MS 41 IGNOU MBA Assignments Jan – June 2019

1. What are the major changes that were made by RBI in the Fifth Bi-monthly Monetary Policy statement for 2018-19?

2. You are required to suggest XYZ Ltd. as to which Credit Policy it should adopt. The company has a present annual sales level of 10,000 units at Rs 300 per unit. The Variable cost is Rs 200 per unit and the Fixed costs amount to Rs 3,00,000 per annum. Presently the company allows 1 month credit period which it intends to increase to 2 months and 3 months. The estimates made are as follows:

Credit Policy Existing Proposed
1 Month 2 Month 3 Month
Increase in Sales 15 % 30%
% of Bad debts 1% 3% 5%

There will be increase in fixed cost by Rs 50,000 on account of increase in sales beyond 15% of present level. The company plans on a pre-tax return of 20% on investment in Receivables.

3. Taking a Suitable Example explain how Permissible Bank Finance can be assessed under the First, Second and Third method of Lending. How do these methods differ from each other?

4. If you are a Finance Manager of an MNC, what circumstances would you consider using Euro-Currency Markets? Also explain why you have selected these markets instead of borrowing from Domestic Markets.

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