Unit-4 includes chapter 9&10

Test Unit-4(Ch. -9, 10)

MM: 47​​​​​​​​​        Time 1hour 30 min

1. Discuss about working capital affecting both liquidity as well as profitability of a business(1)

2. Amit is running an ‘Advertising agency’ and earning a lot by providing this service to big industries. State whether the working capital requirement of the firm will be ‘less’ or ‘more’. Give reason in support of your answer ​​​​​​​(1)

3. How Secondary market does contributes to Economic Growth?​​​(1)

4. What is DSCR and how does it affect choice between debt and equity? ​​(1)

5. State which type of capital structure (more equity based or debt based) would a company adopt when.

a)​The stock market is bullish     b)   The stock market is bearish.​​​(1)

6. What is meant by ‘near money’?​​(1)

7. What do you mean by Zero coupon Bonds and why?​​(1)

8. Name the concept which increases the return to equity shareholder due to the presence of fixed financial charges. ​​(1)  

9. Few years ago, there were many malpractices and unfair trade practices like price rigging etc. All these had eroded investor’s confidence and multiplied their grievances. To overcome these, Govt. of India decided to set up separate regulatory body for this purpose.

a) Name the separate body set up by Govt. of India and when it was established.

b) Explain the regulatory function performed by it.​​​​​ (3)                                                                  

10. A capital budgeting decisions is capable of changing the financial fortune of a business. Do you agree? Why or why not?​​ (3)                                                                  

11. Sharma ltd needs machinery for production purpose. The manager has two options Available :i)Machinery which has quality certification marks  and approved by the government Costing Rs 500000 ii)Machinery which has the same production capacity but its not approved by  government costing Rs 300000.The manager decides to go with the second alternative.

A)​Identify and state the decision of financial management taken by the manager.

 ​B) ​State any one value which is overlooked by the manager.                ​​(3)

12. Capital structure of two companies is as follows: 

                                                                                  Company A          COMPANY B

            Equity capital                                                   

​(Equity shares of Rs 100 each)                  8 lacs                         4 lacs    

​No.of equity shares​​​​   8000                        4000

​Debentures 15%                                              nil                     ​4 lacs

​Profit before interest                 ​​1.5 lacs                     ​1. 5 lacs

​Interest                                                            nil                         60,000 

​Profit after interest​​​​1.5 lacs                      90,000

​(Profit available to shareholders)

​In which of the above cases shareholders shall get more benefit and why? ​​(3)

13. Explain following terms briefly :

Dematerialisation, Depositary, Depositary participant ​​​​ ​(3)

13. Financial Planning is essentially the preparation of financial blueprint of the organisation future operations .The objective of Financial Planning is to ensure that enough funds are available at right time. The management of Croman Ltd. Decided to raise funds through public issue .Keeping in view the protective function executed by government agency, the management decided not to indulge in unfair trade practices.

a) State any one importance of Financial Planning

b) What will happen if enough funds are not available at right time?

c) Name the government agency referred above.

d) Identify the value which is being emphasized in the Financial Planning. ​​​(4)

14. Suresh and Mahesh are two brothers who are interested to deal in shares. Suresh wants to subscribe for shares of a new company. Five years ago, Mahesh had bought 200 shares of AB Company from some investor. Now Mahesh wants to sell existing shares as he requires money for his personal reason. 

(a)Suggest the type of market in which both brothers can deal.

(b)Explain any two functions of the market in which Mahesh is dealing ​​​(4)

15. S’ Limited is manufacturing steel at its plant in India. It is enjoying a buoyant demand for its products as economic growth is about 7%-8% and the demand for steel is growing. It is planning to set up a new steel plant to cash on the increased demand it is facing. It is estimated that it will require about Rs. 5000 crores to set up and about Rs 500 crores of working capital to start the new plant

a. What is the objective of financial management for this company?  

b. Keeping in mind that it is a highly capital intensive sector name any three factors that will affect the working capital requirements of this company giving reasons in support of your answer.(4)

16. Investors in general consider increase in dividend as good news and stock market reacts positively to it. On the other hand, the Companies Act, places certain restrictions on pay-outs as dividend. To avoid these types of restrictions, the management of Crompton Ltd decided to raise funds through treasury bills, commercial bills etc.

a) With reference to above case study, state two factors that affect dividend decision of the company.

b) Identify the type of market through which company decided to raise funds. State its two features.

c) Mention the values which is being emphasized by the Companies Act in placing restrictions on pay-outs as dividends.​​​​​​​​​(6)

17. Explain the effect of the following:

a) Growth opportunities – on dividend decision

b) Shareholder’s decision not to lose control – on financing decision

c) Production Cycle- on working capital requirement

d) Debt Service Coverage ratio – on the choice of capital structure. 

