Code No: RR211701 Set No.

1
II B.Tech I Semester Supplimentary Examinations, November 2007
MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS
( Common to Electronics & Telematics, Electronics & Computer
Engineering and Instrumentation & Control Engineering)
Time: 3 hours Max Marks: 80
Answer any FIVE Questions
All Questions carry equal marks
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1. What is promotional elasticity of demand? How does it differ from cross elasticity
of demand? [8+8]
2. Write short notes on the following:
(a) Firm and Industry
(b) Cobb-Dongles production function
(c) Concept of period in production. [4+8+4]
3. You are given the following information about two companies in 2000.

Particulars Company A Company B

Sales Rs.50,00,000 Rs.50,00,000
Fixed Expenses Rs.12,00,000 Rs.17,00,000
Variable Expenses Rs.35,00,000 Rs.30,00,000

A friend seeks your advice as to which company’s shares he should purchase. As-
suming the Capital invested is equal for the two companies, state the advice that
you will give. [16]
4. Define Markets? Elaborate how differently are markets classified? [4+12]
5. Write a short notes on
(a) Departmental undertaking
(b) Government company
(c) Public corporation. [5+6+5]
6. Given that a project yields the following cash inflows for six years at an original
cost of Rs.50,000, [16]

Year Cash inflows after taxes

Rs.
1 10,000
2 16,000
3 24,000
4 30,000
5 3,00,000
6 30,000

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Code No: RR211701 Set No. 1
7. Jounalise the following transactions and post them to ledger. [16]
1. Ram invests Rs. 10,000 in cash.
2. He bought goods worth Rs. 2,000 from Shyam.
3 He bought a machine for Rs. 5,000 from Lakshman on account
4. He paid to Lakshman Rs. 2,000
5. He sold goods for cash Rs. 3,000
6. He sold goods to A on account Rs. 4,000
7. He paid to Shyam Rs. 1,000
8. He received amount from A Rs. 2,000
8. From the following extract of a balance sheet of an Airlines company calculate the
debt equity ratio and interest coverage ratio. Given that the debt equity ratio is in
the range of 10:1 , how do you interpret this ratio?

50,000, 10% preference shares of Rs.100 each

2,00,000 equity shares of Rs.10 each
10% ,30,000 debentures of Rs.100 each
Net profit during the year was Rs. 10,00,000 [16]

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Code No: RR211701 Set No. 2
II B.Tech I Semester Supplimentary Examinations, November 2007
MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS
( Common to Electronics & Telematics, Electronics & Computer
Engineering and Instrumentation & Control Engineering)
Time: 3 hours Max Marks: 80
Answer any FIVE Questions
All Questions carry equal marks
⋆⋆⋆⋆⋆

1. Discuss the utility of demand forecasting. What is the criteria of a good forecasting
method? For [4+6+6]

(a) new products

(b) Existing products.

2. Explain and illustrate the following: and also mention why do they arise

(a) The Law of constant Returns.

(b) The Law of increasing Returns. [8+8]

3. (a) What is meant by Break-Even Analysis? Explain the uses and limitations of
BEP.
(b) Appraise the usefulness of Break-Even Analysis for a multi product organiza-
tion. [10+6]

4. Define Markets? Elaborate how differently are markets classified? [4+12]

5. Write short notes on:

(a) Sole Trader

(b) Statutory corporation
(c) Departmental organisation and
(d) private limited companies. [4×4]

6. Find out the average rate of return from the following data relating to Machines 1
and 2

Cost Rs.300,000 each

Estimated life 3years each
Estimated scrap Rs.60,000 each
Income tax rate 50%
Additional working capital required Rs.2,50.000 for each Machine

The estimated cash inflows after taxes for each machine are as given below: [16]

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Code No: RR211701 Set No. 2
Year Machine 1 Machine 2
Rs. Rs.
1 1,50,000 2,00,000
2 3,00,000 3,00,000
3 1,50,000 2,50,000
4 —— 1,50,000

7. Jounalise the following transactions and post them to ledger. [16]

1. Ram invests Rs. 10,000 in cash.
2. He bought goods worth Rs. 2,000 from Shyam.
3 He bought a machine for Rs. 5,000 from Lakshman on account
4. He paid to Lakshman Rs. 2,000
5. He sold goods for cash Rs. 3,000
6. He sold goods to A on account Rs. 4,000
7. He paid to Shyam Rs. 1,000
8. He received amount from A Rs. 2,000
8. The following are the extracts from the financial statements of Blue and Red Ltd.,
as on 31st March 2001 and 2002 respectively.

