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FM Assignment: Liabilities 2010 (') 2011 (') Assets 2010 (') 2011 (')

The document contains 5 questions related to financial management. Question 1 asks to prepare a cash flow statement from income statement and balance sheet data for 2010 and 2011. Question 2 asks to evaluate 3 proposed credit policies to maximize sales and returns. Question 3 provides financial ratios and asks to prepare a balance sheet. Question 4 provides cost and production details and asks to calculate working capital needs. Question 5 provides capital structure and asks to calculate the weighted average cost of capital.

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Avinash Torane
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24 views

FM Assignment: Liabilities 2010 (') 2011 (') Assets 2010 (') 2011 (')

The document contains 5 questions related to financial management. Question 1 asks to prepare a cash flow statement from income statement and balance sheet data for 2010 and 2011. Question 2 asks to evaluate 3 proposed credit policies to maximize sales and returns. Question 3 provides financial ratios and asks to prepare a balance sheet. Question 4 provides cost and production details and asks to calculate working capital needs. Question 5 provides capital structure and asks to calculate the weighted average cost of capital.

Uploaded by

Avinash Torane
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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FM Assignment

1. Prepare Cash Flow Statement from the following data:


Liabilities
2010
2011
Assets
(`)
(`)
Share Capital
200000 320000 Fixed Assets
P&L Account
140500 170600 Stock
Accumulated
120000 80000 Trade Debtors
Depreciation
Debentures
100000 Prepaid Expenses
Trade Creditors
56000 96000 Bank Balance
Provision for Tax
30000 50000 Bills Receivable
646500 716600

2010
(`)
304000
186800
61600

2011
(`)
400000
178400
42200

7900
56200
30000

6000
40000
50000

646500 716600

Additional Information:
(i) Depreciation charged during the year ` 20000.
(ii) Dividend declared & paid during the year ` 24000.
(iii) Additional Building was purchased during the year for ` 156000.
(iv) An equipment costing ` 60000 on which accumulated depreciation is ` 60000 was
sold for ` 2000.
(v) Tax paid during the year ` 40000.
2. Asha Ltd. Manufactures footwear and sells them on credit basis to its customers. Its
present sale is Rs. 60 lakhs per annum with 20 days credit period to debtors. The
company is thinking to increase the credit period with a view to increase sales. Variable
costs are 70% of sales and the total fixed cost is 8 lakhs per annum. The company
expects return on investment of 25%. Other details are as given below:
Proposed Credit Policy
Credit period (days)
Expected Annual Sales
(Rs. Lakh)
I
40
70
II
50
80
III
60
85
Which credit policy should the company adopt? (Assume 360 days in a year)
3. You are given the following figures related to year 2011:
Sales for the year
`2000000
Gross Profit Ratio
25%
Current Assets ratio
1.5
Quick Asset ratio
1.25
Stock turnover ratio
15 times
Debt collection period
1.5 months
Fixed Assets turnover
2 times
Reserves to share capital
1/3
Fixed Assets to net worth
5/6
There are no prepaid expenses & Bank Overdraft. You are required to prepare balance
sheet as on date 31st March, 2011.

4. Rajesh Enterprises has collected the following facts relating to a particular project:
Estimated cost per unit of production:

Additional Information:

Raw material

` 80

Selling price, ` 200 per unit

Direct Labour

` 30

Level of activity 104000 units production

Overheads

` 60

per annum

Depreciation

` 10

Raw material in stock, 4 weeks

Total Cost

` 180

Finished goods in stock, 4 weeks


Credit allowed by suppliers, 4 weeks
Credit allowed to Debtors, 8 weeks
Outstanding wages, 1.5 weeks
Cash at bank is expected to be ` 25000

Estimate the net working capital required for this project. Add 10% to your computed figure to
allow contingencies. (Assume that all sales are on credit & there are 52 weeks in a year).

5. The following has been extracted from the balance sheet of Fashions Ltd. as on 31st
March 2012.
Particulars
Rs.
in
Lakhs
Equity
400
12% Debentures
400
Term Loan @ 18%
1200
Determine the weighted average cost of capital considering the following information:
T-bill rate : 7% Sensex return: 16%
Beta of Fashions Ltd: 1.2 Tax Rate : 30%

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