e) Financing alternatives – on fixed capital requirement

f) Rate of return – on capital Budgeting decision.​​​​​​(6)

                                                     

Unit-3 includes chapter 6,7 and 8

Test Unit-3(Ch -6,7,8)

MM:42​​​​​​​​​Time 1hour 20 min

1. Identify the type of test conducted to check the potential employee’s desire to learn new skills or increase knowledge.(1)

2. What do you mean by KRA’s ?(1)

3. On Annual day of the company, all departmental heads were having dinner with their terms. Production Manager Mr. Siddharth and his supervisor Mr. Allahrakaha were also there. Mr. Allarakha told Mr. Siddharth about the problems faced by workers due to the bad condition of machines. According to him major repairs and replacements of worn out parts were required. Lates on, Production Manager made efforts to find out the actual position and found the same situation as described by Mr. Allahrakha. He conveyed the matter to higher authorities who went for overhauling of machinery. As a result productivity increased by almost 20%.

Top management awarded a cash prize of Rs. 25000/- to Mr. Allahrakha on next Annual day 

Identify the kind of communication which took place between Mr. Siddarth and Mr. Allaharakha. (1)

4. In Manik Ltd., selection process is very fair, scientific and standardised. Competent, laborious employees with good work culture are selected. As a result subordinates are efficient, responsible and take initiative in every activity. Which kind of leadership style would be suitable in Manik Ltd.(1)

5. Give two examples of ‘Noise’ in the process of communication.(1)

6. Zenith Ltd. is a highly reputed company and many people wanted to join this company. The employees of this organization are very happy and they discussed how they came in contact with this organization. Aman said that he was introduced by the present Sales manager, Mr. John. Benu said that he had applied through the newspaper and was appointed as H.R Vaibhav said that he was neither related to any of the employee of the organization nor there was any advertisement in the newspaper even then he was directly called from IIM Ahmedabad from where he was about to complete his MBA.

a) The above discussion is indicating an important function of management. Name the function 

b) The management function identified in part (a) follows a particular process. Explain the step of this process which is being discussed in the above para. (1+2)

7. The barriers to effective communication exist in all organizations. Explain any three measures to overcome these barriers. (3)

8. Ms. Akshita has  recently completed her Post Graduate Diploma in Human Resource Management. A few months from now a large steel manufacturing company appointed her as its human resource manager. As of now, the company employs 800 persons and has added 200 persons for various types of additional requirements. Ms. Akshita has been given complete charge of the company’s Human Resource Department. Company deals in sophisticated machinery and equipment. 

• Identify the methods of training suitable for workers of above organisation.

• Also explain any two other methods of training of employees (3)

9. XYZ ltd is a manufacturing concern. Its Manager sets critical point and focus attention on significant deviations which cross permissible limit. It has helped the organization in many ways and hence it is able to lead in its competitive market.

(1) Identify which function of management is followed by the Manager.

(2) State the techniques involved .(3)

10. Mr. R. Ranjan, Manager(Operations) does not define clear goals to his subordinates and is not regularly abreast with their work as all the employees are skilled and experienced in their job. Which is the style of leadership being followed by him? Is he right in doing so? Explain nature of this style of leadership .(3)

11. A company X limited is setting up a new plant in India for manufacturing auto components. India is a highly competitive and cost effective production base in this sector. Many reputed car manufacturers source their auto components from here.   X limited is planning to capture about 40% of the market share in India and also export to the tune of at least $5 million in about 2 years of its planned operations. To achieve these targets it requires a highly trained and motivated work force. You have been retained by the company to advise it in this matter. 

1. Which sources of recruitment the company should rely upon. Give reasons for your recommendation.

2. Outline the process of selection the company should follow. (4)

12. Blue Heavens Ltd. purchased a new hi-tech machine from Germany for manufacturing high quality auto components in a cost effective manner. But during the production process, themanager observed that the quality of production was not as per standard. On investigation it was found that there was lack of knowledge amongst the employees of using these hi-tech machines. So, frequent visit of engineers was required from Germany. This resulted in high overhead 

Suggest what can be done to develop the skills and abilities of employees for producing high quality products by using these hi-tech machines. Also state how the employees or the organization will benefit from your suggestion. (4)

13. You are the Personnel Manager in a company. Your supervisor tells you that the workers are efficient and hence there is no need to supervise them. Would you! Agree with him? Give reasons in support of your answer. (5)

