Subject

: MANAGERIAL ECONOMICS & FINANCIAL ANALYSIS

1. COURSE OBJECTIVES:Student should be able know the To learn about various types of business organizations

To access the demand for a particular product

To study the various types of cost concepts

To have an idea about the markets

To make the students expertise in account principles and concepts To learn about capital and capital budgeting2. COURSE OUTCOMESStudents have ability to Ability to start the suitable business organization with available resources Able to take the further decisions based on the demand

Aware of costs incurred in the production

Able to understand which market is suitable to introduce the product.

The knowledge about the account principles make the students expertise in maintaining accounting books

Knowledge about the capital budgeting helps the students to accept or reject the new projects in business3. GAPS IDENTIFIED IN THE COURSE VIS--VIS PEOS Unable to perform the forecasting of demand completely, this course not able to give in detail knowledge of forecasting methods (Discussing Few Traditional Forecasting Methods). Unable to give the knowledge on various financial instruments, it is limited to some basic and simple concepts of finance.4. CONTENTS BEYOND SYLLABUS TO MEET PEOS All the Sales\Demand Forecasting Techniques like Statistical, Survey\Opinion polling Techniques and Other Techniques. Dividend and its policies.5. PRESCRIBED TEXT BOOKS J.V.Prabhakar Rao: Managerial Economics and Financial Analysis, Maruthi Publications, 2011

N. Appa Rao. & P. Vijaya Kumar: Managerial Economics and Financial Analysis, Cengage Publications, New Delhi, 2011

6. REFERENCE BOOKS A R Aryasri - Managerial Economics and Financial Analysis, TMH 2011

Suma damodaran- Managerial Economics, Oxford 2011

S.A. Siddiqui & A.S. Siddiqui, Mangerial Economice and Financial Analysis, New Age International Publishers, 2011.

7. URLS AND OTHER E-LEARNING RESOURCESSome important topics in Management, Economics, Financial Management and Accountancy can be seen in the website and down loaded i.e.

www.google.com www.emeraldinsight.com http://scitation.aip.org/meo/

http://scitation.aip.org/leo/E-Journals: Journal of management of engineering

http://scitation .aip.org/meo/

Leadership & Management in engineering

http://scitation .aip.org/leo/

Print-Journals: Journal of Indian Management

Indian Journal of Marketing

Industrial Engineering

Magazines: The Economist

For Eastern Economic Review

Business Today

Auto India

Survey of Indian Industry

News Papers: Business line

The Economic Times

8. BRIEF HISTORY AND CURRENT DEVELOPMENTS IN THE SUBJECT AREAManagerial economics,application of economic principles to decision-making in business firms or of other management units. The basic concepts are derived mainly from microeconomic theory, which studies the behavior of individual consumers, firms, and industries, but new tools of analysis have been added. Statistical methods, for example, are becoming increasingly important in estimating current and future demand for products. The methods ofoperations researchand programming provide scientific criteria for maximizing profit, minimizing cost, and selecting the most profitable combination of products. Decision-making theory andgame theory, which recognize the conditions of uncertainty and imperfect knowledge under which business managers operate, have contributed to systematic methods of assessing investment opportunities.For Accounting Analysis, now every organization is using software like tally, wings, focus, SAP FICO etc., these are the current developments every organization has to be implemented in future for getting accurate and simplified results.9. PRE-REQUISITES, IF ANY Basic knowledge on Production and Operations carried out in an organization. Able generalize the surroundings.

Electronic Calculator to solve the problems like ratio analysis, BEP etc.10. LECTURE SCHEDULE / LESSON PLANUNIT-I:

No. of Periods

Introduction to Economics

1

Managerial Economics & its definition

1

Nature & Scope of Managerial economics

1

Relationship of Managerial Economics with other disciplines

1

Meaning of Demand

1

Demand Determinants & Demand Function

1

Law of Demand

1

Assumptions & Exceptions to Law of Demand

1

Revision

1

UNIT-II:

Elasticity of Demand & its significance

1

Types of Elasticity of Demand

1

Demand Forecasting & factors governing Demand Forecasting

1

Methods of Demand Forecasting

1

Revision

1

UNIT-III:

Theory of Production

1

Cobb Douglas Production Function

1

Iso-Quants & Iso-Costs

1

Least cost combination of inputs

1

Law of diminishing returns to scale

1

Law of returns to scale

1

Internal & External Economies of Scale

1

Cost Concepts

1

Breakeven Analysis & its significance

1

Problems on Breakeven Analysis

1

Revision

1

UNIT-IV:

Markets & types of competition structures

1

Price & output determination under Perfect Competition

1

Price & output determination under Monopoly

1

Duopoly, Oligopoly, Monopsony, Oligopsony

1

Pricing Strategies

1

Revision

1

UNIT-V:

Business Organizations & their types

1

Features of Sole trading business

1

Partnership

1

Joint stock Companies

1

Public Enterprises & their types

1

Changing business environment in post-liberalization scenario

1

Revision

1

UNIT-VI:

