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Code No: V3101/R07 Set No. 1

III B.Tech I Semester Regular Examinations, November 2009
MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS
( Common to Civil Engineering, Mechanical Engineering, Electronics &
Communication Engineering, Electronics & Computer Engineering,
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Instrumentation & Control Engineering and Bio-Technology)
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 is meant by Elasticity of demand. How do you measure it? [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 competitor under conditions of perfect competition is only price taker and quan-
tity adjustor’ - In the light of the above statement, discuss clearly the important
features of perfect competition and how price output decisions can be taken. [16]
5. What are the factors that affect the choice and form of a business organization?
[16]
6. Following is the information in respect of the three projects A,B and C. [16]
Item A B C
Initial Investment ( in Rs) 60,000/- 2150/- 4,25,000/-
Annual Cash Flow (in Rs) 12,000/- 1500/- 2,51,000/-
Life Period (in years) 15 3 20
If the cost of capital for all the three projects is 10%, rank them using NPV method
and simple pay back method.
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.
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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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?????
1. Managerial Economics is the application of Economic Theory to business manage-

ment. Discuss. [16]
2. What are the various methods of demand forecasting. Evaluate various survey-
based demand forecasting methods. [16]
3. “Break even analysis provides the management with a simplified framework for an
organization which is thinking on a number of problems” ? Discuss. [16]
4. (a) What are the objectives of pricing?
(b) Explain any three important methods of pricing followed by industrial houses.
[6+10]
5. What are the objectives behind the emergence of company organization? Do they
achieve these objectives? Justify your answer. [16]
6. Explain different types of working capital. [16]
7. Give a brief account on the important records of Accounting under Double entry
system and discuss briefly the scope of each. [16]
8. From the information given below calculate: [16]
(a) Inventory-Turnover ratio and
(b) Receivables ? Turnover ratio.
(Amounts in Lakhs of Rs.)
Sales (100% credit) 42.00
Opening stock 6.00
Closing stock 7.00
Sales returns 3.00
Opening balance of sundry debtors 6.00
Closing balance of sundry debtors 4.00
Opening balance of Bills Receivable 3.00
Closing balance of Bills Receivable 5.00
Gross profit = 30% of sales
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?????
1. Write briefly on the following: [16]
(a) Giffin’s paradox

(b) Demand schedule
(c) Income effect
(d) Joint demand
2. What are the various methods of demand forecasting. Evaluate various survey-
based demand forecasting methods. [16]
3. (a) Distinguish between the following:

i. Average cost and Marginal cost
ii. Explicit cost and implicit cost
iii. Short run Average cost and Long run Average cost
iv. Variable cost and semi variable cost [4 × 2]
(b) Diagrammatically represent the relationship between Average Fixed Cost, Av-
erage variable cost, Unit cost and Marginal cost. [8]
4. (a) What are the causes for the emergence of Monopoly?

(b) Elaborate how price output decisions can be taken by a monopolist. [6+10]
5. What are the objectives behind the emergence of company organization? Do they
achieve these objectives? Justify your answer. [16]
6. What is the importance of capital budgeting? Explain the basic steps involved in
evaluating capital budgeting proposals. [16]
7. The following trial balance belongs to Amzad Khan with the help of which prepare

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trading and profit and loss A/c and balance sheet. [16]
Dr. Cr.
Drawing and capital 18,000 1,00,000
Furniture 32,500
Equipment 15,000
Loan payable 15,000
Interest on loan 900
Sales 1,00,000
Purchases 75,000
Opening stock(1.1.05) 25,000
Trade expenses 15,000
Wages 2,000
Insurance 1,000
Commission received 4,500
Sundry debtors 28,100
Cash at bank 20,000
Sundry creditors 10,000
Interest received 3,000
2,32,500 2,32,500
Adjustments:
(a) Closing stock as on 31st December 2005, was valued at Rs.60,000
(b) Wages were outstanding by Rs.500
(c) Provide depreciation @ 10% on furniture.
8. Explain in detail how the following ratios are calculated and also the purpose of
their computation. [16]
(a) Current ratios

(b) Turnover ratios
(c) Solvency ratios
(d) Profitability ratios.
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?????
1. Managerial Economics is the application of Economic Theory to business manage-

ment. Discuss. [16]
2. What are the needs for demand forecasting. Explain the various steps involved in
demand forecasting. [16]
3. With the help of Isoquant analysis, explain how a producer can attain the least
cost combination of factor inputs? [16]
4. (a) What are the conditions under which a competitor can reach equilibrium po-
sition in perfect competition?
(b) How is long run equilibrium different from short run equilibrium? [10+6]
5. Analyze the factors that help in choosing a suitable form of business organization
in public and private sectors. [16]
6. What is meant by discounting and time value of money? How is it useful in capital
budgeting? [16]
7. Explain the following adjustments and illustrate suitably with assumed data. [16]
(a) Closing stock

(b) outstanding expenses
(c) Prepaid Income
(d) Bad debts.
8. Compute the following ratios.
(a) Calculate Earnings Per share
Rs.
Net profit before preferential dividend 1,15,000
Equity share capital (40,000 shares of Rs.100 each) 4,00,000
121/2 % preference share capital 2,00,000

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(b) Calculate Debtor ? Turnover ratio
Total sales for the year Rs.1,75,000

Cash sales 25% of total sales
Sales returns out of credit sales Rs.10,000
Sundry Debtors ? Opening balance Rs. 8,000
Sundry Debtors - Closing balance Rs.12,000
(c) Calculate interest coverage ratio
Rs.
Net profit after deducting Interest and Tax 6,00,000
12% Debentures of the face value of 15,00,000
Provision for taxation 1,20,000
(d) A company has current ratio of 3:1 and Quick ratio of 1:2. If the Working
Capital is Rs. 1,80,000, calculate Current liabilities and Stock. [4+4+4+4]
?????
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www.andhracolleges.

com The Complete Information About Colleges in Andhra Pradesh

Code No: V3101/R07 Set No. 1

2. What is meant by Elasticity of demand. How do you measure it? [16]

Seminar Topics - Scholarships - Admission/Entrance Exam Notifications

Code No: V3101/R07 Set No. 1

Code No: V3101/R07 Set No. 2

1. Managerial Economics is the application of Economic Theory to business manage-

Code No: V3101/R07 Set No. 3

1. Write briefly on the following: [16]

(a) Giffin’s paradox

3. (a) Distinguish between the following:

4. (a) What are the causes for the emergence of Monopoly?

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Code No: V3101/R07 Set No. 3

(a) Closing stock as on 31st December 2005, was valued at Rs.60,000

(a) Current ratios

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Code No: V3101/R07 Set No. 4

1. Managerial Economics is the application of Economic Theory to business manage-

(a) Closing stock

8. Compute the following ratios.

(a) Calculate Earnings Per share

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Code No: V3101/R07 Set No. 4

Total sales for the year Rs.1,75,000

(c) Calculate interest coverage ratio

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