14. A company ‘M’ limited is manufacturing mobile phones both for domestic Indian market as well as for export. It had enjoyed a substantial market share and also had a loyal customer following. But lately it has been experiencing problems because its targets have not been met with regard to sales and customer satisfaction. This is causing problems for the company. Identify the management function required to torectify the problems it  is facing and briefly explain its process (5)

15. In Hindustan Times, an article was printed under the title ''Business Success Mantra: Motivation''. Some portion of the article are as under:-

"If an employee has a sense of fear or insecurity in his mind, that he can be removed from his job any time, he will never work wholeheartedly and his worries continue troubling him. On the other hand, if he has a feeling that his job is secure and permanent and he cannot be removed from his job easily, he will work without any worry and with an easy mind. Consequently, his efficiency increases. This is the reason why people prefer a permanent job with less salary to a temporary job with more salary".

(a) Which method of non-monetary incentive has been described in this case.

(b) Explain two more methods of the same category.

(c) Give the value suggested in this case.(4)

Unit-2 includes chapter-4,5and 6

Business Studies CLASS-XII

MM: 39​                          Ch- 4,5                                                               Time 1 hour 20min​

1. How should a manager select the best possible course of action? (1)                    

2. Planning requires logical and systematic thinking rather than guess work. Which feature of planning is highlighted here? (1)

3. Starbucks made divisions in its organizational structure in following way

i. Division for Coffee and related products

ii. Division for Baked products

iii. Division for Merchandise like mugs

Each division is multifunctional and self-contained. Identify the organisation structure stated above (1)

4. National Vritech Ltd. has grown in size. It was a market leader but with changes in business environment and with the entry of MNCs its market share is declining. To cope up with the situation CEO starts delegating some of his authority to the General Manager, who also felt himself overburdened and with the approval of CEO disperses some of his authority to various levels throughout the organization. Identify the concept of management discussed above. (1)

5. State any three advantages that a functional structure offers to an organization. (3)

6. “If we delegate the authority, we multiply it by two. If we decentralise it, we multiply it by many.” How ?(3)

7. Aditya Lumba, director at Eco-Rent-A-Car, knows future is uncertain. But making assumptions about the future, he forecasts that self-drive business will thrive because of increase in number of tourists, NRIs visiting India, corporate employees spending weekends out of the city etc.

I. Name the function of management discussed in the above case.

II. Name the step of that function mentioned in that case.

III. List any two features of that function.  (3)       

8. The directors of Gunjan Ltd., an organisation  manufacturing colour televisions, have asked their production manager to achieve a target production of 150 televisions per day. The production manager has asked his foreman to achieve this target, but he did not give him the authority for the requisition of tools and materials from the stores department. The foreman could not achieve the desired target. Can the directors blame the production manager, and can the production manager blame his foreman for not achieving the target? Explain in brief the relevant principles relating to this situation in support of your answer(3)

9. The central government has taken the initiative ‘Startup India’, to boost entrepreneurship in the country. Many have come forward to participate in it. Explain any two reasons why inspite of intense planning many have failed. (3)

10. A company is manufacturing washing machines. There is a well defined system of jobs with a clear and definite authority, responsibility and accountability in the company. But people are not allowed to interact beyond their officially defined roles. As a result the company is not able to adapt to the changing business environment. The workforce is  also not motivated due to lack of social interaction. The company is facing problems of procedural delays and inadequate recognition to creative talents.

(i) Suggest how the organization can overcome the problems faced by it.

(ii) Give any two benefits it will derive from your suggestion. (3)

11. Om reported at his office at 9 a.m. as usual. He received a telephonic message from his wife at 10 a.m. informing him about accident of his father.Om rushed to his manager, Ashok. Ashok offered him seat and water to drink. He told Om not to worry about medical expenses as the same would be borne by the company. Om left immediately for hospital on one week's leave.Later Dheer, assistant manager reminded Ashok of a circular put on notice board stating ' No leave will be allowed before prior sanction'. Ashok replied that his decision was based on ensuring employees' welfare, fulfilling their needs and addressing their grievances without disturbing company's operations.  

(a)Identify the two types of plans referred to by Ashok and Dheer respectively. Distinguish between them on any one basis.

(b)State and explain the limitation of planning highlighted above. 

