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F 8175
(Pages:2)
Reg. No................

M.BA DEGnEE UXAMINAUON, SEPTEMBER


Fourth Semester
WORIGNG CAPITAL I{ANAGEMENT
Time : Three Hours Answer rll tlo qwctions. Eaah qucstion carrics L2 marks.

20L

Maximum : 60 Marks

1.

Analyze the need for working capital uranagement as related to operating/cash cycle, permanent and temporary working capital.

Or

2. Describe
required.

in general tems the factors having a bearing on the total quantum of working capital
throughout the year, which, if any, of the three financing Or

3. If a firm has constant funds requirement


plans is preferable ? Why ?

4. 5.

What are the principal motivee for holding cash ?


Discuss briefly commercial papers as source of working capital finance. How would you compute the cost of commercial paper ?

Or
From the following data, compute the duration ofthe operating rycle for each of the two years and comment on the increasy'decrease :

Particulars
Siocks:

Year

L(days\
Bs.

Yeor 2(doYs)
Bs.

Raw materials Work-in-process Finished goods


Purchase of raw materials Cost ofgoods sold
Sales

20,000

27,004
18,000
24,OOO

..!

14,000 21,000 96,000 1,40,000 1,60,000 82,000 16,000

1,35,000 1,80,000 2,00,000 50,000 18,000

Debtors Creditors

Assume 360 days per year for computation Pulposes.

Tur:r over

F 8I"75

(Pages:2)

Reg. No...............:

M.BA DEGnEE UKAIITINArION, SEPTEMBER


Fourth Semester
WOBI{ING CAPITAL I{ANAGEMENT
Time : Three Hours Answer all the qwstions. Eoch qucstion carries LZ marks.

201

Maximum: 60 Marks

1.

Analyze the need for working capital management as related to operating/cash cycle, permanent and temporary working capital.

Or

2. Describe
required.

in general terus the factore having a bearing on the total quantum of working capital
throughout the year, which, if any, of the three financing Or

3. If a firm has constant funds requiremeat


plans is preferable ? Why ?

4. 5.

What are the principal motives for holding cash ?


Discuss briefly commercial papers as souroe of working capital finance" How would you compute the eost of commercial paper ?

Or
b.

From the following data, compute the duration of the operating cycle for each of the two years and comment on the increagey'decreage :

Particulars
Stocks:

Year

L(days)
Bs.

Year Z(doys)
Bs.

Raw materials Work-in-process Finished goods


Purchase of raw materials Cost ofgoods sold
Sales

20,000

27,004
18,000

..i

14,000 21,000 96,000 1,40,000 1,60,000 32,000 16,000

24,000
1,35,000 1,80,000 2,00,000 50,000 18,000

Debtors Creditors

Assume 360 days per year for computation Purposes.

Tur:r over

r'8175

7. JPL has two dates when it receives its cash inflows, that is, February

15, and August 15. On each

of these dates, it expects to receive Rs 15 crore. Cash e:rpenditures are expected to be steady throughout the subsequent 6 month period. Presently, BOI in marketable securities is 8 per cent per annum, and the cost of transfer from sec,urities to cash is Rs 125 each time a transfer occurs,

(i) (ii)

What is the optimal transfer size using the EOQ, model ? What is the average cash balance?

What would be your answer to part (i), if the ROI were 12 per cent per annum and the transfer costs were Rs 75? Why do they differ from tJrose in part (i) ? Or

8. Discuss the utility of cash budget as a tool of cash manage&ent.


construction of a cash budget
?

What are the steps involved in the

L
10.

Distinguish between : (i) Gross working capital and Net working capital ;(ii) permanent and temporary working capital ; (iii) Production and operating cycle. Or
Discuss the factors determining cash needs
?

(5 x 12 = 60 marks)

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