31 March 2001 31 march 2002

Rs. Rs.
Stock 10,000 25,000
Debtors 20,000 20,000
Bills receivables 10,000 5,000
Cash in hand 18,000 15,000
Bills payable 15,000 20,000
bank overdraft - 2,000
9%debentures 5,00,000 5,00,000
Sales for the year 3,50,000 3,00,000
Gross profit 70,000 50,000
Compute for both the years the following:

(a) Current ratio

(b) Acid ratio
(c) Stock turnover ratio. Also interpret the results. [5+5+6]

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Code No: RR211701 Set No. 3
II B.Tech I Semester Supplimentary Examinations, November 2007
MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS
( Common to Electronics & Telematics, Electronics & Computer
Engineering and Instrumentation & Control Engineering)
Time: 3 hours Max Marks: 80
Answer any FIVE Questions
All Questions carry equal marks
⋆⋆⋆⋆⋆

1. Discuss the utility of demand forecasting. What is the criteria of a good forecasting
method? For [4+6+6]

(a) new products

(b) Existing products.

2. Explain and illustrate the following: and also mention why do they arise

(a) The Law of constant Returns.

(b) The Law of increasing Returns. [8+8]

3. (a) The information about Raj and Co., are given below:
i. Profit-Volume Ratio 20 %
ii. Fixed Cost Rs.36,000
iii. Selling price per unit Rs.150
(b) Calculate:
i. BEP (in Rs.)
ii. BEP (in units)
iii. Variable Cost per unit
iv. Selling price per unit. [4×4]

4. Define Markets? Elaborate how differently are markets classified? [4+12]

5. Write a short notes on

(a) Departmental undertaking

(b) Government company
(c) Public corporation. [5+6+5]

6. Given the following information in respect of the two project proposals rank them
by applying the criteria of

(a) payback period Annual cash Flow after Taxes:

(b) ARR

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Code No: RR211701 Set No. 3
Initial investment: Rs.25,000 [8+8]

Year Proposal 1 Proposal 2

Rs. Rs.
1 11,750 13,500
2 12,250 12,500
3 12,500 12,250
4 13,500 11,750

7. Jounalise the following transactions and post them to ledger. [16]

1. Ram invests Rs. 10,000 in cash.
2. He bought goods worth Rs. 2,000 from Shyam.
3 He bought a machine for Rs. 5,000 from Lakshman on account
4. He paid to Lakshman Rs. 2,000
5. He sold goods for cash Rs. 3,000
6. He sold goods to A on account Rs. 4,000
7. He paid to Shyam Rs. 1,000
8. He received amount from A Rs. 2,000
8. Discuss briefly the meaning and nature of ratio analysis. How is it useful for inter
firm and intra firm comparisons [16]

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Code No: RR211701 Set No. 4
II B.Tech I Semester Supplimentary Examinations, November 2007
MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS
( Common to Electronics & Telematics, Electronics & Computer
Engineering and Instrumentation & Control Engineering)
Time: 3 hours Max Marks: 80
Answer any FIVE Questions
All Questions carry equal marks
⋆⋆⋆⋆⋆

1. Elaborate the importance of managerial economics in decision making. [16]

2. Explain and illustrate the following: and also mention why do they arise

(a) The Law of constant Returns.

(b) The Law of increasing Returns. [8+8]

3. (a) The information about Raj and Co., are given below:
i. Profit-Volume Ratio 20 %
ii. Fixed Cost Rs.36,000
iii. Selling price per unit Rs.150
(b) Calculate:
i. BEP (in Rs.)
ii. BEP (in units)
iii. Variable Cost per unit
iv. Selling price per unit. [4×4]

4. Monopoly is disappearing from markets. Do you agree with this statement? Do

you advocate for monopoly to continue in market situations? [8+8]

5. What are the reasons for Joint Stock Companies being popular as a form of business
Organization? Explain. Why some companies with good beginning disappear
slowly? [16]

6. Define ‘Accounting rate of return’ ‘and Pay back period method’ ? Compare and
contrast the two.Illustrate with assumed data. [16]

7. From the following Trial Balance of Sri Krishna and Company prepare trading and
profit and loss account for the year ended December 31, 2000 and a Balance Sheet
as on that date.

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Code No: RR211701 Set No. 4
Rs. Rs.
Debit Credit

Machinery 3,67,600
Opening stock 1,16,800
Purchases and sales 8,00,000 9,52,000
Returns 16,800 15,200
General expenses 40,000
Stationery 4,000
Loan from Andhra Bank 2,76,800
Cash 25,300
Apprentice premium 6,400
12% loan 20,000
Bad debts 13,600
Debtors and Creditors 2,56,000 80,000
Provision for bad debts 8,000
Interest 300
Sri Krishna Capital 2,82,000
Adjustments

(a) Purchases include Rs.8,000 being the Value of Machinery purchased in Jan
2000
(b) Provide 5% per cent per annum as interest on capital
(c) Provide 10% depreciation on machinery
(d) Value of stock on 31-12-2000 was Rs.68,000. [16]

8. From the following extract of a balance sheet of an Airlines company calculate the
debt equity ratio and interest coverage ratio. Given that the debt equity ratio is in
the range of 10:1 , how do you interpret this ratio?

50,000, 10% preference shares of Rs.100 each

2,00,000 equity shares of Rs.10 each
10% ,30,000 debentures of Rs.100 each
Net profit during the year was Rs. 10,00,000 [16]

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