(c)Identify two values displayed by Ashok.(5)

12. Name the function of management which examines the activities and resources required to implement the plan and explain its steps (5)

Test- Unit-1 includes chapter 1,2 and 3

Test Unit 1(Ch- 1, 2, 3)

MM: 47​Time 1 hour 30 min

1. Sahni garments produce 20000 shirts a month at a cost of 170 per shirt. Due to a sudden rise in the labour cost due to Diwali season, the cost of production went up to 190 per shirt. The production manager had the option of making less than the target to save cost but he decided to meet the target at the higher cost because they didn’t want to loose sales. Which concept of management has the manager followed and which has he ignored? (1)

2. In an organisation sales department wants to increase the sale by 20% so sales department planned to offer extra discounts to customers.  Finance department raised objection on it as they say it will result in loss of revenue and company may face liquidity problem. What quality of management is lacking in the above case? (1)

3. X Ltd, a tyre manufacturing concern has been established for more than ten years. Having made good profits in the past, company wanted to expand further and hence did not declare bonus for the previous year. With this decision the workers got agitated but management promised that the bonus will be declared once the projects achieves a stable position. State relevant management principle of Fayol used by management.​(1)

4. Which level of managers are responsible for coordination?(1)

5. Alia Enterprises, a company was initially producing grinders and mixers. Now,  with the changing scenario and emerging trends of working women there is a greater demand for a  product which is more efficient and a multi-tasker. On analyzing the situation, the company decided to penetrate into the market for producing Food Processor. 

a. Which feature of management is highlighted here?

b. Which level of management will take this decision?  (1)                                                            

6. Successful organisations do not achieve their goals by chance but by following a process. Name the process. (1)

7. The aim of this study is to eliminate unnecessary movement so as to ensure timely completion of work”. Which study is emphasized in above statement?(1)

8. What changes were made in the industrial policy in the recent past?(3) 

9. Soni Traders is a chain of retail stores engaged in buying and selling of electronic gadgets in India. Due to increased competition, dynamic technology, ever-changing tastes and preferences of customers and of course turbulent political and legal environment, the survival of business is at stake. Discuss what the managers of Sony Traders should do in response to such dynamic business environment.(3)

10. Why is it said that knowledge of  principles of management are essential for the success of an organization?(3)

11. It is common now to see CD-ROM’s, computerized information   kiosks, and Internet/ World Wide Web multimedia pages highlighting the virtues of products. Identify dimension of business environment related to following situations and explain (4)

12. Kolkata rice foods ltd is a big rice manufacturing firm. From the beginning of the year its sales are falling. Being worried about the situation, the MD appointed a research committee to find the reasons. They submitted the following report after the survey:

a. Due to increase in export duty by the government the foreign demand has gone down.

b. Due to substitutes available the attention of people has shifted from rice.

c. Some other rice manufacturing firms have imported machines which are producing better quality rice.

d. Also the relations of their country have turned bitter with one main importing country.

Identify the dimensions of business environment identified above, by quoting the relevant lines.

Which importance of business environment has the manager missed out? (4)

13. Simmi Ltd. manufactures fashionable and designer clothes. Recently it finds that the demand for its products has been declining. After market research it was discovered that fashion and tastes of the consumers is changing at a fast pace. Customers' demand is increasing. New competitors have entered the market with new designs. It is very difficult for the company to predict future happenings. Also, it is difficult to know the extent of the relative impact of the social, economic, political, technological or legal factors on decrease in demand of its products in the market.

A meeting was held in which managers from different functional levels heading Production, Marketing, Finance etc, e.g. CEO, CFO, VP (Marketing) were present to discuss how to deal with the situation. After a long discussion, it was decided that they would study and analyse the market first to identify customer tastes and fashion and then manufacture garments accordingly. It was also decided to increase expenditure on advertising, after- sales services etc.

a. Identify any two features of business environment by quoting the lines from the above case.

b. Identify any two impacts of government policy changes on business, quoting lines from the above case.

c. State the importance of understanding of environment by business managers in the light of the above para.(5)

14. (a)One of technique given by F.W. Taylor is extension of   principle given by Henry Fayol. Identify that and explain 

(b) Mohan always comes 1 hour late in the office and leave half an hour before the scheduled time. No penal action is taken against him. Other employees also started coming late in the office. Management is very disturbed with this and has started scolding the employees.
(1) Which management principle is being violated in the given case?
(2) Explain the principle.
(3)  Mention one probable adverse consequence of violation of the given principle (3+3)

15. (a)Explain the principle of management which advocated paternalistic style of management.

(b)Suresh is working under supervisor Ramesh. Suresh always give useful ideas which have resulted in gains for organisation but Suresh never acknowledges him and he also use to take credit for suggestions given by Ramesh. Which Principle of management is being violated and what values are ignored by Ramesh and what will be the consequences.(2+4)

16. M Ltd was manufacturing water heaters. In the first year of its operations, the revenue earned by the company was barely sufficient to meet its costs.  The firm had also taken no steps to ensure proper arrangement of things, i.e. materials, tools etc and also did not have a fixed place for every employee. This led to a fall in productivity and efficiency and wastage of time and cost. To increase the revenue, the company analysed the reasons for less revenue. After this analysis, the company decided to: 

• To reduce labour costs by shifting the manufacturing unit to a backward area where labour was available at a low rate.

