a source of long term finance
16) What are the advantages of vertical form of presenting financial statement? Draw a typical format of balance sheet in vertical form
17) What is lease finance? Distinguish b/w finance lease and operating lease
18) “Financial management is more than procurement of funds”. What do you think are the responsibilities of a finance manager?
19) Explain the arbitrage process as propounded by Modigiliani-Miller in their NOI approach to capital structure theory.
20) What are the advantages of fund flow statements
21) Discuss the scope and significance of finance function
22) The leading Investment Guru says “I am greedy when people are fearful and I become fearful when people are greedy”. Which ratios will help you to sense such fear or greed factor?

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