Assignment of Financial Management – Class – 12th.
Q 1. Identify the financial decision depicted in the picture given below:
a) Investment decision,
b) Financing decision,
c) Dividend decision,
d) None of these.
Q 2. Identify the financial decision illustrated by the picture given below:
a) Long term investment decision,
b) Short term investment decision,
c) Financing decision,
d) Dividend decision.
Q 3. In certain industries, assets become obsolete sooner. Consequently, their replacements become
due faster in lieu of the given statement and picture given below:
Identify the factor affecting fixed capital requirement of a business.
a) Nature of business,
b) Choice of technique,
c) Technology upgradation,
d) Financing alternative.
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Q 4. Aval Limited is engaged in the business of export canvas goods and bags. In the past, the
performance of the company had been up to the expectations. In line with the latest demand in the
market, the company decided to venture into leather goods for which it required specialized
machinery. For this, the finance manager Prabhu prepared a financial blue print of the
organisation’s future operations to estimate the amount of funds required and the timings with the
objective to ensure that enough funds are available at right time. He also collected the relevant
data about the profit estimates in the coming years. By doing this, he wanted to be sure about the
availability of funds from the internal sources of the business. For the remaining funds he is trying
to find out alternative sources from outside.
Identify the financial concept discussed in the above paragraph.
Also, state the objectives to be achieved by the use of financial concepts so identified.
Q 5. ‘S’ Limited is manufacturing steel at its plant in India. It is enjoying a buoyant demand for its
products as economic growth is about 7% to 8% and the demand of steel is growing. It is planning
to set up a new steel plant to cash on the increased demand. It is estimated that it will require about
Rs. 5000 crores to set up and about Rs. 500 crores of working capital to start the new plant.
Identify the factors which will affect the capital structure of the company.
Q 6. Shalini, after acquiring a degree in hotel management and business administration took over her
family food processing company of manufacturing pickles, jams and squashes. The business was
established by her great grandmother and was doing reasonably well. However, the fixed operating
cost of the business were high and the cash flow position was weak. She wanted to undertake
modernization of the existing business to introduce the latest manufacturing processes and
diversify into the market of chocolates and candies. She was very enthusiastic and approached a
finance consultant, who told her that approximately Rs. 50 lakhs would be required for undertaking
the modernization and extension program. He also informed her that the stock market was going
through a bullish phase.
Keeping the above considerations in mind, name the source of Finance Shalini should not
choose for financing the modernisation and expansion of her food processing business.
Identify one reason in the support of your answer.
Identify any two other factors, apart from those stated in the above situation, which Shalini
should keep in mind while taking this decision.
Q 7. Somnath Ltd. is engaged in the business of export of garments. In the past, the performance of the
company had been up to the expectations. In line with the latest technology, the company decided
to upgrade its machinery for this, the finance manager, Dalmia estimated the amount of funds
required and the timings. This will help the company in linking the investment and the financing
decision on a continuous basis. Dalmia, therefore, began with the preparations of a sales forecast
for the next four years. He also collected the relevant data about the profit estimates in the coming
years. By doing this, he wanted to be sure about the availability of funds from the internal sources
of the business for the remaining funds he is trying to find out alternative sources from outside.
Identify the financial concept discussed in the above para. Also identify the objectives to be
achieved by the use of financial concepts, so identified.
Q 8. Steelone Enterprises is manufacturing high quality steel utensils. The demand for steel utensils is
rising as people are getting aware that plastic is not good for health. This has led to increase in
production of steel utensils to encourage sales steel one enterprises declared a liberal credit policy
which allows 3 months credit to its wholesale buyers.
In the light of the above, identify the 2 factors affecting working capital requirements of
Steelone enterprises.
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Q 9. Manak Chand & Co., dealing in copper and other metals, has earned a profit of Rs. 1200 crores.
Manak Chand & Co. is a renowned name in the market and investors like to invest in the company.
Company has explored its potential fully and is on the top, thus, it has no plans for growth or
expansions in the next few years. Also, earnings of the company are consistent and stable over the
years. Tax on dividends is also lived at a low rate by the government on the company.
Guide the company on the decision of distribution of dividend to shareholders.
Q 10. Aarohan Ltd., an automobile manufacturer was diversifying into manufacturing Two - Wheelers.
They knew that India is on a growth path and a new breed of consumer is eager for a first vehicle.
The market responded very well to the new product and the company did not have to allow credit
as it had advanced orders from 4 to 6 months with deposits paid. Also, due to efficiency in managing
their operations as soon as a vehicle was off the assembly line, it was out to the dealers.
Identify one reason discussed about which helped the firm in managing its working capital
efficiently.
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