PROGRAM - BBA ,
SEMESTER V
SUBJECT CODE & NAME - BBA502 & FINANCIAL
MANAGEMENT
1. Explain the
functions of finance
Explain about the
role of a
finance manager and funds allocation.
Functions of Finance
For the effective
execution of the finance functions,certain other functions have to be routinely
performed. They concern procedures andsystems and involve a lot of paper work
and time. They do not require specialised skills of finance. Some of the
important routine finance functions are:
• supervision of cash
receipts and payments and safeguarding of cash balances
• custody and safeguarding of securities, insurance policies and other valuable papers
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2. Write short notes on :
a) Operating Budgets
b) Financial Budgets
c) Capital Budgets
(i) Operating Budgets
Operating budgets
relate to the planning of the activities or operations of the enterprise, such as
production, sales and purchases. Operating budget is composed of two parts—a programme or
activity budget and aresponsibility budget. These represent two different ways
of looking atthe operations of the enterprise; but arriving at the same
results.
• Programme
or activity budget specifies the operations or functions to be performed during
the next year. One logical way toprepare this kind of budget is to
plan for each product
the expected CONTACT US FOR READY MADE SOLVED
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(ii) Financial Budgets
Financial budgets are
concerned with the financial implications of the operating budgets—the expected
cash inflows and cash outflows, financialposition and the operating results.
The important components of financial budgets are: cash budget, pro forma
balance sheet and income statement and statements of
changes in financial
position.
• Cash
budget is the most important component of the financial budgets. A good
management would keep cash balance at optimum level; too little cash endangers
the liquidity of a company, and too much cash tends to impair profitability.
The major objective of the cash budget, therefore, is to plan cash in CONTACT
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(iii) Capital Budgets
Capital budget involves
the planning to acquire worthwhile projects, together with the timings of the
estimated cost and cash flows of each project. Such projects require large sum
of funds and have long-term implications for the firm. Capital budgets are
difficult to prepare because estimates
of the cash flows over a long period have to be made which involve a great degree of uncertainty.
The capital
budgets are generally prepared separately from the operating budgets. In many
companies, there is a committee separate from the budget committee to appropriate funds
for capital CONTACT US FOR READY MADE SOLVED
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3. Explain on cost of capital and
cost of preference capital.
Cost of Capital
We should recognise
that the cost of capital is one of the most difficult and disputed topics in
the finance theory. Financial experts express conflicting opinions as to the
correct way in which the cost of capital can be measured. Irrespective of the
measurement problems, it is a concept of vital importance in the financial
decision-making. It is useful as a standard for:
• evaluating investment
decisions,
• designing a firm’s
debt policy, and
• appraising the
financial performance of top management.
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4. Solve the given problem below:
Sales 25,00,000 ;
Variable cost 15,00,000 ; Fixed
cost 5,00,000 (including interest on
10,00,000). Calculate degree of financial leverage.
Determine the operating leverage :
Determine the degree of operating leverage from the following data:
S Ltd R Ltd
Sales 25,00,000 30,00,000
Fixed costs 7,50,000 15,00,000
Variable expenses 50% of sales for firm S 25% for firm R.
Calculation of financial leverage
Solution
Sales 25,00,000
– Variable cost 15,00,000
– Operating fixed costs
(`5,00,000 – `1,50,000) 3,50,000
_______
EBIT 6,50,000
– Interest 1,50,000
_______
Net earnings before
Taxes 5,00,000
_______
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5. Explain the capital budgeting
process. Why is Net Present Value (NPV) important?
Capital Budgeting Process
Capital
expenditure or investment planning and control involve a process of
facilitating decisions covering
expenditures on long-term
assets. Since a company’s
survival and profitability hinges on capital expenditures, especially the major
ones, the importance of the capital budgeting or investment process cannot be
over-emphasized. A number of managers think that investment projects have
strategic elements, and the investment analysis should be conducted within the
overall framework of corporate strategy. Some managers
feel that the qualitative aspects
of investment projects should be CONTACT US FOR READY MADE SOLVED
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6. Write about cash planning and
explain about cash forecasting and budgeting.
Cash Planning
Cash flows
are inseparable parts of the business operations of firms. A firm needs cash to
invest in inventory, receivable and fixed assets and to make payment for operating expenses in
order to maintaingrowth in sales and earnings. It is possible that the firm may
be making adequate profits but may suffer from the shortage of cash as its
growing needs may be consuming cash very fast. The ‘cash poor’ position of the
firm can be corrected if its cash needs are planned in advance. At times, a
firm can have excess cash with it if its cash inflows exceed cash outflows.
