Code No: R059210102 Set No.

1
II B.Tech I Semester Regular Examinations, November 2007
MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS
( Common to Civil Engineering and Metallurgy & Material Technology)
Time: 3 hours Max Marks: 80
Answer any FIVE Questions
All Questions carry equal marks
⋆⋆⋆⋆⋆

1. What is Managerial Economics? Explain its focus areas. [16]

2. What are the needs for demand forecasting. Explain the various steps involved in
demand forecasting. [16]

3. (a) Explain how does cost-output relationship help the management while taking
output decisions.
(b) How is long run Average cost determined? [8+8]

4. (a) Define Market and explain how markets are classified?

(b) What are the important features in any market structure? [12+4]

5. Define a Joint stock company and explain its basic features. [16]

6. Explain different types of working capital. [16]

7. The following trial balance belongs to Amzad Khan with the help of which prepare
trading and profit and loss A/c and balance sheet. [16]

Dr. Cr.
Drawing and capital 18,000 1,00,000
Furniture 32,500
Equipment 15,000
Loan payable 15,000
Interest on loan 900
Sales 1,00,000
Purchases 75,000
Opening stock(1.1.05) 25,000
Trade expenses 15,000
Wages 2,000
Insurance 1,000
Commission received 4,500
Sundry debtors 28,100
Cash at bank 20,000
Sundry creditors 10,000
Interest received 3,000
2,32,500 2,32,500

Adjustments:

1 of 2
Code No: R059210102 Set No. 1
(a) Closing stock as on 31st December 2005, was valued at Rs.60,000
(b) Wages were outstanding by Rs.500
(c) Provide depreciation @ 10% on furniture.

8. Calculate the following ratios from the balance sheet given below: [16]

(a) Long term Debt-Equity ratio

(b) Liquidity ratio
(c) Fixed Assets to current Assets ratio, and
(d) Fixed Assets to Turnover ratio.

BalanceSheet
Liabilities Rs. Assets Rs.
Equity share capital 10,00,000 Goodwill 6,00,000
Reserves 2,00,000 Fixed assets(at cost) 14,00,000
Profit and Loss A/c 3,00,000 Stock 3,00,000
Secured loan 8,00,000 Debtors 3,00,000
Sundry creditors 5,00,000 Advances 1,00,000
Provision for Taxation 2,00,000 Cash on hand 3,00,000
30,00,000 30,00,000

Sales for the year were Rs. 56,00,000.

⋆⋆⋆⋆⋆

2 of 2
Code No: R059210102 Set No. 2
II B.Tech I Semester Regular Examinations, November 2007
MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS
( Common to Civil Engineering and Metallurgy & Material Technology)
Time: 3 hours Max Marks: 80
Answer any FIVE Questions
All Questions carry equal marks
⋆⋆⋆⋆⋆

1. Explain the Law of Demand. What do you mean by shifts in demand curve. [16]
2. What is meant by Elasticity of demand. How do you measure it? [16]
3. (a) What do you understand by ‘Law of increasing Returns?’ What causes make
increasing returns operate? [10]
(b) When do you notice ‘constant returns’ arising? [3]
(c) Do diminishing returns apply only for agriculture or any other fields? [3]
4. (a) Distinguish between perfect competition and monopoly.
(b) Graphically represent equilibrium position of business units in both the above
market structures. [8+8]
5. What are the reasons for Joint stock company being popular form of business
organization? [16]
6. Explain the concept of capital budgeting and what is its practical utility? [16]
7. The following balances are extracted from the books of Chandra for the year ending
31st March, 2004. Prepare a Trading profit and Loss A/c and Balance Sheet after
considering the following adjustments. [16]
(a) Closing stock was valued at Rs.50,000
(b) Wages were outstanding by Rs.1,000.
Debit balances Rs. Credit balances Rs.
Opening stock 50,000 Purchase returns 4,100
Sundry debtors 27,500 Commission 5,000
Purchases 1,00,000 Sundry creditors 50,000
Interest 10,000 Sales 1,80,000
Miscellaneous expenses 3,500 Capital 80,000
Wages 30,000
Insurance 3,600
Sundry debtors 60,000
Interest on capital 4,000
Carriage 2,500
Sales returns 3,000
Cash 25,000
3,19,100 3,19,100

1 of 2
Code No: R059210102 Set No. 2
8. (a) From the following information, calculate [16]
i. Debt Equity ratio
ii. Current ratio
Rs. Rs.
Debentures 1,40,000 Bank balance 30,000
Long term loans 70,000 Sundry Debtors 70,000
General reserve 40,000
Creditors 66,000
Bills payable 14,000
Share capital 1,20,000
(b) Calculate Interest Coverage ratio from the following information.

