1. BBA 4th Sem ASODL Financial Management
BBA Assignment A
Q1. At the end of five years, how much is the initial deposit of Rs 25,000 worth if the compounding
annual rate is 10%. Also compute the worth of the initial deposit if the interest is compounded
semiannually and quarterly.
Q2. Ramesh requires Rs 100,000 at the end of 5 years so he decides to keep certain equal amount
out of his income at the end of each year in his bank account. The bank pays an interest of 8% per
annum. How much should Ramesh save each year?
Q3. Star hotels ltd have two investment proposals that are as follows.
Project A
Period Cost Net Cash
Flow
0 9000 Rs. 0
1 Rs. 1000
2 Rs. 1000
3 Rs. 1000
Project B
Period Cost Net Cash
Flow
0 12000 Rs. 0
1 Rs. 5000
2 Rs. 5000
3 Rs. 8000
Compare both the projects on the basis of its payback period, Net present value and its
profitability index using discount rate of 15%.
Q4. A company is planning to buy a new machine for Rs 2, 00,000 with life for 2 yrs. The cost of
capital is 12 %. The cash flow after tax generated from the machine for 2 yrs are:
Year Cash flow after tax Probability
1 Rs 1,00,000 0.4
1 Rs 1,20,000 0.6

2. 2 Rs 80,000 0.5
2 Rs 1,20,000 0.5
The cost of capital is 12% and risk free rate is 5%. Using the decision tree approach find out
whether the investment should be made or not?
5 . Answer any three questions out of the following
.
a) What is operating cycle? How important is it for the management of working
capital?
b) Distinguish between ( i) Gross and net working capital
ii) Permanent and temporary working capital
c) How do working capital management policies impact a firm’s risk and profitability ?
d) The balance sheet of X ltd as om 31 March 2010 is
Liabilities ( Rs) Assets (Rs)
Current Liabilities 1,00,000 Current assets 1,50,000
Long Term Liabilities 2,50,000 Fixed assts 2,00,000
Total 3,50,000 Total 3,50,000
Calculate the current ratio for the firm.
e) From the data provided below calculate the operating cycle.
Credit sales Rs 5,00,000
Cost of goods sold Rs 2,50,000
Purchases Rs 1,20,000
Average raw material Rs 60,000

3. stock
Average work in
progress
Rs 55,000
Average finished goods
stock
Rs 92,000
Average creditors Rs 60,000
Average debtors Rs 1,50,000
Q6. The balance sheet and income statement of R Electricals is given below.
Balance Sheet
Cash Rs 400
Accounts Receivable Rs 1,300
Inventories
Rs 2,100
Current
Assets
Rs 3,800
Net Fixed Assets Rs 3,320
Total Assets Rs 7,120
Accounts payable Rs 320
Accruals Rs 260
Short term loans Rs 1,100
Current
Liabilities
Rs 1,680
Long term debt Rs 2,000
Net worth Rs 3,440
Total Liabilities and net
worth
Rs 7,120

4. Source Cost
Equity Rs 4,50,000 18%
Preference shares Rs 1,00,000 11%
Debentures Rs 3,00,000 8%
Retained earnings Rs 1,50,000 18%
Rs 10,00,000

5. Q7. Calculate the weighted average cost of capital from the following information provided
Q8. From the data given below find out the price of the share according to the Gordon’s model
when dividend payout is 25% and 50%.
 Earnings per share = Rs 8
Income statement
Net sales ( all credit) Rs 12,680
Cost of goods sold Rs 8,930
Gross profit Rs 3,750
Selling, general and
administration
expenses
Rs 2,230
Interest Expense Rs 460
Profit before taxes Rs 1060
Taxes Rs 390
Profit after taxes Rs 670

