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FM Assignment-2

Here are the ratios calculated from the given financial data: 1) Net Profit Margin = Net Income / Revenue = 5,200 / 12,500 = 41.60% 2) Days Sales Outstanding (Average Collection Period) = Accounts Receivable / (Revenue/365) = 2,500 / (12,500/365) = 73 days 3) Inventory Turnover Ratio = COGS / Average Inventory = 6,000 / (3,000 + Inventory beginning) / 2 = 2 4) Return on Equity = Net Income / Equity = 5,200 / 7,500 = 50.49% 5) Current Ratio = Current Assets / Current Liabilities = (Cash

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Rajarshi Daharwal
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340 views

FM Assignment-2

Here are the ratios calculated from the given financial data: 1) Net Profit Margin = Net Income / Revenue = 5,200 / 12,500 = 41.60% 2) Days Sales Outstanding (Average Collection Period) = Accounts Receivable / (Revenue/365) = 2,500 / (12,500/365) = 73 days 3) Inventory Turnover Ratio = COGS / Average Inventory = 6,000 / (3,000 + Inventory beginning) / 2 = 2 4) Return on Equity = Net Income / Equity = 5,200 / 7,500 = 50.49% 5) Current Ratio = Current Assets / Current Liabilities = (Cash

Uploaded by

Rajarshi Daharwal
Copyright
© © All Rights Reserved
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Q1

ABC Co a franchise of Apolloo pharmacy, sells 350 strips/day of low budget drugs at an average contribution of Rs
strips/day of high budget drugs at an average contribution of Rs.45/ strip. Assume the franchise operates for all 330
Sales volume and average price are expected to grow by 3% every year for both the drugs
To operate a franchise , it needs to have a 750 sqft space for retail shop with a lease rental of Rs.155 / sqft / month
years, deposit of Rs.10,00,000 at the start). Rent remains same for all 5 years. A one time renovation of the premise
will need to be incurred at the start. Rennovation costs will be depreciated using SLM with 5 years useful life and scr
Required personnel costs are Rs 135,000/month Wage inflation in the economy is 8%.
Other operational expenses are expected to be 20% of the annual sales, generated for the period. Tax rate in the ec
losses cannot be carried forward. The initial investment (deposit + renovation) can be funded by 70% bank loan (@1
The remaining should be funded using equity. The debt is to be repaid in 5 Equal Annual installments at the end of e
investment opportunity with ABC Co. is expected to provide a return of 20% Evaluate the business opportunity with
years. After 5 years the franchise will be handed over to Apolloo and the deposit will be refunded to the ABC Co.

Question-1 What is the Annual Sales for Year-2?


Question-2 What is the Salary Expense for Year-5?
Question-3 What is the PAT for Year-4?
Question-4 What is the NPV at cost of capital of 20%
Question-5 What is the IRR of the project?

Year-0 Year-1 Year-2

Commission (Rs./Unit)
Drug-A 22 22.7
Drug-B 45 46.4

Units Sold / Day


Drug-A 350 360.5
Drug-B 175 180.3

Debt Schedule
BOP Debt 2,100,000 1,788,537
Interest 315,000 268,281
EMI 626,463 626,463
EOP Debt 2,100,000 1,788,537 1,430,355
Debt Repayment 311,463 358,182

Annual Sales 5,139,750 5,452,761

Rent Expenses 1,395,000 1,395,000


Salaries 1,620,000 1,749,600
Other Operating Expenses 1,027,950 1,090,552
Depreciation 400,000 400,000
Interest Expense 315,000 268,281
PBT 381,800 549,328
Tax 114,540 164,798
PAT 267,260 384,530

Deposit 1,000,000
Rennovation 2,000,000
Total Investment 3,000,000

Debt 2,100,000
Equity 900,000

Cash Flow Calculation

Initial Investment (3,000,000)