• To start manufacturing solar water heaters and reduce the production of electric water heaters slowly. This will not only help in covering risks, but will also help in meeting other objectives too. • It also decided to ensure proper arrangement of things, i.e. materials, tools etc and a fixed place for every employee to increase productivity and efficiency and minimization of wastage of time and cost.  

a. Identify and explain the objectives of management discussed above giving 3 examples of each. b. Identify the principle of Fayol that has not been followed in M Ltd. What are the benefits of following this principle and the adverse effects of not following this principle?   (6)

Share capital- practice questions

Q.1 X Ltd issued 5000 equity shares of rupees hundred each at Rs.120,face value was Rs.100 company received applications for6000 equity shares allotment was made to the applicants of 5500 shares remaining applicants sent a letter of regret. A shareholder who was having 500 shares failed to pay the allotment and calls. Amount was paid Rs.50 on application Rs.40 on allotment and balance on call. The shares were reissued at the rate Rs.90 per share.pass necessary journal entries in the books of the company.

Q.2 X Ltd purchase running business of while Ltd for a consideration of Rs.16 lakh. Company paid the amount Rs.5 lakh but draft and the balance amount by issuing equity shares of rupees hundred eachat 10% security premium. Company acquired the following assets and liabilities machinery Rs.3 lakh, plant Rs.5 lakh, debtors Rs.2 lakh, Furniture Rs.5 lakh, creditors Rs.2 lakh, outstanding expenses Rs.2 lakh. Pass necessary journal entries.
Q.3 Rajesh Ltd took over the assets of Rs.7 lakh 20,000 and creditors of Rs.1 lakh offRohan Ltd for a sum of Rs.6 lakh payable 10% by a cheque and the balance by issue of fully paid equity shares of Rs.10 each. Pass necessary journal entries.

Q.4 be limited issued shares of Rs.10 lakh of Rs.10 each at a premium of Rs.10 per share. Amount was payable 20% on application 40% on allotment and balance with call. Half of the premium Call with allotment and balance with call. Company received application for 1.6 lakh shares.Pro rata allotment was made to the applicant of 1.4 lakh applicants. Remaining applications rejected. Shareholder having 500 shares fail to pay allotment call. A shareholder who applied for 700 sharesfail to pay allotment. His shares were forfeited before the call was made. All the shares were issued at Rs.12 per share. Pass necessary Journal entries.

Q.5 J Ltd invited application for issuing 50,000 equity shares of Rs.10 each at par the amount was payable as follows.
On application – Rs.2 per share, on allotment – Rs.4 per share, and on the first and final call – balance amount the issue was oversubscribed three  times. Application for 30% shares what reject it and money refunded. Allotment was made to the remaining applicants as follows,
(1)Applications 80,000–40,000 allotted, (2)applications 25,000–10,000 allotted.
Exes money paid by applicants who were allotted shares was adjusted to words Sam due on allotment.
Deepak, a shareholder belonging to category one who had applied for 1000 shares, failed to pay the allotment money. Raju, a shareholder holding 100 shares, also failed to pay allotment money. Raju belong to category second. Shares of both Deepak and Raju were forfeited immediately after allotment. Afterwords first and final call was made and duly received.The forfeited shares of the plane Raju worry issued at Rs.11 per share fully paid-up pass necessary journal entries for the about transactions in the books of the company.

Q.6 do you Limited made an issue of one lakh equity shares of Rs.10 each at a premium of 20% payable as follows, on application – Rs.2.5 Per share, on allotment Rs.4.5 per share and on the first and final call balance. Application was received for two lakh equity shares and the directors madePro  Rata allotment. Rae know who had applied for 800 shares did not pay the allotment and final call money. As a result of shares were forfeited. Later on all the shares were reissued at Rs.8 per share fully paid up. Pass necessary journal entries.

Q.7 while Ltd acquired running business of Black Ltd consideration was payable in cash Rs.6 lakh, and the equity shares of rupees hundred eachat 20% premium. Assets and liabilities were acquired as follows,
Machinery Rs.5 lakh, plant Rs.3 lakh, patents Rs.2 lakh, trademark Rs.1 lakh, furniture Rs.7 lakh, debtors Rs.3 lakh, creditorsRs.5 lakh, there was a provision for doubtful debts Rs.50,000 in the books of accounts. Pass necessary Journal entries in the books of company for the acquisition and payment. Show your working clearly for the calculation of purchase consideration.