6.  Rate of return on investment = 16%
 Return expected by share holders = 12%
Amity BBA Assignment B
Case Study
Mergers and acquisitions in banking sector have become familiar in the majority of all the
countries in the world. A large number of international and domestic banks all over the world are
engaged in merger and acquisition activities. One of the principal objectives behind the mergers
and acquisitions in the banking sector is to reap the benefits of economies of scale. With the help
of mergers and acquisitions in the banking sector, the banks can achieve significant growth in
their operations and minimize their expenses to a considerable extent. Another important
advantage behind this kind of merger is that in this process, competition is reduced because
merger eliminates competitors from the banking industry. Mergers and acquisitions in banking
sector are forms of horizontal merger because the merging entities are involved in the same kind
of business or commercial activities. Sometimes, non-banking financial institutions are also
merged with other banks if they provide similar type of services. Through mergers and
acquisitions in the banking sector, the banks look for strategic benefits in the banking sector.
They also try to enhance their customer base.
In the context of mergers and acquisitions in the banking sector, it can be reckoned that size does
matter and growth in size can be achieved through mergers and acquisitions quite easily. Growth
achieved by taking assistance of the mergers and acquisitions in the banking sector may be
described as inorganic growth. Both government banks and private sector banks are adopting
policies for mergers and acquisitions.
In many countries, global or multinational banks are extending their operations through mergers
and acquisitions with the regional banks in those countries. These mergers and acquisitions are
named as cross-border mergers and acquisitions in the banking sector or international mergers
and acquisitions in the banking sector. By doing this, global banking corporations are able to
place themselves into a dominant position in the banking sector, achieve economies of scale, as
well as garner market share.
Mergers and acquisitions in the banking sector have the capacity to ensure efficiency, profitability
and synergy. They also help to form and grow shareholder value. In some cases, financially
distressed banks are also subject to takeovers or mergers in the banking sector and this kind of
merger may result in monopoly and job cuts.
Deregulation in the financial market, market liberalization, economic reforms, and a number of
other factors have played an important function behind the growth of mergers and acquisitions in
the banking sector. Nevertheless, there are many challenges that are still to be overcome through
appropriate measures.
Mergers and acquisitions in banking sector are controlled or regulated by the apex financial
authority of a particular country. For example, the mergers and acquisitions in the banking sector
of India are overseen by the Reserve Bank of India (RBI).Indian competition law grants a maximum
time period of 210 days for the determination of the combination, which comprises acquisitions,

7. mergers, amalgamations and the like. One needs to take note of the fact that this stated time
frame is clearly distinct from the minimum compulsory wait period for applicants.
As per the law, the compulsory period of waiting for applicants can either be 210 days starting
from the day of notice filing or receipt of the Commission's order, whichever occurs earlier.
The threshold limits for firms entering business combinations are substantially high under the
Indian law. The threshold limits are set either in terms of the asset value or in terms the firm's
turnover. Indian threshold limits are greater than those for the EU. They are twice as high when
compared with UK.
The Indian law also provides for the modern day phenomenon of merger and acquisitions, which
are cross border in nature. As per the law domestic nexus is a pre-requisite for notification on this
type of combinations.
It can be noted that Competition Act, 2002 has undergone a recent amendment. This has replaced
the voluntary notification regime with a mandatory regime. Of the total number of 106 countries,
which possess competition laws only 9 are thought to be credited with a voluntary notification
regime. Voluntary notification regimes are generally associated with business uncertainties. Post-
combination, if firms are seen to be involved in anti-competitive practices de-merger shows the
way out.
Indian Income Tax Act has provision for tax concessions for mergers/demergers between two
Indian companies. These mergers/demergers need to satisfy the conditions pertaining to section
2(19AA) and section 2(1B) of the Indian Income Tax Act as per the applicable situation.
In case of an Indian merger when transfer of shares occurs for a company they are entitled to a
specific exemption from the capital gains tax under the “Indian I-T tax Act”. These companies can
either be of Indian origin or foreign ones.
A different set of rules is however applicable for the 'foreign company mergers'. It is a situation
where an Indian company owns the new company formed out of the merger of two foreign
companies.
It can be noted that for foreign company mergers the share allotment in the merged foreign
company in place of shares surrendered by the amalgamating foreign company would be termed
as a transfer, which would be taxable under the Indian tax law.
Also as per conditions set under section 5(1), the 'Indian I-T Act' states that, global income
accruing to an Indian company would also be included under the head of 'scope of income' for the
Indian company.
Q1. Discuss the reasons they encourage mergers in the banking sector?
Q2. Discuss the legal implications of merger in India?
Amity BBA Assignment C
1. Compounding technique shows---

