MINIMUM LEARNING PROGRAMME FOR BUSINESS STUDIES

UNIT 9 TO 12

CHAPTER – 9 FINANCIAL MANAGEMENT

MEANING OF FINANCIAL MANAGEMENT : It refers to that part of the management activity which is concerned with the efficient planning and controlling of financial affairs of the enterprise. In other words, it can be said that under financial management, first of all, need for finance is estimated and then different sources of obtaining finance and its quantum are determined and finally arrangements are made for the distribution of profit.

IMPORTANCE OF FINANCIAL MANAGEMENT :1. It estimates the funds requirement of the business and determines the sources of funds – debt and equity.2. It ensures availability of enough funds whenever it is required and avoiding idle finance.3. Good financial management helps in mobilization of funds at lower costs and deployment of these funds in most profitable activities so that return on investment exceeds cost of procurement.4. Financial management ensures safety of funds procured by creating reserves, reinvesting profits, etc.

OBJECTIVES OF FINANCIAL PLANNING :1. Profit maximisation2. Proper utilisation of funds3. Maintenance of liquidity4. Meeting of financial commitment

Q1:-What is meant by financial management? State the primary objectives of financial management.Ans- Financial management is that branch of management which is concerned with the effective acquisition and use of money. OBJECTIVES OF FINANCIAL PLANNING :1. Profit maximisation2. Proper utilisation of funds3. Maintenance of liquidity4. Meeting of financial commitment

Q2: Discuss in brief the importance of financial management.Ans. IMPORTANCE OF FINANCIAL MANAGEMENT :1. It estimates the funds requirement of the business and determines the sources of funds – debt and equity.2. It ensures availability of enough funds whenever it is required and avoiding idle finance.3. Good financial management helps in mobilization of funds at lower costs and deployment of these funds in most profitable activities so that return on investment exceeds cost of procurement.4. Financial management ensures safety of funds procured by creating reserves, reinvesting profits, etc.

Unit :9 Financial Management

Q3:- Briefly explain the investment decision and factors affecting it.Ans- It refers to the selection of assets in which funds will be invested by the business that is long term assets and short term assets. Factors affecting investment decision1. Cash flow of the project2. The rate of return3. The investment criteria involved

Q4: Briefly explain dividend decision and factors affecting it.Ans. Dividend decision determines that how much part of the earning should be distributed among share holders and how much should be retained with business. FACTORS AFFECTING DIVIDEND DECISION :1. Amount of profit earned2. Stability of earnings3. Policy of maintaining stability of dividend4. Growth opportunities5. Cash Flow position6. Shareholders’ preference.

Q7:- What is meant by financial planning? Give its importance?Ans: It means estimating the funds requirement for a business and determining the sources of funds for current and fixed assets and future expansion prospects.

IMPORTANCE OF FINANCIAL PLANNING :1. It enables a company to tackle the uncertainty in respect of the availability and timing of the funds.2. It tries to forecast what may happen in future under different business situations.3. It helps in avoiding business shocks and surprises and helps in preparing a blueprint of an organisation’s future preparations relating to finance.4. It provides a link between investment and financing decisions on a continuous basis.

Q5. Explain the meaning of fixed capital? Briefly explain any four factors that determines the fixed capital of the company?Ans. Fixed capital is the capital which is used for the purchase of the fixed assets. FACTORS TO BE CONSIDERED WHILE DETERMINING FIXED CAPITAL :1. Nature of Business2. Scale of Operations3. Choice of Technique4. Technology Upgradation5. Growth Prospects6. Diversification

Q6. What is meant by working capital? Briefly explain any four factors that determines the working capital of the company?Ans.It is the difference between current assets and current liabilities or the investments that helps in the smooth day to day operations.FACTORS DETERMINING THE WORKING CAPITAL REQUIREMENT :1. Scale of Operations2. Business Cycle3. Production Cycle4. Credit allowed5. Credit Availed of the business.

Q7. :- What is meant by capital structure? Explain different factors affecting the capital structure of a company? Ans.Capital Structure refers to relative proportion of different sources of long term finance.FACTORS AFFECTING CAPITAL STRUCTURE :1. Cash Flow Position2. Return on Investment3. Financial Risk of the organization4. The expected rate of return of lenders on debt capital (Cot of debt)5. The expected rate of return on equity capital (Cost of Equity)

UNIT:10 FINANCIAL MARKET

Q1:- What is meant by financial market ? Explain any two function of financial market?Ans. Financial market creates and exchanges financial securities.Functions of Financial markets:(a)Mobilisation of savings and their channellisation into more productive

uses.(b)Facilitates price discovery.

