WORKSHEETS FOR FINANCIAL MANAGEMENT CHAPTERS FOR PRACTICE

1. ASSIGNMENT THEORY QUESTIONS
CHAPTER 1-BACKGROUND
1. Write short notes on: (a) Wealth maximization. (b) Functions of finance manager. (c) Treasury Management.
2. Explain how the scope of finance function has changed overtime. What role a finance manager play in a modern firm? [B.Com. (H.),
D.U., 2014]
3. The modern approach to corporate finance is an improvement over the traditional approach. Comment.
4. Draw a typical organization chart highlighting the finance function of a company.
5. Explain wealth maximization and value maximization objectives of financial management.
6. “An optimal combination of decisions relating to investment, financing and dividends will maximize the value of the firm to its
shareholders”. Examine.
7. “It has been traditionally argued that the objective of a firm is to earn profit, hence, the objective of financial management is also
profit making”. Comment.
8. “Financial management is nothing but managerial decision making in asset mix, capital mix and profit “allocation”. Comment.
[B.Com. (H.), D.U.]
9. Examine inter-relationship among the investment, financing and dividend decisions.
10. What are the principles of financial decision making? Explain and illustrate the factors which should be kept in mind while taking
financial decision.
11. “Financial management is more than procurement of funds”. What do you think about the responsibilities of a finance manager?
[B.Com. (H), D.U., 2004, 2005]
12. “The profit maximization is not an operationally feasible criterion”. Do you agree? [B.Com. (H), D.U., 2010]
13. When can there be conflict between owners and management’s goals? How wealth maximization takes care of this?
14. How the financial decision making involve risk-return trade-off? [B.Com. (H), D.U., 2013]

2. 15. “Financial decision making is the hallmark of financial management”. Examine in the light of this statement, the important financial
decisions in a firm.
16. “Financial management has expanded in its scope during last few decades”. Examine the modern approach to the scope of financial
management. [B.Com. (H), D.U., 2013, 2018]
17. “Financial Management is concerned with the solutions of three major decisions a firm must make, the investment, the financing
and the dividend decisions.” Explain this statement highlighting the inter-relationship amongst these decisions. [B.Com. (H), D.U.,
1999, 2016]
18. Investment, Financing and Dividend decisions are all interrelated. Comment. [B.Com. (H), D.U., 2000, 2007, 2012]
19. “The corporate firm will attempt to maximize the shareholder’s wealth by taking action that increase the current value per share of
existing stock of the firms.” (Ross). Comment. [B.Com. (H), D.U., 2001]
20. “Growth is a realistic objective of a joint stock company for financial decision making”. [B.Com. (H), D.U., 2002]
21. “The Finance Manager has no role to play in a dot.com company”. Comment. [B.Com. (H), D.U., 2002]
22. “The financial goal for a firm should be to maximise profit and not wealth.” Do you agree? Comment. [B.Com. (H), D.U., 2003]
23. “Wealth Maximization is only a decision criterion and not a goal.” Explain. [B.Com. (H), D.U., 2004, 2018]
24. Explain the concept of ‘profit maximization’ and ‘wealth maximization’. Which of these is better operational guide for finance
manager? [B.Com. (H), D.U., 2007]
25. What are the basic financial decisions? How do they involve risk-return trade off? [B.Com. (H), D.U., 2008]
26. Financial Accounting and Financial Management are complementary in nature. Do you agree? Explain. [B.Com. (H), D.U., 2009]
27. “Wealth Maximization is a better criterion than profit maximization.” Do you agree ? Explain. [B.Com. (H), D.U., 2011, 2016]
28. Why is it inappropriate to seek profit maximization as the goal of financial decision making? How would you justify the adoption
of wealth maximization as an apt substitute for it? [B.Com. (H), D.U., 2015]
29. What do you mean by financial management? How is it different from financial accounting?

3. CHAPTER 2- MATHEMATICS OF FINANCE
1. Write short notes on : (a) Effective rate of interest. (b) Present value of an Annuity Due. (c) Present value of a Growing Annuity.
2. What is meant by the phrase “present value of a future amount”? How are the present values and future values calculated?
3. “Individuals do have a time preference for money”. State the reason for such preference.
4. What is the relevance of time value of money in financial decision making? [B. Com. (H.), D.U., 2017, 2018]
5. Explain the discounting technique of adjusting for time value of money.
6. Explain how the discounting and compounding techniques help in sinking funds creation and capital recovery.
7. “Cash flows occurring at different point of time are not comparable”. Explain the reason and how can they be made comparable. [B.
Com. (H.), D.U., 2013]
8. “Incorporation of time value of money helps financial manager is taking better decisions”. Illustrate.
9. “Potential analyst should take into account the time value of money”. Explain with suitable examples. [B. Com. (H.), D.U., 2014]
10. What effect would a decrease in interest rate or an increase in holding period of a deposit have on its future value? Why?
11. Why is the consideration of time important in financial decision making? How can time be adjusted? [B. Com. (H.), D.U., 2011,
2015]
12. “TVM does not exist in the absence of inflation.” Do you agree? Give reasons.
13. ‘A rupee of today is not equal to the rupee of tomorrow’. Explain
CONTD

4. CHAPTER 2- MATHEMATICS OF FINANCE - PROBLEMS