Such excess cash may remain idle. CONTACT US FOR READY MADE SOLVED
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SUBJECT CODE &
NAME - BBA 504
TAXATION MANAGEMENT
1. Distinguish between
revenue expenditure and
capital expenditure. Explain
the distinction between capital
losses and revenue losses.
To distinguish revenue expenditure from capital expenditure, the
following tests can be applied:
(i) Nature of the assets:
The amount incurred to purchase or gain fixed assets or due to the installation
of fixed assets is called capital expenditure. While When a person incurs expenses
due to purchasing of goods for resale as well as other costs in connection with
the purchase, it is termed as revenue expense.
(ii) Nature of liability: A
payment made by an individual to clear a capital liability is capital
expenditure.
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2. Explain the deductions u/s 80.
Various deductions u/s 80 are as below :
Deductions on Section 80C, 80CCC & 80CCD
Section 80C
This section has been
introduced by the Finance Act 2005. Broadly speaking, this section provides
deduction from total income in respect of various investments / expenditures /
payments.
Section 80CCC: Deduction in respect of Premium Paid for Annuity Plan
of LIC or Other Insurer
Payment of premium for
annuity plan of LIC or any other insurer Deduction is available upto a maximum
of Rs. 100,000.
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3. Write a note on Fringe Benefit
Tax.
Fringe Benefit Tax (FBT) was
introduced in the Finance Act, 2005, as an additional income-tax and came into
force on 1st April 2005. The
term ‘fringe benefits’
means ‘any consideration
for employment provided by way of
any privilege, service, facility or amenity provided by the employer to the
employees’. Fringe Benefit Tax is to be levied on the employer in respect of
fringe benefits provided/deemed to be provided by the employer to his employees
during any financial year commencing on or after 1st April 2005.
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SEMESTER 5
SUBJECT CODE & NAME BBA505: ENTREPRENEURSHIP MANAGEMENT
1. Define the term ‘Entrepreneurship’. Explain the importance of
entrepreneurship.
Definition of Entrepreneurship
The word
‘entrepreneurship’ typically means to undertake. It owes its origin to Western
societies. But even in the West, the meaning has undergone changes from time to
time. In the early sixteenth century, the term was used to refer to army
leaders. In the eighteenth century, it represented a dealer who bought and sold
goods at uncertain prices. In 1961, Schumpeter used the term ‘innovator’ for
entrepreneur. Entrepreneurship is recognized all over the world in countries
such as USA, Germany, and Japan and in developing countries like India. From
the economic standpoint, initially the economists CONTACT US FOR READY
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2. What are the sources of
opportunities for an entrepreneur? Discuss the methods of generating ideas.
Sources of opportunities for an entrepreneur
Opportunities are
everywhere. It is like ‘eye the beholder’. Some see opportunities, some don’t.
Some even see opportunity in threats or failure. The source of grassroots
innovation, like that of Wright brothers, need just curiosity, relentless
efforts, and of course a belief in oneself that ‘we shall overcome someday’.
This is a high risk area, as nothing is known in terms of outcome or even
timeline for activities.
In case of
existing innovation, creative thinking comes handy in sensing business
opportunity that can build an echo system. An idea around innovation that can
improve the quality of life of certain sections CONTACT US FOR READY
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3. Write short notes on the
following:
a) Types of ownership securities
b) Choosing the Legal Form of New Venture
a) Types of ownership securities
For non-corporate
(sole-proprietorship and partnership) businesses there is only one type of
ownership security available and that is the owners’ capital. Owners (sole-proprietor
or partners) bring capital and enjoy the rights to participate in managing
business (depending upon agreement) and the right to share profit or loss
(usually in the proportion of every partner’s share in capital). Therefore, the
following material on the types of ownership security is more appropriate for corporate
form of business.
1. Common or Equity Shares
In case of
a company, total ownership fund is called a ‘stock’ and it is divided into smaller
units called CONTACT US FOR READY MADE SOLVED ASSIGNMENTS
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b) Choosing the Legal Form of New Venture
The broad
classification of the forms of business organizations includes: (i)
sole-proprietorship, (ii) partnership, and (iii) corporate form of business organizations.
Partnerships can be regular and limited; and companies can be private or
public. Companies can also be either for-profit or non-profit organizations.
Let us have a look at
each of the forms of business organization in brief.
1. Sole Proprietorship Form of
Business Organization
Formation
of sole-proprietorship and running it has no legal costs. The owner has full
control over CONTACT US FOR READY MADE SOLVED ASSIGNMENTS
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