Qnot_visibleShare Valuation - Dividend Policy
0 marks easy
Retention Ratio is 75%. CALCULATE the market price of the share using:
(1) Gordon's Model
(2) Walter's Model
Q1Capital Budgeting - Initial Investment
2 marks easy
Case: Based on case scenario involving hotel operations, furniture purchase, renovation costs, and capital structure analysis at 15% hurdle rate
The amount of net initial investment required is:
(a) ₹ 41.044 Crores
(b) ₹ 34.887 Crores
(c) ₹ 6.156 Crores
(d) ₹ 40.74 Crores
Q1Strategic Management, Stakeholder Analysis, Strategy Audit,
0 marks hard
Case: MuseoGoa, a company managing museums in Goa, chose a picturesque location in a quaint village to build their first museum. However, initial enthusiasm was met with concern from local communities about tourist influx disrupting their peaceful existence. To address this challenge, MuseoGoa applied Mintzberg's matrix, identifying local communities as key stakeholders. They engaged in open dialogues, understanding and respecting village values while proposing sustainable practices involving locals in museum operations, supporting local artisans, and organizing cultural events. After resolving init…
Once upon a time in the land of sun, sand and vibrant cultures, there existed a company named 'MuseoGoa' - a company that managed museums in the beautiful state of Goa. MuseoGoa had a vision to bring cultural and natural heritage sites to the local community without its fair share of challenges.
Q1Strategic Management Concepts
0 marks hard
Case: MuseoGoa, a museum with an idyllic location in a quiet village, initially faced concerns from the local community. To address this and attract tourists (despite being away from preferred beaches), MuseoGoa priced tickets affordably, cheaper than city museums, and organized cultural experiences. They later expanded into new markets such as Pune and Trivandrum using strategic partnerships.
Based on the above Case Scenario, answer the Multiple Choice Questions:
Q2Capital Budgeting - Net Present Value
2 marks easy
Case: Based on case scenario involving hotel operations, furniture purchase, renovation costs, and capital structure analysis at 15% hurdle rate
NPV of the project is:
(a) ₹ 7.0532 Cr
(b) ₹ 8.4025 Cr
(c) ₹ 8.4935 Cr
(d) ₹ 2.4100 Cr
Q2Ratio Analysis - Creditors Turnover Ratio
1 marks easy
XY Ltd's opening stock was ₹ 2,50,000 and the closing stock was ₹ 1,95,000. Sales during the year were ₹ 13,00,000 and the gross profit ratio was 25% on sales. Average accounts payable are ₹ 80,000. Creditors Turnover Ratio =?
(A) 13.33
(B) 14.33
(C) 14.44
(D) 13.75
Q2Strategic Management Limitations
1 marks easy
Jago Lights, a successful brand from Jalandhar, aimed to enter the Middle East market by teaming up with major industry players. They implemented new machinery and hired specialized workforce. This initially led to higher costs, but with an aggressive marketing strategy and expansion with full-scope facility, they faced pressure to expand quickly and turbulence in existing operations. What is the primary imitation of strategic management highlighted in the case?
(a) Lack of senior management support
(b) Time consuming and complex nature
(c) Inability to adapt to market changes
(d) Misalignment between strategic goals
Q3Capital Budgeting - Payback Period
2 marks easy
Case: Based on case scenario involving hotel operations, furniture purchase, renovation costs, and capital structure analysis at 15% hurdle rate
Pay Back period of the project to recover the initial investment is:
(a) 5.12 years
(b) 12.02 years
(c) 11.80 years
(d) 4.46 years
Q3Leverage - Financial Leverage Analysis
0 marks hard
Case: A firm has sale of ₹ 75,00,000, variable cost of ₹ 42,00,000 and fixed cost of ₹ 6,00,000. A firm has debt of ₹ 45,00,000 at 9% and equity of ₹ 55,00,000.
A firm has debt of ₹ 45,00,000 at 9% and equity of ₹ 55,00,000. Does it have favourable financial leverage?
Q3Product Life Cycle
1 marks easy
A traditional desi ghee company modernized its production and introduced pro-biotic desi ghee, facing initial market doubts. Aggressive marketing during which stage of the product life cycle did the desi ghee company face doubts, but gained acceptance through aggressive marketing campaigns?
(a) Introduction stage
(b) Growth stage
(c) Maturity stage
(d) Decline stage
Q4Capital Budgeting - Accounting Profit
2 marks easy
Case: Based on case scenario involving hotel operations, furniture purchase, renovation costs, and capital structure analysis at 15% hurdle rate
Estimated Recurring accounting profit(loss) for first three years are:
(a) ₹ 7.0928 Cr p.a
(b) ₹ 6.9078 Cr p.a
(c) ₹ 6.5937 Cr p.a
(d) ₹ 9.6120 Cr p.a
Q4Financial Management - WACC, Levered and Unlevered Company V
0 marks easy
Computation of Market Value of Equity of Company ABC. Given: Market value of unlevered company (V_Lev) = ₹ 10,00,00,000; Market value of debt (B) = ₹ 4,00,00,000; Tax rate (t) = 25%. Using the formula V_Ace = V_Lev ÷ [1 + (1-t) × B/E], compute the market value of equity of Company ABC.
