405 - Practical Applications in Finance

Q-1. Describe the practical importance of Ratio Analysis as a tool for a Finance Manager of a organization ? Q- 2. Does the importance of Ratio Analysis as a tool change from one industry to another and from a small sized firm to a large corporate ? Support your answers with logical explanations. Q-3. Bring out the economic impact of foreign exchange rate fluctuations on developing countries ? Q-4. What are the objectives of taxation ? What are the differences between direct taxation and indirect taxation ? Q- 5. The country is going through an economic slowdown. In order to come out of this economic crisis, it is decided that increasing the revenues of the Government is the only way to come out of this. Hence, you are appointed as the Chief Finance Advisor to Shri. P. Chidambaram, the Honble Finance Minister of the Government of India. The FinMin is in a great dilemma. In order to increase the revenues for the Government, he is planning on increasing the tax rates, but is confused whether to increase Direct Taxes or Indirect Taxes. He approaches you for help in this matter. The future of this country is now in your hands. You have the following options : a. Increase Direct Taxes and keep Indirect Taxes constant. b. Increase Direct Taxes and reduce Indirect Taxes. c. Increase Indirect Taxes and keep Direct Taxes constant. d. Increase Indirect Taxes and reduce Direct Taxes. e. Increase both Direct and Indirect Taxes. Q-6. Which option would you choose and why ? Explain your answers with suitable numerical examples and suggestions to the Honble FinMin. Q- 7. Explain the setup and operations process of Mutual Funds in India. How many Mutual Funds operate in India ?

Q. 8. As a financial planner, prepare a financial and investment plan with the following data : Mr. Shahid Kapoor works with a private firm as GM Operations. He earns Rs.6 Lacs per annum. He is 57 years old and has 2 children. His daughter was married last year and he spent Rs.13 Lacs for her marriage. His son has recently completed his MBA from IIM-A and shall be joining DeloitteTouche Tomatsu in Tokyo as Head Strategic Marketing at a annual compensation of Rs. 93 Lacs. Mr. Kapoor had taken some soft loans for his daughters marriage and has paid off a major part of it. He still has to repay Rs. 2 Lacs for the same and that is his main priority. He owns a house in Mumbai and currently lives on rent in Delhi. His monthly expenses is Rs. 12K including food and stay. He plans to buy a car (of about 4Lacs) and a house in Delhi (of about 8Lacs). He also wants to save as much tax as possible. This year, his employer has already cut TDS of Rs.35K and shall be deducting the balance in the coming months salary incase he does not submit proof of his investments. His wife passed away 6 months ago and currently stays with his son till he goes for work in August 2009. His retirement age is 70. He comes to you, a MBA Finance (Distinction) and a Certified Financial Planner, for advice. You need to prepare an investment plan for him and are asked to give him a short term and a long term financial plan in which he can save tax and also achieve his goals. Consider all the following details given above. You may assume other information if required (state them separately as assumptions made by you). He may choose to take financial support from his son, but only if absolutely required. You can decide on all the available investment options in the market like Mutual Funds, Shares, Insurance, NSC, PPF and others. Prepare a plan for Mr. Shahid Kapoor and support your plan with numerical examples. Q-9. Explain the role and importance of the Insurance Sector in India. What is the growth pattern expected from the Insurance Industry. What are the new trends in this sector in the past 5 years ? Q-10. Explain the various roles played by a modern Management Accountant. Q- 11.What is the importance of FDI and FII inflows for an economy ? Explain the pattern of FDI and FII Inflows in India giving examples.

Q-12. What is Fundamental and Technical Analysis ? Write a detailed note on both of them. Q-13. With the following ratios and further information given below, prepare the balance sheet of X Ltd. which has only one class of share capital. a. Sales for the year Rs. 20,00,000 b. Gross profit ratio 25% c. Current ratio 1.5 d. Quick assets (cash and debtors) ratio 1.25 e. Stock turnover ratio 15 times f. Debts collection period 1 months g. Turnover to fixed assets 1.5 h. Ratio of Reserve the Share Capital 0.33 (i.e. 1/3) i. Fixed assets to Net worth 0.83 (i.e., 5/6). (The term turnover refers to cost of sales and the term stock to closing stock). Q-14. What are the methods of raising an IPO ? Explain each of them in detail. Q-15. What practical factors influence the dividend policy of a firm. Explain your answer logically. Q-16. What is hedging ? What are the various types of hedge ? What are the methods of hedging in the Futures and Options Market. Q-17. Describe the trend of foreign exchange reserves in India since liberalization. Q-18. What is the secondary market ? What are the differences between money market and capital market ? Q-19. Explain the functions of Commercial Banks and the structure of the Indian Banking Industry. Q-20. What is meant by financial services ? What are the important financial services available in the Indian market ?

Q-21. What are the banking innovations made by New Generation Banks ? What are your suggestions for improvements in the Indian Banking Sector ? Q-22. Explain the concept of IRD and ERD with reference to International Finance. Assume a numerical example to elaborate on the same. Q- 23.Compare and contrast between owned capital and loaned capital. Explain the advantages and disadvantages of both. Under which circumstances should a company opt for each of them and why ? Support your answer with logical explanations. Q-24. Explain the concept of Insurance ? What are the basic principles of Insurance ? Q-25. What is Credit Rating ? What are the Credit Rating Institutions in India ? Give details about each of them ? Q-26. What do you mean by Underwriting ? Why and when is underwriting required ? Q-27. Explain the scope of Mutual Funds in India. Q. 28. Discuss the different forms of business enterprises that offer financial services ? What is Bancassurance ? Q-29. What is Merchant Banking ? What are the roles and functions of a Merchant Banker ? Are there any requirements to become a Merchant Banker ? If so, what are they ? Q-30. What are the advantages and disadvantages of the IRR method as a project appraisal criterion ? Explain with an example. Q-31. What are the advantages and disadvantages of the NPV method as a project appraisal criterion ? Explain with an example. Q-32. What is Venture Capital ? What is Private Equity ? How far do they facilitate the success of a project ?

Q-33. What do you mean by Mergers, Takeovers and Acquisitions ? Who is a White Knight ? What is his relevance from the viewpoint of the Target company ? Q- 34.Give atleast 2 examples from the current market scenario of Mergers and Acquisitions. Explain their process in detail. Q-35. What do you mean by Synergy ? What are the methods to calculate Synergy ? Q-36. Explain the trade cycle in International Finance. Use an example and draw a diagram elaborating the same. Q-37. Give details about Pre-shipment Finance and Post-Shipment Finance. Why does an exporter need them ? What are the methods to avail of them ? Q-38. What are the advantages and disadvantages of Portfolio Management. What are the steps involved in developing a Portfolio. Q-39. What is SEBI ? Explain the powers and functions of SEBI. Q-40. Give details on the Satyam Scandal by Mr. Ramalinga Raju. Explain the financial implications of his actions on the company, industry and the country as a whole.