Capital & its significance

1

Estimation of Fixed & Working capital Requirements

1

Methods of raising capital

1

Introduction to Capital budgeting

1

Traditional Methods with problems

1

Discounted Cash flow Methods with problems

1

Revision

1

UNIT-VII:

Introduction to Accountancy

1

Types of Accounts, Ledgers

1

Maintenance of Ledgers & Trial Balance

1

Introduction to Final Accounts

1

Problems on Trading , Profit & Loss Account and Balance sheet1

Problems with simple adjustments

1

Revision

1

UNIT-VIII:

Introduction to Financial Analysis

1

Analysis & Interpretation of financial statements

through Liquidity ratios

1

Analysis & Interpretation of financial statements

through Solvency ratios

1

Analysis & Interpretation of financial statements

through Turnover ratios

2

Analysis & Interpretation of financial statements

through Profitability ratios

2

Revision

1

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TOTAL NO.OF PERIODS

60

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11. SEMINARS / GROUP DISCUSSIONS, IF ANY . Pricing Policies Seminar\GD Solo Proprietorship Seminar

Monopoly gives career opportunities or not GD 12. CONTINUOUS EVALUATION PROCEDURE The performance of a student shall be evaluated for 100 marks in the subject Managerial Economics & Financial Analysis. As per the JNTUK Curriculum, the distribution shall be 25 marks for internal evaluation and 75 marks for the end examination. Out of 25 internal marks 15 marks are assigned for subjective exam, 10 marks for objective on Line exam.

13. SCHEDULE OF INTERNAL EVALUATION TESTS I Mid Examinations

-27-08-2012 01-09-2012

II Mid Examinations-29-10-2012 03-11-201214. ASSIGNMENTS AND TUTORIALS QUESTIONSUNIT-11. Define Managerial Economics. Explain the nature and scope of Managerial Economics?

2. Managerial Economics is the discipline which deals with the application of economic theory to business Management?

3. Explain the relationship of managerial economics with other branches of social sciences.

4. Explain the Nature & chief characteristics of Managerial Economics.

5. What is the role of a Managerial Economist in Decision making activities?

6. What is demand? What are the types of demand? Explain the demand function.

7. State and Explain Law of demand? Explain its exceptions & Assumptions?

8. Explain the determinants of Demand?

UNIT-2

1. What do you understand by elasticity of demand? Explain how you measure elasticity of demand. What is its significance?

2. Define elasticity of demand. How do you interpret the different types of elasticity?

3. What do you understand by elasticity of demand? Explain the factors governing it.

4. Define Price-elasticity of demand. What are the various degrees of price elasticity? Illustrate graphically. What are the factors affecting it?

5. What do you understand by demand forecasting? Explain different methods of demand forecasting?

6. What is demand forecasting? Explain the factors governing demand forecasting.

7. What is demand forecasting? Explain statistical and mathematical methods of demand forecasting.

8. Evaluate survey based demand forecasting methods with appropriate examples. Explain expert opinion, Test marketing, judgmental approach of demand forecasting.

UNIT-3

1. Explain the Meaning & Importance of production function? Determine Cobb-Douglas production function.

2. Define Iso-Quants &List out various types of Iso-Quants &Explain them with diagrams.

3. Explain the operation of the law of diminishing returns & its business implications.

4. Briefly explain various economies & diseconomies of scale.

5. Briefly explain various cost concepts used in cost analysis.

6. Define cost function and also discuss cost-output relation in the short-run.

7. Answer the following

(a) Define Break-even point & How do you determine it. Show graphical presentation of Break Even Analysis.

(b) Discuss the managerial uses of BEP?

(c) Write the significance & Limitations of BEP?

8. The PV ratio of X company ltd is 40% and the margin of safety is 30% .you are required to work out the BEP and Net profit if the sales volume is Rs.1400

UNIT-4

1. Answer the following

1. What are the causes for the emergence of Monopoly?

2. Elaborate how price output decisions can be taken by a Monopolist?

2. Answer the following

(a) What are the objectives of pricing?

(b) Explain any four important methods of pricing?

3. Answer the following

(a) What is equilibrium? What are the conditions under which a competitor can reach equilibrium point in perfect competition?

(b) How is long run equilibrium different from short run equilibrium?

4. What is perfect competition? How is market price determined under conditions of perfect competition?

5. Define Markets? How differently are Markets classified? What are the important features in any Market structure?

6. Differentiate between perfect & imperfect markets.

7. Explain how price is determined under conditions of perfect competition. Illustrate this with the help of diagrams.

8. What are the characteristics of Oligopoly?

UNIT-5

1. Answer the following

(a) What are the characteristics of a business unit?

(b) Explain the features of sole trader form of organization. Discuss the advantages and limitations of sole trader form of organization?

2. Answer the following

(a) What are the features of Joint Stock Company? How does it differ from a private company?

(b) Explain how a public limited company commences its business?

