Old Exam Papers June 2012 (Set 2)

(a) in total
(b) as regards each constituent part of working capital.
Budgeted sales are j 2,60,000 per annum. Analysis
of cost of each unit :
Raw material 3
Labour 4
Overheads 2
Profit 1
Selling price 10
It is estimated that :
(i) Pending use; raw materials are carried in
stock for three weeks and finished goods
for two weeks.
(ii) Factory processing will take three weeks.
(iii) Suppliers will give five weeks credit and
customers will require eight weeks credit.
It may be assumed that production and
overheads accrue evenly throughout the year.
600 2 MP-202
j
Evaluate the two alternatives by using :
(i) Pay-back Period Method
(ii) Post Pay-back Period Method
9. Why companies use debt capital ? What are the limitations
on their borrowing capacity ?
10. What do you mean by dividend policies ? Examine critically
the advantages and disadvantages of a stable dividend
policy.
MP-202 5 600