Engineering Economics and Financial Management Questions Bank 2014

Anna University, Chennai

Engineering Economics and Financial Management

16 Marks Question Bank

UNIT I

1. Discuss the nature and scope of managerial economics

2. Discuss the relationship between managerial economics and other disciplines.

3. Describe cost of production in the long run average cost curve

4. Discuss the various types of firms.

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UNIT II

1. Describe various demand forecasting techniques

2. Explain law of demand and its exception.

3. Explain the types of elasticity of supply and list out the various factors affecting the same.

4. Explain the different elasticity of supply.

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UNIT III

1. Describe iso product curve and its features.

2. Explain long run average and short run average cost curves with neat sketch.

3. Describe production function with one variable input factor.

4. Explain in detail the returns to scale. UNIT IV

1. Explain different pricing methods

2. Explain how price and output can be determined under monopoly.

3. Explain various cost based and competition based pricing methods.

4. Explain the features of perfect competition and discuss how price and output can be determined under perfect competition.

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UNIT V and VI

1. Explain the following: Net Present Value Method, Pay Back Period Method, Profitability

Index Method and Internal Rate of Return Method.

2. Differentiate cash flow and fund flow statement. Discuss the advantages and limitations of financial statement analysis.

3. What is ratio analysis? Discuss the classification of ratio analysis.

From the following Profit and Loss Account of a company ascertain the following ratios.

1. Gross Profit Ratio

2. Net Profit Ratio

3. Operating Ratio

4. Operating Profit Ratio

5. Stock Turnover Ratio

Trading and Profit & Loss Account for the year ending 31.3.2005

Dr Cr

Particulars	Rs.	Particulars	Rs.
To opening stock	10000	By sales	56000
To purchases	44000	By closing stock	10000
To gross profit	20100
	66000		66000
To administration expenses	2000	By gross profit	20100
To selling expenses	8900	By dividend	10000
To interest	3000	By profit on sale of investments	800
To net profit	8000
	21900		21900

4. What major steps are involved in the capital budgeting process?

5. (i) What is capital budgeting? Explain the importance of capital budgeting. (8)

ii) Each of the following projects requires a cash outlay of Rs.10,000. You are required to suggest which project should be accepted if the standard pay-back period is 5 years. (8)

Year	Project X	Project Y	Project Z
1	Rs. 2,500	Rs. 4,000	Rs. 1,000
2	2,500	3,000	2,000

3 2,500 2,000 3,000

4 2,500 1,000 4,000

5 2,500 - -

6.a) From the following balances of Ms. Priya. Prepare Profit and Loss A/c for the year ending

31st August, 2000. (16)

Salaries 22,000

Printing 300

Insurance 600

Rent 1,200

Discount Allowed 200

Interest 600

Repairs 200

Advertisement 1,400

Office Lighting 250

Traveling Expenses 300

Postage 350

Sales Tax 500

Stationary 400

Gross Profit 5,000

Sundry Expenses 200

7a)i) What is ratio analysis? Explain the profitability ratios in detail. (8)

ii) From the following balance sheet prepare. (8) (a) a Schedule of Changes in Working Capital

(b) a Funds Flow Statement.

Liabilities 31st December Assets 31st December

1985 1986 1985 1986

Share Capital Rs.10,000 Rs.15,000 Cash Rs.5,000 Rs.8,000

Profit & Loss Appropriation A/C 5,000 8,000 Debtors 10,000 15,000

General Reserve 4,000 6,000 Stock 10,000 12,000

Sundry Creditors 8,000 12,000 Machinery 3,000 5,000

Bills Payable 5,000 3,000 Land 4,000 4,000

32,000 44,000 32,000 44,000