Get premium membership and access revision papers, questions with answers as well as video lessons.

Got a question or eager to learn? Discover limitless learning on WhatsApp now - Start Now!

Financial Management Question Paper

Financial Management

Course:Diploma Course In Management Section 1

Institution: Kenya Institute Of Management (Kim) question papers

Exam Year:2011

Diploma course in management

Section I

June 2009 Examination

Financial Management

Time: 3 Hours

Instructions
1. Write your index number in the space provided in the answer booklet.
2. Answer any five questions
3. All questions carry equal marks
4. No writing should be done on this question paper
5. Candidates who break KIM examination rules and regulations or commit any malpractice will be Disqualified

1. With regard to Mergers and acquisitions explain the following (10 marks)
i) Synergy
ii) Horizontal integration
iii) Conglomerate merger
iv) Vertical integration

b) Identify and explain any six benefits of mergers (10 marks)

2. Discuss the level to which dividends are thought to be relevant in determining the value of shares (20 marks)

3. The capital structure of Bor Ltd is as follows, 600000 issued ordinary shares Ksh 10 nominal value with a market value of Ksh 30 each. 500000 8% Ksh 10 preference shares redeemable in three years at Ksh 11 and with a current market value of Ksh 10.50 D sh 2000000 of 7% debentures valued at Ksh 750 per Ksh 1000

The following information is available
- The current dividend is Ksh 4.50
-The company's expected growth rate is 3%
- The corporation tax rate is 30%

Required

a) Calculate the companies weighted average cost of capital (15 marks)
b) Discuss the importance of cost of capital in investment decision making (5 marks)

4. The follwing infomation relates to the unit prices of material A.

Sales per unit Ksh 20
Direct materials per unit Ksh 6
Labour cost per unit Ksh 4.50
Fixed cost Ksh 20000
Selling variable cost per unit Ksh 2.50
Fixed selling cost Ksh 12000
Number of units produced and sold 6000

Required
i) The P/V ratio
ii) The break even point in units and shillings
iii) The new B.E.P if the units sold are 8000
IV) Sales volume required to earn a profit of Ksh 25000 (20 marks)

5. Define working capital (2 marks)

b) Explain the determinants of working capital (18 marks)

6. Identify the participants in the Kenyan Capital Market as related to quoted ordinary shares and explain their respective roles. (20 marks)

7. Define and explain using relevant examples the term ratio analysis (20 marks)

Financial Management Question Paper

More Question Papers

Popular Exams