MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS-supply 2k9

Code No: 43030
JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY, HYDERABAD
R07 II B.Tech. I Semester supplementary, May/June – 2009
MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS
(Common to CSE, IT, CSSE)
Time: 3 hours Max. Marks.80
Answer any Five questions
All questions carry equal marks
---
1.a) Explain the law of demand and state the reasons for the demand curve to slope
from left to right.
b) Explain the nature and scope of managerial economics. [8+8]
2.a) Define price Demand, Income Demand and Cross Demand.
b) Explain various elasticities of demand. [8+8]
3.a) Explain Cobb Douglas production function.
b) Define cost and explain various types of cost. [8+8]
4. Discuss the features of perfect competition and explain how price is determined in
perfect competition. [16]
5.a) Define Partnership and explain its advantages and disadvantages.
b) Differentiate between public and private companies. [8+8]
6. Compute Pay back period (ii) Net Present Value (iii) Profitability index of two
projects if cost of capital is 10% [16]
Project
X
Project Y
Investment 70000 70000
Cash inflows I year 10000 50000
II year 20000 40000
III year 30000 20000
IV year 45000 10000
V year 60000 10000
Contd…2
SET-1
::Set-1::
7.a) Explain (i) Journal (ii) Ledger
b) Journalize the following transactions 2009: May
i) Vamsi Commenced business with Rs 100000
ii) Deposited Rs 40000 with bank
iii) Purchased goods worth Rs 15000 from Mr. A
iv) Purchased goods worth Rs 5000 from Mr.B
v) Sold goods to Mr. Z for cash Rs 5500
vi) Paid rent by cheque worth Rs 8000
vii) Goods returned by Mr Z worth Rs 250
viii) Returned defective goods worth Rs 900 to Mr.A [6+10]
8. The following is the balance sheet of a company. Compute:
(i) Current Ratio
(ii) Quick Ratio
(iii) Debt –Equity Ratio
(iv) Capital Gearing Ratio
(V) Proprietary Ratio [16]
Liabilities Amount (Rs) Assets Amount ( Rs)
Equity Share Capital 2,00,000 Good Will 1,40,000
Profit and Loss A/c 30000 Plant & Machinery 3,50,000
General Reserve 40000 Stock 2,00,000
12% debentures 4,20,000 Sundry Debtors 1,00,000
Sundry Creditors 1,00,000 Bills Receivable 10,000
Bills Payable 50000 Cash at Bank 40,000
8,40,000 8,40,000
*****
Code No: 43030
JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY, HYDERABAD
R07 II B.Tech. I Semester supplementary, May/June – 2009
MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS
(Common to CSE, IT, CSSE)
Time: 3 hours Max. Marks.80
Answer any Five questions
All questions carry equal marks
---
1.a) State the law of demand and explain Giffen’s Paradox.
b) Discuss the need for demand forecasting. How is demand for a new product
estimated? [8+8]
2.a) Explain the factors that govern elasticity of demand.
b) Discuss the significance of elasticity of demand. [8+8]
3.a) Explain Break Even Analysis and State the assumptions made in Break Even
Analysis.
b) Explain the terms:
(i) Opportunity Cost
(ii) Fixed Cost
(iii) Variable Cost. [8+8]
4.a) Explain the objectives of pricing policy.
b) What are the advantages and limitations of marginal pricing? [8+8]
5.a) Explain Sole trader form of Organisation.
b) Write short notes on:
(i) Joint Stock Company
(ii) Public company vs Private Company. [8+8]
6. A company is considering two mutually exclusive projects. Both require an initial
cash outlay of Rs 10000 each and have a life of 5 years. The company’s required
rate of return is 10% and pays tax @50%. The projects will be depreciated on
straight-line basis. The net cash flows before taxes expected to be generated by
the projects are as follows.