Q4Strategic Focus
1 marks easy
A small tech company focused on enhancing their main product, which became crucial across various industries due to its increased power and
Q4Strategic Management - Core Competency
1 marks easy
Adaptability. They only provided opportunities for facilitated rapid growth by up to a $5 billion valuation in just five years. Which of the following describes the tech company's core competency?
(A) Competitive Value
(B) Competitor Differentiation
(C) Product Differentiation
(D) Application to Other Markets
Q4Stakeholder Management
0 marks easy
Develop Strategies for each Quadrant: Based on the placement of stakeholders in the grid develop specific strategies for each stakeholder category.
Q5Capital Budgeting - Internal Rate of Return
2 marks easy
Case: Based on case scenario involving hotel operations, furniture purchase, renovation costs, and capital structure analysis at 15% hurdle rate
IRR of the project is:
(a) 16.25%
(b) 19.39%
(c) 15%
(d) 12%
Q5Weighted Average Cost of Capital (WACC)
0 marks easy
COMPUTE weighted average cost of capital (WACC) of the company based on the existing capital structure.
Q5Strategic Management - Growth Strategies
1 marks easy
Armeen's clothing brand recognized new opportunities and researched emerging trends and consumer feedback. From initial trials, it grew clothing line, received positive feedback, and grew into a diversified product portfolio. What strategic choice best describes this approach?
(A) Product Development
(B) Market Development
(C) Market Penetration
(D) Diversification
Q5(i)Financial Management - Weighted Average Cost of Capital
0 marks easy
Compute the Weighted Average Cost of Capital (WACC) based on the existing capital structure with the following sources and amounts: Equity share capital ₹100,00,000, 11.5% Preference share capital ₹60,00,000, 10% Debentures ₹100,00,000
Q6Capital Structure and MM Approach
0 marks easy
Case: Company A and Company B with Expected Net Operating Income of ₹ 18,00,000 each. Company A has no debt. Company B has 12% debt of ₹ 54,00,000. Equity Capitalization Rate for Company A is unknown, for Company B is 18.
The following data relate to two companies belonging to the same risk class:
Q6Strategic Management - Strategic Control
1 marks easy
For over a hundred years, the KDH business has thrived by leveraging strategic control at a cornerstone of its strategic approach. Regular evaluations of goals and performance ensured they stayed responsive to market changes and growth. Why is strategic control highlighted here?
(A) Premier Control
(B) Special Alert Control
(C) Implementation Control - Milestone Reviews
(D) Implementation Control - Monitoring Strategic Thrusts
Q7Operating Leverage and Financial Leverage
0 marks easy
Case: PC Ltd. with Initial Capacity of 3,600 units, Actual Production and Sales of 2,400 units, Selling price per unit of ₹30, Variable cost per unit of ₹20, and Fixed Costs varying across three situations (₹3,000, ₹6,000, ₹9,000). Two capital structures (A and B) with different equity and debt amounts.
The following data relate to leverage of PC Ltd. with different capital structures:
Q7Strategic Management - Organizational Structure
5 marks medium
Tech Innovators Inc., a rapidly expanding technology company, aims to lead in Artificial Intelligence (AI) and machine learning (ML). With recent growth, the company is evaluating which organizational structure will best support its vision for innovation and leadership in AI. In technologies: The Company identifies Vertical Relationships for M&E, Relationship for Specialization, the Horizontal Relationship for flat organization, and the Matrix Relationship for cross-functionality. Given these options, which structure—Vertical, Horizontal, or Matrix—will most effectively achieve Tech Innovators' strategic goals and why?
Q8Dividend Decision
0 marks easy
Case: Gamma Ltd. with Net Profit ₹30,00,000, Preference share capital ₹1,00,00,000, Equity share capital ₹60,00,000, Internal rate of return 22%, Cost of Equity Capital 18%.
The following information is taken from Gamma Ltd.: Net Profit for the year ₹ 30,00,000; 12% Preference share capital ₹ 1,00,00,000; Equity share capital (Share of ₹10 each) ₹ 60,00,000; Internal rate of return on investment 22%; Cost of Equity Capital 18%.
Q8Strategic Management - Introduction
5 marks medium
Strategic management helps an organization to work through changes in the environment to gain competitive advantage. With respect to this statement discuss its benefits.
