MIBM EMBA Answer Sheets - A firm has lead time demand distribution which is given below. It has estimated carrying cost 20% p.a. of price, which is Rs. 100. Shortage cost is also estimated at Rs. 25 per unit per period of time.
MIBM EMBA Answer Sheets - A firm has lead time demand distribution which is given below. It has estimated carrying cost 20% p.a. of price, which is Rs. 100. Shortage cost is also estimated at Rs. 25 per unit per period of time.
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Management of Working Capital
Section – A (Marks – 50)
Attempt any five questions
1- (a) A firm has lead time demand
distribution which is given below. It has estimated carrying cost 20% p.a. of
price, which is Rs. 100. Shortage cost is also estimated at Rs. 25 per unit per
period of time.
Determine the optimum reorder level.
(b) A processing plant has a requirement
of a particular chemical which is 40 kg per week. The cost of ordering is Rs.
150 per order, holding cost is Re. 100 per kg per week, and no shortages are
permitted. Vendor A will supply the chemical at Rs. 1100 per kg. Vendor B
quotes the following price schedule (where X is the order quantity):
Which source would you prefer and what will be
the minimum cost order size?
2- Ratio Analysis is an effective tool
used by the management of a firm for better planning and control of working
operations.' Discuss in the light of the above statement the importance of
Ratio Analysis in Working Capital Management. Also explain the difference
between Current Ratio and Acid-test Ratio
3- Explain what a Letter of Credit (LC)
is. How is it different from bank guarantee? Also, discuss the role of LC in
promoting trade and provide non-fund based source of finance for working
capital.
4- Explain the term working capital. What
is the primary objective of working capital management? Define a.) Fixed
working capital b.) Variable working capital
5- Write short notes on any four of the
following:
(i) Current Assets and Fixed Assets (ii)
Terms of credit (iii) Euromarkets as a source of financing (iv) Maximum
Permissible Bank Finance (v) Motives of holding Cash in a firm
6- Distinguish between the
following:
(i) Liquidity and Profitability in
Working Capital Decisions (ii) Operating Cycle and Cash Conversion Cycle (iii)
ABC Analysis and VED Analysis as methods of inventory classification (iv)
Public Deposits and Certificate of Deposits
Section – B (Marks – 35)
Attempt any five questions –
1- Explain basic
corporate finance framework.
2- Describe in
details determination of finance for operation in an organization.
3- Explain
positive versus negative working capital strategies and growth.
4- What
recommendations of Tandon committee were accepted by RBI according to its
notification on 21st Aug 1975?
5- Explain credit
policy and how it is evaluated?
6- Discuss the walker’s approach and
trade off approach to working capital investment.
Section – C
(Marks – 15)
Attempt any three questions –
1- Explain definition and
interpretation of working capital.
2- What is the effect of
seasonality on working capital?
3- Explain Miller-Orr Model
4- Which credit rating agencies
are authorized by RBI to provide a credit rating for Commercial Papers?
5- What is fund based lending?
What are the various forms in which fund based lending may be made by banks?
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For answersheets contact
info.answersheets@gmail.com
+91 95030-94040
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