Q2:- What is money market. Explain different instruments used in money market?Ans. It is the market where transactions in short term securities are made.Instruments used in money market are;(c) Treasury bill(d)Commercial papers (e)Call money(f) Certificates of deposites.

Q3:- Define capital market. State the two parts of capital market?Ans. It is the market where transactions in long term securities are

made.Two types of Capital market are-(g)Primary market(h) Secondary market

Q4:- What is the difference between primary market and secondary market?Ans. Explain the difference between primary market and secondary market on the basis of issue, buying and selling of securities and place.

Q5:- What is the full form of SEBI?Ana. Securities and Exchange Board of India. Q6:- “SEBI is the watch dog of the securities market”. comment ? FUNCTIONS OF SEBI:(A) Protective Functions :i. To check unfair trade practices in connection with security marketii. To check insiders trading in securitiesiii. To provide education relating to dealing in securities to the investorsiv. To promote code of conduct relating to security market. Q7:- Define Stock Exchange. Discuss any four functions of Stock Market.Ans. Stock exchange is an organised market where sale and purchase of various types of securities is performed as per the prescribed rule.Functions of stock exchange:a. Providing liquidity and marketability to existing securities.b. Pricing of security.c. Safety of transactions.d. Contributes to economic growth.

UNIT:11 MARKETING MANAGEMENT

Q1:-What is marketing? Explain its features?A: It refers to that process under which valuable goods/services are created, offered and by doing transaction independently, the needs are satisfied.

Q2:- What do you mean by marketing management .Explain the main steps involved in the process of marketing management?Ans. It refers to the management of all marketing activities. Steps involved in the process of marketing management: (a) Choosing a target market (b) Growing consumers in target market (c) Creating superior values.

Q3:-Explain any four functions of marketing?Ans a) Gathering and analising market information. b) Marketing planning. c) Product designing and development. d) Packaging and labeling. e) Branding. f) Pricing of product.

Q4:-What is meant by marketing mix?Ans. It refers to the aggregate of decisions taken with a view to successfully completing different marketing activities.

Q5:-Discuss the various elements of marketing mix ?Ans, 1. PRODUCT MIX : It refers to the combination of all decisions relating to product. These decisions are mainly with regard to dimensions of the product, its branding, packaging, labelling, colour, design, quality, size, etc. 2. PRICE MIX : It refers to all those decisions which are concerned with the price fixation of any product or service. 3. PROMOTION MIX : It refers to informing the customers about the product, persuading them to purchase these products. 4. PLACE MIX : It refers to the combination of all decisions relating to make products available to consumers. Q6:- What do you understand by product mix ?Ans. Product mix refers to all the decisions relating to the product. These decisions are meanly with regard to branding, packaging, labeling, colour, design, quality, size, after sale service and weight of the product. BRANDING : It refers to a special word, symbol, letter or the mixture of all these.LABELLING : It refers to designing the label to be put on the package.PACKAGING : It refers to the group of those activities which are related with the designing and production of the containers in which the products are packed.

Q7. What is brand name? State any three factors of good brand name?Ans. It refers to the part of a brand which can be spoken. Factors of a good brand name:a) Simple and short.b) Easily pronounceable.c) Suggestive.d) Distinctive.

Q8. Explain any three functions of packaging?Ans. a) Describe the product and specify its content. b) Identification of the product or brand. c) Grading of product.

Q9. Describe the different levels of packaging?Ans, a) Primary packaging.b) Secondary packaging.c) Transportation packaging. Q10 :- Determination of the price of the product is influenced by many factors .Explain any four factors ?Ans. a) Cost of production.b) Demand for product.c) Price of competing firms.d) Purchasing power of the customer.

Q11:- what is meant by channels of distribution ? Explain the types of the channels of destructions?Ans. It refers to that path through which products reach consumers. Types of levels of channels of distribution:a) Direct channel.b) Indirect channel: i) One level channel ii) Two level channel iii) Three level channel

Q12:- Define advertising . Explain the importance of advertising in marketing management ?Ans. It refers to paid and non personal communication to a target market from an identified sponsor using communication channels. Importance of advertising:To manufactures:c) Enhancing consumer satisfaction and confidence.d) Helpful in increasing the demand of their product.e) Helpful in facing competition.To society:f) Helpful in generating more employment.g) Helpful in improving the standard of living.To consumers:h) No fear of exploitation.i) Knowledge of various products.