8. 2. An infinite series of periodic cash flows growing at a constant rate is
3. Working capital represents---
4. An example of liquidity ratio is---
5. Discounting techniques in capital budgeting include---
6. Net Profit Ratio Signifies---
7. ABC Ltd. has a Current Ratio of 1.5: 1 and Net Current Assets of Rs. 5,00,000. What are the
Current Assets?
8. Financial Planning deals with---
9. Capital Budgeting is a part of---
10. A proposal is not a Capital Budgeting proposal if it—
11. Two mutually exclusive projects with different economic lives can be compared on the
basis of—
12. Risk in Capital budgeting implies that the decision-maker knows ___________of the cash
flows.
13. Cost of Capital refers to---
14. Which of the following cost of capital require tax adjustment?
15. Which is the most expensive source of funds?
16. In case the firm is all-equity financed, WACC would be equal to---
17. Which of the following is true?
18. Advantage of Debt financing is---
19. Cost of Equity Share Capital is more than cost of debt because---
20. Which of the following is true for Net Income Approach?
21. NOI Approach advocates that the degree of debt financing is---
22. Dividend Payout Ratio is---
23. Which of the following is not the responsibility of financial management?
24. Which of the following are not among the daily activities of financial management?
25. The mix of debt and equity in a firm is referred to as the firm's---
26. (1 + i)n
stands for---
27. Net working capital refers to---

9. 28. Retained earnings are---
29. The restructuring of a corporation should be undertaken if---
30. __________ is concerned with the acquisition, financing, and management of assets with
some overall goal in mind.
31. What is the most appropriate goal of the firm?
32. A company can improve (lower) its debt-to-total asset ratio by doing which of the
following?
33. The DuPont Approach breaks down the earning power on shareholders' book value (ROE)
as follows-- ROE = __________.
34. Which group of ratios measures how effectively the firm is using its assets?
35. Which of the following is not a cash outflow for the firm?
36. The accounting statement of cash flows reports a firm's cash flows segregated into what
categorical order?
37. Which of the following is a basic principle of finance as it relates to the management of
working capital?
38. The amount of current assets required to meet a firm's long-term minimum needs is
referred to as __________ working capital
39. The overall (weighted average) cost of capital is composed of a weighted average of
__________.
40. What is the most likely reason that a firm (who is highly profitable) might consider
acquiring a firm that has had large recent losses and will continue to have losses into the
near future?
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10. 28. Retained earnings are---
29. The restructuring of a corporation should be undertaken if---
30. __________ is concerned with the acquisition, financing, and management of assets with
some overall goal in mind.
31. What is the most appropriate goal of the firm?
32. A company can improve (lower) its debt-to-total asset ratio by doing which of the
following?
33. The DuPont Approach breaks down the earning power on shareholders' book value (ROE)
as follows-- ROE = __________.
34. Which group of ratios measures how effectively the firm is using its assets?
35. Which of the following is not a cash outflow for the firm?
36. The accounting statement of cash flows reports a firm's cash flows segregated into what
categorical order?
37. Which of the following is a basic principle of finance as it relates to the management of
working capital?
38. The amount of current assets required to meet a firm's long-term minimum needs is
referred to as __________ working capital
39. The overall (weighted average) cost of capital is composed of a weighted average of
__________.
40. What is the most likely reason that a firm (who is highly profitable) might consider
acquiring a firm that has had large recent losses and will continue to have losses into the
near future?
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