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1. Dear students get fully solved assignments
Send your semester & Specialization name to our mail id :
“ help.mbaassignments@gmail.com ”
or
Call us at : 08263069601
(Prefer mailing. Call in emergency )
ASSIGNMENT
DRIVE SUMMER 2016
PROGRAM BBA
SEMESTER V
SUBJECT CODE & NAME BBA502 &FINANCIAL MANAGEMENT
BK ID B1850
CREDIT 4
MARKS 60
Note: Answer all questions. Kindly note that answers for 10 marks questions should be
approximately of 400 words. Each question is followed by evaluation scheme.
Question1.Explain Real and Financial Assets, Finance &
Management Functions and equity and borrowed funds.
a) Explanation of Real and Financial Assets
Answer:Assets are items of the balance sheet that determine the net worth of a business. These
assetsare furtherclassifiedintofinancialandreal assets.The financial andreal assets serve as value
creationandtransactional instrumentsinproductionandinvestmentactivities. Changes in either of
these typesof assetsaffectthe value maximizationandriskmanagementobjectivesof the business.
It isfor thisreasonthat financial andreal assets are considered to be important components of the
overall business strategy.
b) Explanation of Finance & Management Functions
Answer:Financial Management means planning, organizing, directing and controlling the financial
activitiessuchasprocurementandutilization of funds of the enterprise. It means applying general
management principles to financial resources of the enterprise.

2. Scope/Elements
 Investment decisions includes investment in
c) Explanation of equity and borrowed funds
Answer:There are two types of funds that a firm can raise:- Equity funds and borrowed funds.
A firm sells shares to acquire equity funds. Shares represent ownership rights of their holders.
Buyers of shares are called share holders and they are legal owners of the firm whose share they
holdshare holdersinvesttheirmoneysharesof acompanyinexpectationof returnontheirinvested
capital. The return on shares holder’s capital consists of dividend and capital gain by selling their
shares.
Question.2. Write short notes on :
a) Budgeting and forecasting
Answer:In essence, a budget is a quantified expectation for what a business wants to achieve. Its
characteristics are:
 The budget is a detailed representation of the future results, financial position, and cash
flows that management wants the business to achieve during a certain period of time.
 The budget may only be updated once a year, depending on how frequently senior
management wants to revise information.
b) Financial Budgets
Answer:
Financial budgets are financial plans that are structured to detail projections on incomes and
expenses on both a long-term and a short-term basis. Budgets of this type normally incorporate
aspects of other types of budgeting strategies, including the preparation of a detailed budgeted
balance sheet, a section that functions as a cash flow budget and addresses the receipt of income
and the flow of expenses on an annual, semi-
c) Cost Centre
Answer:A cost centre is a department within a company that does not produce direct profit and
adds to the cost of running a company. However, all cost centres perform an important job. It
improvesthe satisfactionof customersandindirectlyincreasessales.The managerandemployeesof

3. cost centre are notaccountable foritsprofitand investmentdecisionbuttheyare responsiblefor its
cost. They are liable for keeping their cost in line or below
Q3.Explain on cost of capital and cost of preference capital.
a) Explanation of cost of capital
Answer: Ineconomicsandaccounting,the cost of capital is the cost of a company'sfunds(bothdebt
and equity), or, from an investor's point of view "the required rate of return on a portfolio
company's existing securities".It is used to evaluate new projects of a company. It is the minimum
return that investors expect for providing capital to the company, thus setting a benchmark that a
new project has to meet.
For an investmenttobe worthwhile,the expectedreturn oncapital hasto be higher than the cost of
capital.Givena numberof competinginvestmentopportunities,investors are expected to put their
capital to work in order to maximize the return. In other
b) Explanation of cost of preference capital
Answer:Preference shares represent a special type of ownership interest in the firm. They are
entitledtoafixeddividend,butsubjecttoavailabilityof profitfordistribution.The preference share
holders have to be paid their fixed dividends before any distribution of dividends to the equity
shareholders.Theirdividendsare notallowedasanexpense forthe purpose of taxation. In fact, the
preference dividend is a distribution of profits of the business. Because dividends are paid out of
profitsaftertaxes,the questionof aftertax orbefore tax cost of preference shares does not arise as
in case of cost of debentures.
Question.4. Solve the given problem below:
Sales 25,00,000 ; Variable cost 15,00,000 ; Fixed cost 5,00,000 (including interest on10,00,000).
Calculate degree of financial leverage.
Determine the operating leverage :
Determine the degree of operating leverage from the following data:
S Ltd R Ltd
Sales 25,00,000 30,00,000
Fixed costs 7,50,000 15,00,000
Variable expenses 50% of sales for firm S 25% for firm R.
Answer: - . Calculation of financial leverage:-
Sales 25,00,000 Rs.

4. – Variable cost 15,00,000 Rs.
– Operating fixed costs (5,00,000 Rs. – 1,50,000 Rs.) 3,50,000 Rs.
Question.5. Explain the phases of Capital Investment Planning and
Control. Why is Net Present Value (NPV) important?
a) Explanation of phases of Capital Investment Planning and Control.
b) Importance of NPV
Answer:Capital Planning and Investment Control (CPIC) is a systematic approach to selecting,
managing, and evaluating information technology investments.
Optimizing the Performance of IT Investments
Capital PlanningandInvestmentControl (CPIC) isasystematicapproachto selecting, managing, and
evaluating information technology investments.
Question.6. Write about cash planning and explain about cash
forecasting and budgeting.
Answer:Asan integral elementof public expenditure management, governments need to develop
cash planning and management to keep within budgeted expenditure in cash terms; to prevent
unanticipatedborrowingthatmightdisruptmonetarypolicies; and to help identify the need for in-
yearremedial fiscal action. Variations in in-year actual versus planned patterns of expenditure are
not withoutcost.Evenif the total limit on borrowing were not exceeded over a fiscal year, higher-
than-plannedexpenditures within a short period may lead to a surge in borrowing and can disrupt
the achievement of monetary policy objectives.
Dear students get fully solved assignments
Send your semester & Specialization name to our mail id :
“ help.mbaassignments@gmail.com ”
or
Call us at : 08263069601
(Prefer mailing. Call in emergency )