Q15:- advertising mislead costumers and increases the cost of products ? Do you agree with this statement ? give reasons to support your answer?Ans. Objections to advertisements: a) Adds to cost. b) Undermines social values. c) Confuses the buyers. d) Encourages sale of inferior products. e) Some advertisements are in bad taste.

Q16. Define personal selling ?Ans. Personal selling refers to contracting prospective buyers of product personally.

Q17 Enumerate any good qualities of a good salesman?Ans. Qualities of a good salesman:a) Physical qualities.b) Psychological qualities.c) Technical qualities.d) Good communication skills.

Q19. Define public relations.Ans. Public relations refers to a variety of programmes (news, events,

publications, sponsorships) to promote and protect the image of a company and its products.

Q18. What is meant by Sales Promotion? Give any four techniques of sales promotion.

Ans. Sales promotions are those activities which are undertaken to increase sales besides advertising personal selling and publicity.

Techniques of sales promotion:a) Rebate.b) Discount.c) Refund.d) Product combination.e) Quantity gift.

Q19. What are the roles of public relations?Ans. Role of Public Relations :1. Smooth functioning of business and achievement of objectives2. Building corporate image that affects favourably on its products.3. Build interest in the established product and help in launching a new

product

Q20. Introducing a scheme of 50%+40% less by a company is an example of which sales promotion technique?

Ans. Discount.

Unit :12 consumer protection Q1:-Mention the act which provides protection to consumers ?Ans. Consumer Protection Act, 1986.

Q2:-What is meant by consumer protection?Ans. Consumer protections refers to the steps taken to protect the consumer against the unfair practices of the producers and the sellers.

Q3:- Give the importance of consumer protection?Ans. From the consumers point of view:a) Consumer ignorance.b) Unorganised consumers.c) Widespread exploitation of consumers.From the bussiness point of view:d) Long term interest of bussiness.e) Bussiness uses societies resources.f) Government intervention.

Q4. who can file a complain in a consumer court ?Ans. a) A consumer.b) Registered consumer association.c) State or central government.

Q4:- Explain the rights provided to the consumers by the consumer protection act?Ans. 1. Right to Safety : It is the right to safety against such goods and services as are hazardous to health, life and property of the consumer.2. Right to be Informed : Consumer has also the right that he should be provided all the information on the basis of which he decides to buy goods or services. Such information relate to quality, purity, potency, standard, date of manufacture, method of use, etc. of the commodity.3. Right to Choose : Consumer has the full right to buy any good or service of his choice from among the different goods or services available in the market. 4. Right to be Heard : Consumer has the right that his complaint be heard. Under this right, the consumer can file a complaint against all those things which are prejudicial to his interest.5. Right to Consumer Education : It refers to educate the consumer constantly with regard to their rights. In other words, consumers must be aware of the rights they enjoy against the loss they suffer on account of goods and services purchased by them.6. Right to Healthy Environment : This right provides consumers, the protection against environmental pollution so that the quality of life is enhanced.

Q5 :- Explain in brief any five responsibility of consumers to safeguard their interest ?Ans. 1. Consumer must be aware of his rights while buying 2. Consumer should make full use of his reason while buying things 3. Consumer should approach the officer concerned in case there is some complaint about the goods purchased. 4. Consumer should not compromise on quality 5. Consumer should recognize the truth of the advertisement 6. Consumer should get receipt or bill for the things purchased.

Q6:-Explain the various ways and means available to the consumers for redressing there grievances under three–tier judicial machinery ?Ans. 1. District Forum : This forum hears disputes involving a sum upto Rs. 20 lacs. 2. State Commission : It redresses grievances involving a sum exceeds Rs. 20 lacs and upto 1 crore. 3. National Commission : It has jurisdiction to hear complaints involving a sum exceeding Rs. 1 crore.Q7 :- What are the remedies available to the consumers under consumer protection act?Ans. 1. Removal of defects 2. Replacement of goods 3. Refund of price 4. Award of compensation 5. Removal of deficiency in service 6. Discontinuance of Unfair/Restrictive Trade Practice