Code No: RR312401 Set No.

1
III B.Tech I Semester Supplementary Examinations, February 2007
MANAGERIAL ECONOMICS & FINANCIAL ANALYSIS
(Automobile Engineering)
Time: 3 hours Max Marks: 80
Answer any FIVE Questions
All Questions carry equal marks
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1. What is Managerial Economics. Explain its focus areas. [16]

2. (a) What is meant by Elasticity of demand.

(b) Determine price elasticity of demand given that the quantity demanded of a
product is 1000 units when the price is Rs. 100 and when the price declines
to Rs.70, demand increases to 1100 units. [8+8]

3. (a) What are Isoquents? Explain the chief characteristics of Isoquents?

(b) What do you understand by Least Cost Combination of inputs and how can
it be achieved. [8+8]

4. (a) Define Market and explain how markets are classified?

(b) What are the important features in any market structure? [12+4]

5. Explain the features of sole trader form of organization. Discuss the merits and
demerits of sole trader from of organization [16]

6. Write short notes on the following [4 ×4]

(a) Cumulative preference shares

(b) Customer advances
(c) Equity Shares
(d) Fixed capital

7. The trail balance of Anil is given below, prepare the Trading Account, Profit &
Loss Account for the year ending 31st December 2005 and Balance sheet as on that

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Code No: RR312401 Set No. 1
date. [16]

Debit Rs. Credit Rs.

Drawings and capital 72,000 6,00,000
Opening stock 2,05,000
Purchases and sales 6,80,000 14,05,000
Carriage inwards 15,000
Debtors and creditors 2,35,000 1,43,000
Cash 39,000
Salaries 2,53,000
Bills payable 42,000
Insurance 1,12,000
Machinery 3,00,000
Wages 2,15,000
Commission received 10,000
Trade expenses 69,000
Freight inwards 5,000
22,00,000 22,00,000

Adjustments

(a) Closing stock was valued at Rs.3,50,000

(b) Provide a reserve for bad and doubtful debts @ 2 on debtors

8. (a) From the following information, calculate [16]

i. Debt Equity ratio
ii. Current ratio
Rs. Rs.
Debentures 1,40,000 Bank balance 30,000
Long term loans 70,000 Sundry Debtors 70,000
General reserve 40,000
Creditors 66,000
Bills payable 14,000
Share capital 1,20,000
(b) Calculate Amounts receivables Turnover ratio form the following information.

Rs.
Net profit after deducting interest and taxes 6,00,000
12% Debentures of the face value of 15,00,000
Amount provided towards taxation 1,20,000

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Code No: RR312401 Set No. 2
III B.Tech I Semester Supplementary Examinations, February 2007
MANAGERIAL ECONOMICS & FINANCIAL ANALYSIS
(Automobile Engineering)
Time: 3 hours Max Marks: 80
Answer any FIVE Questions
All Questions carry equal marks
⋆⋆⋆⋆⋆

1. Define Managerial Economics. Explain its nature and scope. [16]

2. What are the various methods of demand forecasting. Evaluate various survey-
based demand forecasting methods. [16]

3. (a) What do you understand by ‘Law of increasing Returns?’ What causes make
increasing returns operate? [10]
(b) When do you notice ‘constant returns’ arising? [3]
(c) Do diminishing returns apply only for agriculture or any other fields? [3]

4. (a) What are the principal differences between monopoly and perfect competition?
(b) Supplement your answer with appropriate diagrams in both the cases. [8+8]

5. What are the pros and cons of privatisation ? [16]

6. Explain different types of working capital. [16]

7. Explain the following concepts and illustrate their treatment with imaginary data.
[16]

(a) Depreciation
(b) Prepaid expenses
(c) Reserve for bad and doubtful debts
(d) Income received in advance

