Sub. code 4181
NEB — GRADE XII
Set F
Model Question
Class 12 Finance Model Question Set F
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 F (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
What is the primary objective of financial management?
What is meant by the statement of changes in equity?
Define liquidity ratio.
What is trade credit as a source of business finance?
State the meaning of operating leverage.
What is a callable bond?
Define profitability index.
What is temporary working capital?
What is meant by dividend payout ratio?
Define foreign exchange risk.
Calculate Nepalese rupees required to purchase US$ 750.
Group B
Short answer questions
Explain any five major objectives of financial management.
Explain the importance of financial reporting to investors, creditors, management and other stakeholders.
Explain any five advantages of equity financing as a source of business finance.
What is financial leverage? Explain two advantages and two disadvantages of using debt financing in a company's capital structure.
A company is considering purchasing a machine costing Rs. 5,60,000. The expected annual cash inflows from the machine are Rs. 1,40,000.
Calculate the payback period of the investment. Also explain two limitations of the payback period method.
A company has an average inventory conversion period of 50 days, an average receivable collection period of 30 days and an average payable deferral period of 20 days.
Calculate:
a. Operating cycle.
b. Cash conversion cycle.
c. State one importance of cash conversion cycle.
Explain any five common dividend payment methods or forms of dividend distribution.
The exchange rate between Japanese Yen and US Dollar is ¥1 = US 1 = Rs. 141.
Calculate the cross exchange rate between Japanese Yen and Nepalese Rupees.
Explain any five major challenges faced by multinational corporations in international financial management.
Group C
Long answer question
The following information is extracted from the financial statements of Everest Manufacturing Company Ltd.:
Particulars | Amount (Rs.) |
|---|---|
Cash in hand | 50,000 |
Bank balance | 90,000 |
Trade receivables | 1,10,000 |
Inventory | 1,50,000 |
Land and building | 5,00,000 |
Creditors | 1,00,000 |
Outstanding expenses | 50,000 |
Long-term debentures | 2,00,000 |
Equity share capital | 3,00,000 |
Reserves and surplus | 1,50,000 |
Additional information:
Opening inventory = Rs. 1,30,000
Cost of goods sold = Rs. 9,60,000
Net sales = Rs. 12,00,000
Operating profit = Rs. 2,40,000
Net profit after tax = Rs. 1,50,000
Calculate the following financial ratios:
a. Current ratio.
b. Quick ratio.
c. Debt-equity ratio.
d. Inventory turnover ratio.
e. Total assets turnover ratio.
f. Gross profit margin.
g. Operating profit margin.
h. Net profit margin.
a. A company issues a bond having a face value of Rs. 2,000 with an annual coupon rate of 9%. The bond will mature after 5 years. If the required rate of return is 11%, calculate the present value of the bond.
b. A company has just paid an annual dividend of Rs. 15 per share. The dividend is expected to grow at a constant rate of 6% annually. If the required rate of return is 12%, calculate the intrinsic value of the common stock.
What is preference share? Explain any six features of preference shares.
A company is considering two mutually exclusive investment proposals. The estimated cash flows are given below:
Year | Cash Flow | Project X (Rs.) | Project Y (Rs.) |
|---|---|---|---|
0 | Initial Investment | (5,00,000) | (5,00,000) |
1 | Annual Cash Inflow | 1,80,000 | 1,00,000 |
2 | Annual Cash Inflow | 1,70,000 | 1,50,000 |
3 | Annual Cash Inflow | 1,60,000 | 2,00,000 |
4 | Annual Cash Inflow | 1,50,000 | 2,10,000 |
5 | Annual Cash Inflow | 1,40,000 | 1,80,000 |
The required rate of return is 10%.
Required:
a. Calculate the Payback Period of Project X and Project Y.
b. Calculate the Net Present Value (NPV) of both projects.
c. Recommend the best project on the basis of NPV.
Paper Overview & Analysis
Set F
Year
Model Question
Type
75
Full Marks
32
Pass Marks
3 Hours
Duration
22
Question Items
Question Type Breakdown
Group Breakdown