Rs.
Net profit after deducting interest and taxes 6,00,000
12% Debentures of the face value of 15,00,000
Amount provided towards taxation 1,20,000

⋆⋆⋆⋆⋆

2 of 2
Code No: R059210102 Set No. 3
II B.Tech I Semester Regular Examinations, November 2007
MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS
( Common to Civil Engineering and Metallurgy & Material Technology)
Time: 3 hours Max Marks: 80
Answer any FIVE Questions
All Questions carry equal marks
⋆⋆⋆⋆⋆

1. Managerial Economics is the integration of Economic Theory with Business Prac-

tice for the purpose of decision making and forward planning. Discuss. [16]

2. Explain Income Elasticity of demand and its significance in making business deci-
sions. [16]

3. Explain in detail the three stage production function and also represent diagram-
matically. [16]

4. (a) Define Market and explain how markets are classified?

(b) What are the important features in any market structure? [12+4]

5. “In the changing business environment the public sector enterprises should follow
the principles of business” Is it true? [16]

6. Write short notes on the following: [4×4]

(a) Public deposits

(b) Time value of money
(c) Circulating capital
(d) Investment evaluation.

7. The following balances were taken from the books of Balaram with the help of
which prepare Trading, Profit & Loss A/c for the year ending 31st March 2005 and

1 of 2
Code No: R059210102 Set No. 3
the Balance sheet. [16]

Debit Credit
Opening stock 4,500
Purchases 25,000
Wages 2,500
Salaries 2,000
Postage 200
Drawings 2,800
Debtors 2,000
Buildings 7,500
Furniture 4,000
Sales 30,000
Capital 16,500
Creditors 3,300
Interest received 700
50,500 50,500

Adjustments:

(a) Closing stock was valued at Rs.10,000

(b) Wages were outstanding by Rs.500
(c) Interest received in advance amounted Rs. 200 out of the given balance.

8. (a) From the following information, calculate [16]

i. Debt Equity ratio
ii. Current ratio
Rs. Rs.
Debentures 1,40,000 Bank balance 30,000
Long term loans 70,000 Sundry Debtors 70,000
General reserve 40,000
Creditors 66,000
Bills payable 14,000
Share capital 1,20,000
(b) Calculate Interest Coverage ratio from the following information.

Rs.
Net profit after deducting interest and taxes 6,00,000
12% Debentures of the face value of 15,00,000
Amount provided towards taxation 1,20,000

⋆⋆⋆⋆⋆

2 of 2
Code No: R059210102 Set No. 4
II B.Tech I Semester Regular Examinations, November 2007
MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS
( Common to Civil Engineering and Metallurgy & Material Technology)
Time: 3 hours Max Marks: 80
Answer any FIVE Questions
All Questions carry equal marks
⋆⋆⋆⋆⋆

1. Managerial Economics is the application of Economic Theory to business manage-

ment. Discuss. [16]
2. What are the needs for demand forecasting. Explain the various steps involved in
demand forecasting. [16]
3. (a) When fixed cost is Rs.7000, Profit is Rs. 3000 and Sales are Rs.50000, what
is the P/V Ratio?
(b) A company making and selling toys has made the following estimates: Selling
price Rs.20 per unit, Fixed costs Rs. 15 lakhs, Variable costs Rs. 16 per unit.
What happens in case selling price is reduced to Rs.18 per unit. [8+8]
4. (a) Define and explain the concept ‘Monopoly’ and discuss how absolute monopoly
is different from imperfect monopoly?
(b) What are the salient features of manopolistic competition?
(c) Distinguish between ‘Monopoly’ and Monopolistic competition. [6+6+4]
5. What are the differences between a partnership business and company form of
organization? [16]
6. A company is considering two investment opportunities (A and B) that cost Rs.
4,00,000 and Rs. 3,00,000 respectively. The first project generates Rs. 1,00,000/- a
year for four years. The second generates Rs.60,000/-, Rs. 1,00,000/, Rs. 80,000/-
Rs, 90,000/- and Rs. 70,000 over a five year period. The company’s cost of capital
is 8%. Which project would you choose under NPV method? [16]
7. Give a brief account on the important records of Accounting under Double entry
system and discuss briefly the scope of each. [16]
8. (a) From the following information, calculate [16]
i. Debt Equity ratio
ii. Current ratio
Rs. Rs.
Debentures 1,40,000 Bank balance 30,000
Long term loans 70,000 Sundry Debtors 70,000
General reserve 40,000
Creditors 66,000
Bills payable 14,000
Share capital 1,20,000

1 of 2
Code No: R059210102 Set No. 4
(b) Calculate Interest Coverage ratio from the following information.

Rs.
Net profit after deducting interest and taxes 6,00,000
12% Debentures of the face value of 15,00,000
Amount provided towards taxation 1,20,000

⋆⋆⋆⋆⋆

2 of 2