Code No: RR310106 Set No.

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III B.Tech I Semester Supplimentary Examinations, February 2008
MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS
( Common to Civil Engineering, Mechanical Engineering, Metallurgy &
Material Technology, Production Engineering and Bio-Technology)
Time: 3 hours Max Marks: 80
Answer any FIVE Questions
All Questions carry equal marks
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1. Define price - elasticity of demand. What are the various degrees of price elasticity.
Illustrate graphically. What factors enable us to find whether the degree of demand
for a product is elastic or inelastic? [4+4+2+6]

2. Explain briefly the relationship between total physical product average, and mar-
ginal physical product. With the help of assumed data represent graphically. [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. Discuss the factors that help in choosing a suitable form of Business Organization
in private,and public sector. [16]

6. What are major sources of short term finance? Evaluate. [16]

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. Selected financial information about Siri Traders Limited is given below:

2001 2002
Sales 6,00,000 4,30,000
Cost of goods sold 5,70,000 3,25,000
Debtors 72,000 30,000
Inventories 1,14,000 55,000
Cash 15,000 8,000
Other current assets 40,000 27,000
Current liabilities 1,60,000 1,10,000

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Code No: RR310106 Set No. 1
Compute the current ratio, quick ratio, debt collection period and inventory turnover
ratios for the above two years and comment on the results. [4×4]

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Code No: RR310106 Set No. 2
III B.Tech I Semester Supplimentary Examinations, February 2008
MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS
( Common to Civil Engineering, Mechanical Engineering, Metallurgy &
Material Technology, Production Engineering and Bio-Technology)
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 the following

(a) Internal Economies

(b) External Economies. [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. Prepare a comparitive statement representing characteristics of

(a) perfect competition

(b) monopoly and
(c) monopolistic competition. [5+5+6]

5. Discuss the factors that help in choosing a suitable form of Business Organization
in private,and public sector. [16]

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

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

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Code No: RR310106 Set No. 2
8. Write a brief note on the importance of ratio analysis to different category of users.
[16]

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Code No: RR310106 Set No. 3
III B.Tech I Semester Supplimentary Examinations, February 2008
MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS
( Common to Civil Engineering, Mechanical Engineering, Metallurgy &
Material Technology, Production Engineering and Bio-Technology)
Time: 3 hours Max Marks: 80
Answer any FIVE Questions
All Questions carry equal marks
⋆⋆⋆⋆⋆

1. Explain briefly the following methods of forecasting demand.

(a) Barometric method

(b) Expert opinion method
(c) Time series analysis
(d) End user method [4×4]

2. How will you define economies of scale? Explain how increasing returns to scale
work out in reality. [6+10]

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. Write short notes on

(a) super normal profit

(b) Bilateral monopoly
(c) product differentiation
(d) Trade discrimination. [4+4]

5. Write a short notes on

(a) Departmental undertaking

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

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

7. (a) What is Trial Balance? Why it is prepared?

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Code No: RR310106 Set No. 3
(b) From the following list of balances prepare a Trial Balance as on 30-6-2003 [16]

Rs. Rs.
i Opening Stock 1,800 xiii. Plant 750
ii. Wages 1,000 xiv Machinery tools 180
iii sales 12,000 xv. Lighting 230
iv bank loan 440 xvi. Creditors 800
v. coal and coke 300 xvii. Capital 4,000
vi purchases 7,500 xviii. Misc.receipts 60
viii carriage 150 xx. Office furniture 60
ix. income tax 150 xxi. Patents 100
x. debtors 2,000 xxii. Goodwill 1,500
xi leasehold premises 600 xxiii. Cash at bank 510
xii. Cash in hand 20

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: RR310106 Set No. 4
III B.Tech I Semester Supplimentary Examinations, February 2008
MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS
( Common to Civil Engineering, Mechanical Engineering, Metallurgy &
Material Technology, Production Engineering and Bio-Technology)
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 briefly the relationship between total physical product average, and mar-
ginal physical product. With the help of assumed data represent graphically. [8+8]

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

7. Prepare Trading and profit and loss account for the year ended 31.12.2001 and a
Balance Sheet as on that date from the following Trial Balance. [16]

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Code No: RR310106 Set No. 4
Dr, Rs. Cr Rs.
Furniture 6,500
Plant and machinery 60,000
Buildings 75,000
Capital 1,25,000
Bad debts 1,750
Reserve for bad debts 3,000
Sundry debtors 40,000
Sundry creditors 24,000
Stock(1.1.2001) 34,600
Purchases 54,750
Sales 1,54,500
Bank overdraft 28,500
Sales returns 2,000
Purchases returns 1,250
Advertising 4,500
Interest 1,180
Commision received 3,750
Cash in hand 6,500
Salaries 33,000
General expences 7,820
Car expences 9,000
Taxes and insurence 3,500
3,40,000 3,40,000

8. Calculate the following ratios from the balance sheet given below:
(a) Debt -Equity ratio
(b) Liquidity Ratio
(c) Fixed Assets to Current Assets
(d) Fixed Assets/Turnover
BALAN CESHEET
Liabilities Rs. Assets Rs.
Equity shares of Rs.10each 100000 Goodwill 60000
Reserves 20000 Fixed assets (at cost) 140000
Profit and loss a/c 30000 Stock 30000
Secured loan 80000 Sundry Debtors 30000
Sundry Creditors 50000 Advances 10000
Provision for taxation 20000 Cash balance 30000
———– ————
300000 300000
———– ———–
The sales for the year were, Rs.500000. [4×4]

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Code No: RR310106 Set No. 4
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