Deposit Refund
Debt Raised/Repaid 2,100,000 (311,463) (358,182)
Depreciation 400,000 400,000
PAT 267,260 384,530
FCFE (900,000) 355,797 426,348
Cost of Capital 20%
IRR 50.22% IRR>20%
NPV 917,355.83
s at an average contribution of Rs.22/ strip and 175
me the franchise operates for all 330 days of a year.
the drugs
ease rental of Rs.155 / sqft / month (rental contract for 5
one time renovation of the premises worth Rs.20,00,000
SLM with 5 years useful life and scrap value = 0.
s 8%.
ed for the period. Tax rate in the economy is 30%. Tax
n be funded by 70% bank loan (@15% interest rate).
Annual installments at the end of each year. Other
uate the business opportunity with a project life of 5
will be refunded to the ABC Co.
ANSWERS
5,452,761
2,203,992
644,843
917,356
50.22%

Year-3 Year-4 Year-5

23.3 24.0 24.8


47.7 49.2 50.6

371.3 382.5 393.9


185.7 191.2 197.0

1,430,355 1,018,446 544,750


214,553 152,767 81,713
626,463 626,463 626,463
1,018,446 544,750 -
411,909 473,696 544,750

5,784,834 6,137,130 6,510,882

1,395,000 1,395,000 1,395,000


1,889,568 2,040,733 2,203,992
1,156,967 1,227,426 1,302,176
400,000 400,000 400,000
214,553 152,767 81,713
728,746 921,204 1,128,001
218,624 276,361 338,400
510,122 644,843 789,600

1,000,000
(411,909) (473,696) (544,750)
400,000 400,000 400,000
510,122 644,843 789,600
498,213 571,147 1,644,850
Q2
Financial modelling 2nd assignment submission weekday and weekend 20-3-2020

Given below are the details of Income Statement and Balance sheet of a company. Compute Ending cash
balance for the company.
Income Statement Details: Revenue =1050, COGS = 600, SG&A is 15% of Revenues, Depreciation=50, Averag
Debt=500 and Interest rate is 10%, Tax Rate is 30%
Balance Sheet Details: PPE, Gross = 2000, Accumulated Depreciation=1250, Capex done by the company =
99.75, Sale of asset during the period is 25. Current Assets = 750 , Decrease in current assets = 240. Equity =
100, Retained Earning = 1500, Current Liabilities = 250, Increase in current liabilities=25. Debt raised during the
year is 150 and repaid is 175. Equity repurchased during the year is 25. Dividend paid during the year is 50. The
company started the year with cash=125.

ANSWERS
Question-1 How much is PAT? 135
Question-2 How much is CFO? 450
Question-3 How much is CFI? (125)
Question-4 How much is CFF? (100)
Question-5 What is the EOP Cash? 350

Income Statement Cash Flow Statement

Revenue 1,050 PAT 135


COGS 600 Depreciation 50
SG&A 158 Change in CA 240
Depreciation 50 Change in CL 25
Interest Exp 50 CFO 450
PBT 193
Tax 58 Capex (100)
PAT 135 Sale of Asest 25
CFI (125)

Change in Debt (25)


Change in Equity (25)
Dividend Paid (50)
CFF (100)

Net Change in Cash 225

BOP Cash 125


EOP Cash 350
ute Ending cash

preciation=50, Average

by the company =
sets = 240. Equity =
Debt raised during the
ng the year is 50. The
Q3

Find the Following Ratios using the below data:


ANSWERS
Question-1 Net Profit Margin 41.60%
Question-2 Days Sales Outstanding (Average Collection Period) 73.00
Question-3 Inventory Turnover Ratio 2.00
Question-4 Return on Equity 50.49%
Question-5 Current Ratio 1.14

Given Data:
Actual
Year-1
Income Statement
Revenue 12,500.0
COGS 6,000.0
Depreciation 700.0
Tax 600.0
Net Income 5,200.0

Balance Sheet
Cash 4,800.0
Accounts Receivable 2,500.0
Inventory 3,000.0
PPPE, Net 9,000.0
TA 19,300.0

Accounts Payable 1,500.0


Debt 7,500.0
Equity 7,500.0
Retained Earnings 2,800.0
TL & Sh Eq 19,300.0

Find the following Ratios:


Net Profit Margin 41.60%
Days Sales Outstanding
(Average Collection
Period) 73.00
Inventory Turnover Ratio 2.00
Return on Equity 50.49%
Current Ratio 1.14

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