Year 1 2 3 4 5
Project 1 (Cash flows) 4000 4000 4000 4000 4000
Project 2 (Cash flows) 6000 3000 2000 5000 5000
Calculate (i) Payback period (ii) ARR (iii) NPV (iv) PI for each project [16]
Contd…2
SET-2
::Set-2::
7. Prepare the Trading, Profit & Loss account and Balance sheet of M/s Rooplal &
Co for the year ending 2008 from the following trial balance
Debit balances Amount Credit balances Amount
Drawings 18000 Capital 50000
Plant and machinery 50000 Sales 200000
Purchases 60000 Creditors 20000
Sundry Debtors 40000 Bank Overdraft 10000
Wages 10000 Bills Payable 8000
Carriage 3000
Salaries 7000
Rent 6000
Repairs 3000
Opening stock 12000
Land and buildings 40000
Furniture 30000
Discount 9000
288000 288000
Adjustments
Closing stock ( 31.12.2008) Rs 30000
Outstanding wages Rs 500
Provide 5% for doubtful debts
Depreciate Plant and machinery by 5%. [16]
8. From the following balance sheet compute (i) Current ratio (ii) Quick ratio (iii) Debt
equity ratio (iv) Capital Gearing ratio (v) Proprietary ratio [16]
Liabilities Amount Assets Amount
6% preference share capital 1,50,000 Good will 20,000
Equity share capital 2,50,000 Land and buildings 2,50,000
General Reserve 20,000 Machinery 1,75,000
Profit and loss account 15,000 Furniture 10,000
5% debentures 1,00,000 Stocks 90,000
Sundry Creditors 28,000 Debtors 21,,000
Bills Payable 12,000 Cash at bank 5,000
Prepaid expenses 4,000
5,75,000 5,75,000
*****
Code No: 43030
JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY, HYDERABAD
R07 II B.Tech. I Semester supplementary, May/June – 2009
MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS
(Common to CSE, IT, CSSE)
Time: 3 hours Max. Marks.80
Answer any Five questions
All questions carry equal marks
---
1.a) Explain the factors that influence the demand for a product.
b) Discuss the techniques of forecasting demand with their merits and limitations.
[8+8]
2.a) What is elasticity of demand? How would it be measured? Bring out its practical
importance.
b) Distinguish between elastic and inelastic demand. [8+8]
3.a) Explain the relationship between Total Cost, Average cost and Marginal Cost.
b) Discuss any two methods of computing Break even point. [8+8]
4.a) What is monopoly? Explain various forms of monopoly.
b) Discuss the importance of pricing in industries. [8+8]
5.a) Explain the advantages and disadvantages of Sole Proprietorship.
b) Write short notes on:
(i) Partnership deed
(ii) Obligations and Liabilities of partners. [8+8]
6. Explain the importance of Capital Budgeting and Discuss the techniques for
evaluating capital investment decisions. [16]
Contd…2
SET-3
::set-3::
7. Prepare Trading, Profit and loss account and Balance sheet from the following
trial balance of Mr Xavier.
Debit balances Amount Credit balances Amount
Opening stock
30000 Sales 127000
Purchases 68000 Purchase returns 1275
Discount allowed 75 Capital 100000
Bank charges 350 Creditors 25000
Sales returns 1000 Discount received 800
Sundry debtors 45000
Salaries 6800
Wages 10000
Freight in 750
Freight out 1200
Rent 2000
Advertisement 2000
Cash at bank 6900
Plant and Machinery 80000
2,54,075 2,54,075
Adjustments: Closing stock was valued at Rs 50000.
Depreciate plant and machinery by 5%
Make a reserve of 5% on debtors for doubtful debts
Charge 6% interest on capital. [16]
8. Explain:
(i) Liquidity ratios
(ii) Activity ratios
(iii) Profitability ratios
(iv) Capital structure ratios. [16]
*****
Code No: 43030
JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY, HYDERABAD
R07 II B.Tech. I Semester supplementary, May/June – 2009
MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS
(Common to CSE, IT, CSSE)
Time: 3 hours Max. Marks.80
Answer any Five questions
All questions carry equal marks
---
1.a) Define Managerial economics and Discuss the role of economics in decision
making.
b) Distinguish between income elasticity of demand and cross elasticity of demand.
[8+8]
2.a) Discuss various types of isoquants.
b) What is a production function? Explain its importance. [8+8]
3.a) Explain (i) P/V Ratio (ii) Margin of Safety.
b) Write short notes on (i) Opportunity cost (ii) Explicit and implicit cost. [8+8]
4.a) Discuss any two pricing methods.
b) Explain various types of market. [8+8]
5.a) Discuss the factors that effect the choice of business organization
b) Explain the features of Partnership and evaluate it against sole proprietorship.
[8+8]
6.a) What is capital budgeting? Why is it significant for a firm?
b) Compute NPV for the following investment profile:
Year Cash flow
1 10000
2 8000
3 15000
4 20000
Investment is Rs 25000 and cost of capital is 10% [8+8]
Contd…2
SET-4
::Set-4::
7. The following trial balance is extracted from the books of a merchant as on
31.12.2008. Prepare the final accounts from the information.
Debit balances Amount Credit balances Amount
Furniture 6400 Capital 125000
Vehicles 62500 Commission 2000
Buildings 75000 Creditors 25000
Bad debts 1250 Sales 154500
Debtors 38000 Bank overdraft 28500
Stock 1.1.2008 34600 Purchase returns 1250
Purchases 54750 Interest 3750
Sales returns 2000
Advertising 5680
Cash 6000
General Expenses 20820
Salaries 33000
340000 340000
The following adjustments are to be made
Stock on 31.12.2008 was Rs 32500
Provide Depreciation on furniture @10% [16]
8.a) Explain different types of financial ratios.
b) Explain the importance and limitations of ratio analysis. [8+8]
*****