Financial Management Answer Essay

4070 Words Mar 3rd, 2015 17 Pages
National Institute of Business Management
Chennai - 020
FIRST SEMESTER EMBA/ MBA
Subject : Financial Management

Attend any 4 questions. Each question carries 25 marks
(Each answer should be of minimum 2 pages / of 300 words)

1. What are the significant factors of Financial Statements? Discuss the various tools of financial Analysis. (Answered)
2. What is a Fund Flow Statement? Discuss the uses and preparation of Fund Flow Statements. (Answered)
3. What is financial Forecasting? Explain. (Answered)
4. Examine the various tools of Financial Analysis. (Answered)
5. What is Zero Base Budgeting? Explain.
6. Describe the various aspects of Zero Based Budgeting with its merits and demerits.

25 x 4=100 marks

ANSWER SHEET
1. What are the
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Common-size financial statements enable comparisons of changes in the elements that make up financial statements. The figures in each line item of financial statements are divided by a reasonable aggregate total and then expressed as percents. The total of these elements will add to 100%. For example, the balance sheet items are usually expressed as a percentage of total assets and the income statement items are usually expressed as a percentage of total revenues. This makes it easier for the analyst to identify internal structural changes in companies that are reflected in financial statements. The analysis of common-size financial statements focuses on major aspects of the internal structure of company operations such as:
Capital structure and sources of financing
Distribution of assets or make up of investing activities
Composition of important segments of financial position such as current assets
Relative magnitude of various expenses in relation to sales
Moreover, useful information can be obtained by a comparison of common-size statements of a company across years. The advantage of this temporal analysis is even more evident in comparisons between two companies of different sizes. Since analyses can be made on a uniform basis, this tool greatly facilitates such comparisons. A ratio expresses a mathematical relation between two quantities. To be meaningful (useful in analysis), a

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