problem 1) Answer all the problems:

i) describe the factors affecting financial plan.

ii) What do you understand by operating leverage? describe with ex.

iii) describe the objectives of inventory management.

iv) describe the meaning of Contribution.

v) What do you understand by cost of debt capital?

problem 2) Define the term financial management? What are the main characteristics of financial management?

problem 3) describe the term ‘Dividend Policy’. Examine the various factors determining the sound dividend policy of a business enterprise.

problem 4) From the following information, you are required to estimate the working capital required:

                                                                                                     Cost Per Unit   
                                                                                                            Rs.
Raw material                                                                                          90  
Direct Labour                                                                                         40
Overhead                                                                                               75
ADDITIONAL INFORMATIONS:
Selling Price                                                                                         256 per unit   
Output                                                                                             1, 56,000 unit
Raw Material in Stock                                                                            1 month
Materials are in Process                                                                         2 weeks
Finished Goods in Stock                                                                        1 month
Credit Allowed by Supplier                                                                     1 month
Credit Allowed to Debtors                                                                     2 months
Expected Cash at Bank                                                                          60,000

It is assumed that production is carried on evenly thought out the year, wages and overhead accrue similarly and time period of 4 weeks is equivalent to a month and 52 weeks a year.