Tips to solve Financial Management paper

Advertisement

The FM paper generally has around 40 marks numerical and the rest is theory.

Section 1

Q1. This questions would consist of 5 one line questions carrying 1 mark each. These questions would be straight forward one liners based on the chapters that we have covered in the numerical.

Q2A. There would be 3 or 4 questions carrying 5 marks each. Of which any two should be solved. The level of difficulty would be simple. The following are the expected questions that could come along with their tentative variety

  • Leverages (Simple calculation of OL, FL, CL with data given on sales and costs along with interest
  • Receivables management (simple question on computation of opportunity cost for credit period given and evaluation of 2 or 3 credit options)
  • Cost of capital (sure question on computation of WACC when the amounts and cost of each component of capital is given). You may be asked to compute Kd or Ke on the given data.
  • Capital restructuring (Simple sums on merger based on exchange of shares on MPS, EPS method. Basis and straight forward sums)

Q2B. Case study type numerical on capital budgeting or cash management. In capital budgeting computation of NAV and using capital rationing for 3-4 machines/options. Level of difficulty would be moderate. Please don’t leave any questions unanswered. If you are not confident with the whole case, you may atleast make an income statement to compute cash inflow. Also don’t forget to check whether the data given is PAT or EBIT or Cash inflow. Majority of the students make a mistake in identifying the same.

In cash management, moderate level sums where cash inflow and outflow for 3 months would be asked to be computed. Sales information could be bifurcated in a delayed structure over 3 months. Please pay attention to arrears in payment of wages, expenses. Remember that cash management only has to be computed by taking into account only cash expenses.

Section 2.

You may have 2 or 3 numericals and 1-2 theory questions. Each carrying 10 marks

Numericals would be based on

  • Working capital management (where information on production, sales and stores maintained in weeks or months. Selling price breakup and then computation of working capital. Else an alternative sum where by annual sales, expenses etc are given and reverse computation of working capital) Some tips here- please keep in mind that working capital is only computed by taking credit purchase and credit sales. Also check if there is a safety margin to be kept.
  • Capital structure planning (moderate level sum taking care of capital raising under 3-4 options and computing EPS could be asked).
  • Alternatively a sum on capital restructuring  on fair value approach, NAV or yield approach

For theory, the following questions need to be done well

  1. Functions of finance manager
  2. Reasons for carrying cash
  3. Types of working capital
  4. Factors affecting working capital
  5. Sources of long term finance
  6. Sources of short term finance
  7. Capital budgeting techniques
  8. Types of mergers

 

For any queries, you can contact Prof. Vipin Saboo at  9820779873

Advertisement
The following two tabs change content below.
Education Qualification: BMS- N M College (University Rank Holder) PGDBM- Sydenham College M Com- College topper Mr Vipin Saboo has been associated with the following institutes as a visiting faculty Lords college, Malad Patkar College, Goregoan Saraf college, Malad Dalmia college, Malad St Andrews College, Bandra Wilson College, Grant Road Thakur college, Kandivili L N College, Kandivili N K College, Malad Dhanukar College, Vile Parle St Xaviers College, Marine Lines Shroff College, Kandivili KES College, Khar Mr.Vipin Saboo also has more than 5 years of industry expertise with corporate like CRISIL, Motilal Oswal Investment Banking and Yes Bank. Mr. Saboo has also published a text book on Logistics and Supply Chain Management for TYBMS Students.
1 Comment

Leave a reply

Your email address will not be published. Required fields are marked *

*

*

BMS.co.in is aimed at revolutionising Bachelors in Management Studies education, also known as BMS for students appearing for BMS exams across all states of India. We provide free study material, 100s of tutorials with worked examples, past papers, tips, tricks for BMS exams, we are creating a digital learning library.

Disclaimer: We are not affiliated with any university or government body in anyway.

©2020 BMS - Bachelor of Management Studies Community 

A Management Paradise Venture

Ask Us On WhatsApp
or

Log in with your credentials

or    

Forgot your details?

or

Create Account