3. Define partnership. Explain its features. Evaluate it as against sole proprietorship?

4. Explain briefly various steps involved in formation of a company?

5. What do you understand by liberalization, privatization & globalization? Discuss.

6. Distinguish between enterprises and state enterprises.

7. What is a Partnership firm? Evaluate critically its merits & Demerits.

8. What are the criteria for selection of a good form of business organization?

UNIT-6

1. What do you understand by double entry book keeping? What are its advantages?

2. Explain the following adjustments & illustrate suitably with assumed data.

a) Closing stock

b) Outstanding expenses

c) Prepaid income

d) Bad debts

3. Explain the following concepts & illustrate their treatment with imaginary data.

a) Depreciation

b) Prepaid expenses

c) Reserve for bad & doubtful debts

d) Income received in advance.

4. Journalize the following transactions in the books of Rama Krishna

1. Commence business with cash rs.10,000

2. paid into bank rs.8,000

3.Bought goods for cash rs.500

4. Bought furniture by cheque rs.500.

5. withdrawn from bank rs.900

6. He sold goods to Gopal Rs.500

7.Bought goods from Ram for rs.510

8. Paid trade expenses rs.200

9.Received cash from Gopal and allowed discount rs.10- 490

10.paid wages rs.70

11.paid Ram in full settelment rs.500

12.paid rent rs.150

13.Interest on capital rs.500

5. Journalise the following transactions & post them to ledger.

1. Ram invites 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 lakshmanon 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.

6. From the following extract of trail balance, from the books of kamal, for the year ending December 31, 2002 prepare a trading account.

Rs.Rs.

Sales

Purchases

Frieght

Sales returns

Purchase returns

Wages

Salaries

Carriage inwards

Opening stock2,40,000

5,000

5,000

40,000

20,000

10,000

25,0003,25,000

5,600

7. Prepare Trading & Profit and loss account of Ramesh for the year ending 31, March 2010 from the following particulars.

ParticularsRs.ParticularsRs.

Opening stock

Purchases

Purchase returns

Wages

Carriage inward

Sales

Sales returns

Insurance 500

19500

250

1400

400

25,000

650

550Commission(dr.)

Commission(cr.)

Interest on capital

Trade expenses

Rent & taxes

Carriage outwards

Closing stock

stationary 400

200

350

100

550

725

12,500

225

8. From the following Trail Balance and additional information prepare trading and P&L account and Balance sheet.

Trail balance as on 31, December 2000.

ParticularsDr.amount Rs.Cr.amount Rs.

Capital

Debtors

Drawings

Machinery

Creditors

Wages

Purchases

Opening stock

Bank balance

Carriage charges

Salaries

Rent & taxes

sales5400

1800

7000

10000

19000

4000

3000

300

400

90020,000

2800

29000

Additional Information:

1) Closing stock rs.1200

2) Outstanding rent & taxes rs.100

3) Charge depreciation on machinery @10%

4) Wages prepaid rs.400

UNIT 71. What is a Ratio? State its importance & Discuss the advantages of Ratio Analysis

2. Classify the Ratios & explain uses of each group?

3. Define Financial Statement Analysis ,Discuss its limitations & How ratio analysis overcome these limitations

4. Explain the significance & utility of ratio analysis in financial decision

5. Explain briefly the meaning & usefulness of the following

Current ratio

Debt equity ratio

Stock turnover ratio

Operating ratio

6. Profit after tax & interest of ABC ltd is Rs 2,50,000 , provision for tax is of Rs 4,00,000& interest payments is Rs 1,10,000. Find out interest coverage ratio

7. From the following extract of a balance sheet of an Airlines company calculate Debt equity ratio & interest coverage ratio

500000 10% preference shares of rs 100each

20000 equity shares of rs 10 each

10% 30000 debentures of rs 100each

Net profit during the years was rs 1000000

8. From the information given below calculate

Inventory turnover ratio

Receivables turnover ratio

ParticularsAmount in Lakhs

Sales 100%42.00

Opening 6.00

Closing stock 7.00

Sales returns3.00

Opening balance of sundry debtors6.00

Closing balance of sundry debtors4.00

Opening balance of bills receivables 3.00

Closing balance of bills receivables5.00

Gross profit = 30% of sales

UNIT-81. What are the features of different sources of short-term finance & long-term Finance?

2. Explain the factors affecting the requirements of working capital.

3. Explain different techniques of capital budgeting.

4. Find out the IRR of the following investment proposal.

Initial investment Rs.70, 000

Expected annual cash inflowRs.24, 000

Economic life of the partner4 years

Present value of an annuity of Re.1 for 4 years

@10%3.170, @12%, 3.037 @14%, 2.914 @16%, 2.798

5. Explain the following:

a) Cost of capital

b) Working capital

c) Capital Market

d) Capital budgeting

6. What is capital budgeting. What are the factors to be considered in taking investment decisions?

7. Define Accounting rate of return & pay back period method. Compare & contrast the two.

8. Write a short note on:

a) Components of working capital.

b) Types of shares.

c) Working capital cycle.15. CONSULTATION HOURS FOR DISCUSSIONS Students can approach in between 3.50 PM 4.40 PM in all working days of the college, except Saturday.Managerial Economics & Financial Analysis

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