DMBA218 FINANCIAL MANAGEMENT JULY AUG 2026

Description

SESSION	JUL-AUG 2026
PROGRAM	MASTER OF BUSINESS ADMINISTRATION (MBA)
SEMESTER	II
COURSE CODE & NAME	DMBA218 FINANCIAL MANAGEMENT

 

Assignment Set – 1

 

Q.1. Explain the scope and objectives of Financial Management. Distinguish between Profit Maximization and Wealth Maximization, and discuss why wealth maximization is considered an important objective of modern financial management. (10 Marks)

Ans 1.

Scope of Financial Management

Financial Management is planning, organising, directing and controlling the financial activities of an organisation. It applies to large capital decisions like how much capital should a firm raise, how it should invest it, how it should distribute earnings and how it should

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Q.2. A company is considering an investment that will generate cash flows of Rs 80,000 at the end of each year for 4 years. If the required rate of return is 10% per annum, calculate the present value of the cash flows. Explain how the Time Value of Money concept supports capital investment decisions. (10 Marks)

Ans 2.

Meaning of Time Value of Money

Time Value of Money (TVM) is an important concept in finance that says that a dollar today is worth more than a dollar tomorrow. This is because money received today can be invested and used for earning a return, and by delaying the receipt of money an opportunity is given

 

Q.3. Explain the concept of Cost of Capital and discuss the methods of determining the cost of different sources of finance. A firm has 40% equity costing 14%, 20% preference shares costing 10%, and 40% debt costing 8%. If the corporate tax rate is 25%, calculate the Weighted Average Cost of Capital (WACC). (10 Marks)

Ans 3.

Meaning of Cost of Capital

The rate of return that a firm needs on its investments to meet the expectations of the investors that have provided the funds to the business is Cost of Capital. It is the cost the firm would have to pay on the funds it has raised from various sources including equity, preference shares and debt. Each source is associated with a different cost, so the overall cost

 

Assignment Set – 2

 

Q.4. Explain Operating Leverage, Financial Leverage and Combined Leverage. Discuss how leverage affects the risk and return of a firm. Illustrate your answer with suitable numerical or business examples. (10 Marks)

Ans 4.

Meaning of Operating Leverage

The concept of operating leverage is based on the fact that some of a firm’s operating costs are fixed costs, which do not vary with the level of output (e.g., rent, depreciation, some salaries). Sales volume changes have a much greater effect on operating profit when the fixed

 

Q.5. Explain in detail, Dividend Relevance Model, Miller and Modigliani Model, Stability of Dividends, Forms of Dividends. (10 Marks)

Ans 5.

Dividend Relevance Model

The dividend relevance school of thought believes that the dividend decision of the firm has a direct impact on the market value of the firm. This argument suggests that investors would rather receive the dividend now as opposed to risk a capital gain in the future, as an amount

 

Q.6. Tabulate the key differences between the Conventional & operating cycle approaches of Working Capital Management and provide one example for each. (10 Marks)

Ans 6.

Meaning of Working Capital Management

Working Capital Management is the operation of a firm’s short term assets and liabilities (e.g., cash, inventory, receivables and payables) to ensure the smooth day to day activities of a business without any unnecessary strains on its resources. There are two methods of working capital evaluation and management that are often discussed: the conventional