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Fina 023: Financial Management Question Paper

Fina 023: Financial Management

Course:Accounting,Finance And Investiments

Institution: Kenya Methodist University question papers

Exam Year:2012

KENYA METHODIST UNIVERSITY
END OF 2ND TRIMESTER 2012(EVENING) EXAMINATIONS
SCHOOL : BUSINESS AND ECONOMICS
DEPARTMENT : ACCOUNTING AND FINANCE
UNIT CODE : FINA 023
UNIT TITLE : FINANCIAL MANAGEMENT

TIME: 2 HOURS
Instructions:
Answer any three questions.
Question One
Explain five functions of a finance manager in company.
(10mks)
Explain circumstances when the actions of manager will be in conflicts with the interests of shareholders.
(10mks)
Explain ways a limited company can raise finance for expansion. (10mks)
Question Two
Discuss factors that determine working capital needs.
(8mks)
Nairobi bottlers require 2000 units of a component in a manufacturing process in the coming year which cost sh. 50 each. Each order costs sh. 50 to prepare, lead and process time is 7days while holding cost is shs. 20 per unit per year for storage.
Required
How many units should be ordered each time an order is placed to minimize inventory cost.
(3mks)
What is the reorder level?
(3mks)
How many orders will be placed per year?
(3mks)
Determine the total relevant costs.
(3mks)
Question Three
Company XYZ has identified a project that will cost shs. 80,000 and will generate the following returns.
Year Returns
1 20,000
2 30,000
3 10,000
4 15,000
5 15,000
6 0
Required
Compute the pay-back period of this project.
(10mks)
A company has identified a project which will cost sh. 15000 and forecasts, indicate that this project will generate the following returns:
Year Returns
1 3000
2 7000
3 6000
This company will pay an interest rate of 15% per annum. Required: compute NPV for this project and advice the company accordingly. (10mks)
Question Four
Discuss the various main sources of business finance that can be acquired from external and internal source.
(10mks)
Discuss key managerial functions of a financial manager.
(10mks)
Question Five
Discuss the process of getting capital from the public.
(10mks)
Describe the process of forming a company and the documents necessary in the formation.
(10mks)

Fina 023: Financial Management Question Paper

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