Q9Strategic Analysis - External Environment - Product Life Cyc
5 marks medium
India's pharmaceutical industry faces intense competition from international players. In recent years, it faced slow dual growth, limited markets, and high prices. However, over time, the demand for the product expanded rapidly, prices fell and competition increased. Identify the stages of the product life cycle (PLC) that the company went through.
Q10Working Capital Management and Cash Cycle
0 marks easy
Case: TMT Limited commencing new project for manufacture of electric tops with specified cost structure and working capital constraints
TMT Limited is commencing a new project for manufacture of electric tops. The following cost information has been ascertained for annual production of 60,000 units at full capacity: Raw materials ₹20 per unit, Direct labour ₹15 per unit, Manufacturing overheads (Variable ₹15, Fixed ₹10) per unit, Selling and Distribution overheads (Variable ₹3, Fixed ₹1) per unit, Total cost ₹64, Profit ₹36, Selling price ₹100.
In the first year of operations expected production and sales are 40,000 units and 25,000 units, respectively. To assess the need of working capital, the following additional information is available:
(i) Stock of Raw materials 3 months consumption.
(ii) Credit allowable for debtors 1½ months.
(iii) Credit allowable by creditors 4 months.
(iv) Lag in payment of wages 1 month.
(v) Lag in payment of overheads 6 months.
(vi) Cash in hand and Bank is expected to be ₹60,000.
(vii) Debtors for operating revenue is required in 10% of working capital.
You are required to PREPARE a projected statement of working capital requirements for the first year of operations. Debtors are taken at cost.
Q10Strategic Analysis - External Environment - Porter's Five Fo
5 marks medium
Rajiv Ltd. is known for the manufacture of domestic vacuum cleaners. The market is competitive, with four other manufacturers offering similar products and achieving comparable sales volumes. Additionally, these rival firms hold several patents related to the vacuum cleaner technology. The supplier base for both companies is highly fragmented. Explain the significant factors from Porter's Five Forces framework that are relevant to this company.
Q11Credit Policy and Receivables Management
0 marks easy
Case: Ramu Limited evaluating alternative credit policies with comparison of Present Policy, Policy Option I, and Policy Option II
Ramu Limited is considering relaxing its present credit policy and is in the process of evaluating the alternative credit proposed policies. Currently, the firm has annual credit sales of ₹225 lakhs and accounts receivable turnover ratio of 3 times i.e., annual debtors of ₹75,00,000. If the discount is to increase in profit and the variable cost is 40% of sales, What is better option?
Present Policy: Annual credit sales ₹225 lakhs, Accounts receivable 5, Turnover ratio blank, Bad debt loss ₹7.5 lakhs
Policy Option I: Annual credit sales ₹275 lakhs, Accounts receivable 4, Turnover ratio blank, Bad debt loss ₹22.5 lakhs
Policy Option II: Annual credit sales ₹350 lakhs, Accounts receivable 3, Turnover ratio blank, Bad debt loss ₹47.5 lakhs
Q12Stakeholder Management
0 marks easy
How can Mendelson's Matrix be used to analyze and manage the stakeholder effectively?
Q13Strategic Choices - Expansion vs Divestment
0 marks hard
Pizza Galleria was India's first pizza delivery chain enjoying monopoly for several years. However, after the entry of Modino and Uncle Jack it is struggling to compete. Both Modino and Uncle Jack have opened several outlets in the cities. Modino expects that more people will like the chain has achieved significant larger share. The chain wishes to know whether they should go for a further expansion or divestment, action plan for turnaround strategy.
Q13Turnaround Strategy, Strategic Management
0 marks hard
Case: Pizza Chains is facing multiple challenges. For turnaround strategies to be successful it is imperative to focus on the short and long term financing needs as well as on strategic issues. The chain may attempt to leverage the potential Indian market by engaging a new logistics partner. It may bring innovation in food items, technology, and service. During the turnaround, the 'product mix' may be changed, requiring prior negotiation to do some repositioning.
Pizza Chains wish to have turnaround strategy if there are persistent negative cash flow from business, unavoidable products or services, declining market share, deterioration in physical facilities, over-staffing with high turnover of employees and low morale, and mismanagement.
Q14Strategic Choices
0 marks easy
Distinguish between Concentric Diversification and Conglomerate Diversification.
Q15Organizational Structure
0 marks hard
A Mumbai-based conglomerate, PQR Ltd., has announced a major restructuring of its business operations. The company has decided to split its business into four separate units: Manufacturing, Retail Services, and IT Services. The HR director of the company has delegated responsibility for day-to-day operations and strategy to the respective unit managers. Identify the organizational structure that PQR has created? What are the advantages that benefits the firm may derive by using this organizational structure?
Q16Strategic Performance Measures
0 marks easy
Why Strategic Performance Measures are essential for organizations?