8. What are the limitations of financial analysis? Discuss briefly. [16]

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Code No: RR312401 Set No. 3
III B.Tech I Semester Supplementary Examinations, February 2007
MANAGERIAL ECONOMICS & FINANCIAL ANALYSIS
(Automobile Engineering)
Time: 3 hours Max Marks: 80
Answer any FIVE Questions
All Questions carry equal marks
⋆⋆⋆⋆⋆

1. State the Law of Demand. Explain why the demand curve slopes downwards. Are
there any exceptions to the law? [16]

2. What are the needs for demand forecasting. Explain the various steps involved in
demand forecasting. [16]

3. (a) “To reach Breach even position means to reach zero point” In the light of
the above statement explain how output, cost and revenue relationship can be
established.
(b) What are its limitations?
(c) Use suitable diagrams. [8+4+4]

4. (a) Define Market and explain how markets are classified?

(b) What are the important features in any market structure? [12+4]

5. Explain the features and problems of public sector enterprises in India [16]

6. Write short notes on the following :

(a) Shares
(b) Bonds and debentures
(c) Working capital
(d) Current liabilities [4×4]

7. You are required to prepare Trading and profit & Loss Account in the books of
Amarnath for the year ending 31st December, 2005 and Balance Sheet as on that
date after considering the following adjustments. [16]

(a) Closing stock was valued at Rs.50,000

(b) Prepaid rent amounted Rs.410

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Code No: RR312401 Set No. 3
Debit balances Rs. Credit balances Rs.
Buildings 18,750 Capital 35,000
Machinery 9,250 Purchase returns 120
Debtors 7,000 Bills payable 5,000
Rent 4,510 Sales 63,500
Drawings 840 Creditors 10,000
Cash at bank 3,850
Sales returns 450
Salaries 1,120
Opening stock 16,700
Purchases 46,850
Wages 4,300
1,13,620 1,13,620

8. (a) From the following information, calculate [16]

i. Debt Equity ratio
ii. Current ratio
Rs. Rs.
Debentures 1,40,000 Bank balance 30,000
Long term loans 70,000 Sundry Debtors 70,000
General reserve 40,000
Creditors 66,000
Bills payable 14,000
Share capital 1,20,000
(b) Calculate Amounts receivables Turnover ratio form the following information.

Rs.
Net profit after deducting interest and taxes 6,00,000
12% Debentures of the face value of 15,00,000
Amount provided towards taxation 1,20,000

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Code No: RR312401 Set No. 4
III B.Tech I Semester Supplementary Examinations, February 2007
MANAGERIAL ECONOMICS & FINANCIAL ANALYSIS
(Automobile Engineering)
Time: 3 hours Max Marks: 80
Answer any FIVE Questions
All Questions carry equal marks
⋆⋆⋆⋆⋆

1. Write briefly on the following: [16]

(a) Giffin’s paradox
(b) Demand schedule
(c) Income effect
(d) Joint demand
2. What are the needs for demand forecasting. Explain the various steps involved in
demand forecasting. [16]
3. Write short notes on the following:
(a) Isoquants
(b) Least cost combination of inputs
(c) Budget line
(d) Marginal rate of Technical substitution. [4+4+4+4]
4. (a) What are the features of monopolistic competitions?
(b) Explain the differences between monopolistic competition and perfect compe-
tition.
[8+8]
5. What are the salient features of a company ? Why it has become the most popular
form of organization ? [16]
6. Examine the following 3 project proposals and evaluate them based on
(a) PBP Method
(b) ARR Method. (ARR on original investment)
Initial Investment is Rs. 10,00,000/- each for all the three projects

Cash inflows (Rs.)

Year Project-A Project-B Project-C
1. 5,00,000 6,00,000 2,00,000
2 5,00,000 2,00,000 2,00,000
3. 2,00,000 2,00,000 6,00,000
4 - 3,00,000 4,00,000

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Code No: RR312401 Set No. 4
7. How are Accounts finalized at the end of an Accounting period with the help of a
Trial balance? Illustrate. [16]

8. Discuss the importance of Ratio Analysis for inter firm and intra-firm comparison,
including circumstances responsible for its limitations, if any. [16]

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