Sub. code 4181
NEB — GRADE XII
Set A
Model Question
Class 12 Finance Model Question Set A
The candidates are required to give their answers in their own words as far as practicable. The figures in the margin indicate full marks.
Pass Marks : 32
सबै प्रश्नको उत्तर दिनुहोस् । (Attempt All Questions)
This model question paper is for Class 12 Finance, Set A (subject code 4181), carrying full marks of 75 with a pass mark of 32, to be completed within 3 Hours. Model answers are available for questions that have one — reveal them with a free account (a few reveals) or a paid plan (unlimited).
Group A
Very short answer question
State the meaning of finance.
If you are authorized to prepare financial statements of a company, what statements would you include? State any two.
Mention the meaning of ratio analysis.
State any two advantages of short term debt for a company.
Mention any two differences between preferred stock and common stock.
Write any two features of optimal capital structure.
State two characteristics associated with a cross exchange rate
Define what a dividend means in financial terms .
Mention two key factors that influence or determine the amount of working capital a business requires
If short term source is Rs. 3,00,000 which is 40% of the total debt capital, find out the total debt of a company.
If current exchange rate is Rs. 130 per dollar, how much dollar is needed for Rs. 68,900?
Group B
Short answer question .
Explain any five major functions performed by a financial manager in a business organization.
Describe the major components of a company's income statement and statement of financial position.
Explain the major sources of long-term and short-term financing available to a business organization.
A manufacturing company provides the following information:
Particulars | Amount |
|---|---|
Annual fixed cost | Rs. 180,000 |
Variable cost per unit | Rs. 25 |
Selling price per unit | Rs. 40 |
Required:
a. Calculate the contribution per unit.
b. Calculate the break-even point in units.
c. Calculate the break-even sales revenue.
What is working capital management? Explain any four factors that influence the working capital requirement of a company.
A company has the following information:
Particulars | Amount |
|---|---|
Annual credit sales | Rs. 720,000 |
Average accounts receivable | Rs. 90,000 |
Average inventory | Rs. 80,000 |
Cost of goods sold | Rs. 480,000 |
Average accounts payable | Rs. 60,000 |
Assume 360 days in a year.
Required:
a. Calculate the average collection period.
b. Calculate the inventory conversion period.
c. Calculate the payable deferral period.
Explain the major factors that a company should consider while making dividend decisions.
Differentiate between domestic financial management and international financial management on any five bases.
The exchange rate between US Dollar and Japanese Yen is 1 US Dollar = 150 Yen. Similarly, 1 British Pound = 1.25 US Dollars.
Calculate the cross exchange rate between British Pound and Japanese Yen.
Group C
Long answer question.
The following information is obtained from the financial records of ABC Company:
Particulars | Amount |
|---|---|
Cash | Rs. 30,000 |
Accounts receivable | Rs. 70,000 |
Inventory (Opening) | Rs. 40,000 |
Inventory (Closing) | Rs. 50,000 |
Prepaid expenses | Rs. 10,000 |
Current liabilities | Rs. 80,000 |
Net sales | Rs. 600,000 |
Cost of goods sold | Rs. 300,000 |
Net profit | Rs. 60,000 |
Fixed assets | Rs. 300,000 |
Total assets | Rs. 500,000 |
Total debt | Rs. 200,000 |
Shareholders' equity | Rs. 300,000 |
Assume all sales are made on credit and 360 days in a year.
Required: Calculate the following financial ratios.
a. Current ratio
b. Quick ratio
c. Net profit margin
d. Fixed assets turnover ratio
e. Return on total assets
f. Debt-equity ratio
g. Inventory turnover ratio
h. Average collection period
Answer the following questions:
a. A company has issued a bond with the following details:
Face value = Rs. 1,000
Annual coupon rate = 8%
Maturity period = 4 years
Required rate of return = 10%
Calculate the present value of the bond. [4]
b. A company has recently paid a dividend of Rs. 5 per share. The dividend is expected to grow at a constant rate of 6% annually. If the required rate of return of investors is 12%, calculate the current market value of the share using the Gordon Growth Model.
Explain the major methods of valuing common stock. Describe the dividend discount model with a suitable numerical example.
Sunrise Manufacturing Company is planning to purchase a new machine for its production process. The machine requires an initial investment of Rs. 500,000. The expected annual cash inflows are given below:
Year | Cash Inflow (Rs.) |
|---|---|
0 | (500,000) |
1 | 150,000 |
2 | 180,000 |
3 | 200,000 |
4 | 160,000 |
5 | 120,000 |
The company's required rate of return is 10%.
Required:
a. Calculate the payback period of the investment.
b. State whether the investment should be accepted if the maximum acceptable payback period is 3 years. Give a reason.
c. Calculate the Net Present Value (NPV) of the investment.
Paper Overview & Analysis
Set A
Year
Model Question
Type
75
Full Marks
32
Pass Marks
3 Hours
Duration
22
Question Items
Question Type Breakdown
Group Breakdown