Questions

Average Profit is 19,167 and normal profit is 10,000. The Super Profit is ___________

Goodwill is paid for obtaining __________

Super profit is ____________.

EVA is calculated to find out contribution of the organisation to ______________

Quoted shares are those shares which are ____________

Any non trading income included in the profit should be____________

Under net asset method value of a share depends on ___________

Value of a Partly Paid equity Share is equal to _____________

EPS is calculated on the basis of ________________

Discounting cash flow method considers ___________

Future Cash Flow is discounted at _____________

Increase in working capital is ______________

P/E ratio is calculated on the basis of ________________.

EVA is calculated on the basis of _________________.

Goodwill as per purchase of super profit method is equal to__________.

Yield value is based on the assumption that ______________.

Net asset value is also called as ________________.

F.M.P. for yield valuation is ___________

Fair value of a share is equal to __________________

While calculating capital employed _____________

Normal profit depends on _____________

Goodwill is a __________

________ is the accounting record value of assets that is shown in the balance sheet
______ value is used when an investor wants 'true' or 'real'value on the basisof an anaylsis of fundamentals
without considering the prevailing price in the market.

Among all types of values, the ______ value of a business or an asset is likely to be the to the lowest.
Using______,company can evaluate the project performance and decide whether to execute the project or
not to execute.

Higher EVA implies_______ bonuses to employees.

Declining positive EVA indicates that financial performance is _____ over time.

______= Market capitalization-invested equity capital.

Wealth maximization is more important as compared to _______maximization

Discounted cash flow valuation is based upon expected future cash flows and ______

The _______is the excess of the purchase consideration over the total value of the assets ,net of liabilities.

salvage value is also called as the ____________

_____________value refers to the price at which an asset can be traded in the market

Market value can not be ascertained for ___________companies only

____________ value can be applied to tangible assets only because intangible assets cannot be sold generally

capital employed=____________

cost of capital employed=__________

As a result of a merger, if a new company comes into existence, it is the process of

If as a result of merger, one company survives and other lose their independent entity, it is a case of ______

_____ takeover occurs by way of Board negotiations and purchase.

Friendly takeover is also known as _____ takeover.

In _____ merger, the concerned companies are in totally unrelated lines.

Merger of companies operating in the same market is called _____ merger

Merger may fail due to difference in _________________

Acquisition refers to the acquiring of ______ rights in the property & assets.
In a _____ merger, there is merger of companies engaged at different stages of production cycle within the
same industry.

Gross assets are Rs. 1,01,000, fictitious assets Rs. 350 are included in the gross assets. External liabilities are Rs. 7,500.
6% prefer share capital is Rs. 45,000. Equity capital is 4,500 equity shares of Rs. 10 each fully paid. Average expected
profit is Rs. 8,500. Transfer to reserves is 10%. Pref. dividend is payable. NRR is 9%. The Net Asset Value Per share is

2000 9% Pref. Shares ofRs. 100 each - 2,00,000, 50,000 equity shares of Rs. 10 each Rs. 8 per share paid up - 4,00,000
Expected Profit - 2,18,000, Tax Rate - 40%, Transfer to general reserve - 20%, Normal rate of earning - 15%. Yield
Value Per share is.

Profit of a company is Rs. 30,000 Rs. 33750 and Rs. 39750 for last three years. What will be the average
Profit ?
Average profit of a firm is Rs. 34500, Bad debts is Rs. 300 and Transfer to General Reserve is 25%. So FMP will
be __________.

If FMP is 23625, Paid up euqity share capital is Rs. 75000 @ Rs. 10 each, and NRR is 10%, Yield Value will be
Rs. __________

If FMP is 17600 and normal profit is Rs.12100. Calculate goodwill as 5 years purchase of super profit.

If total assets are Rs.207500 and total liabilities are Rs. 59000, no. of equity shares are 10000, Instrinsic Value
per share will be ____________

If total assets are Rs.1510880 and total liabilities are Rs. 599945, no. of equity shares are 3080, Instrinsic
Value per share will be ____________

Profit of a company is Rs.175000, Rs.210000 and Rs. 250000 for last three years. 40% is tax payable and 15%
is transferred to general reserve. FMP will be __________

If FMP is Rs.74800, Paid up share capital is Rs. 600000 @ Rs.100 per share, NRR is 10%, Yiled value of share
will be ____________

Net asset value of a share is Rs. 154.50 and Yield Values is Rs. 162, Fair value of share will be ________.
If free cash flow to firm is Rs. 510 Cr., growth rate is 7%, Cost of capital is 13%, Value of firm by FCFF approach
will be __________.

NOPAT is Rs. 120000, Capital employed Rs. 600000 and WACC is 8%, EVA will be ______________

NOPAT is Rs. 400000, Capital employed Rs. 500000 and WACC is 8%, EVA will be ______________
If Profit is Rs. 400000 and Sales Margin is 20%, sales will be _____________

If sales is 2000000 and capital turnover is 1, capital employed will be ___________

If profit is Rs. 400000 and Sales is Rs. 2000000, ROI will be _____________

NOPAT is Rs. 400000, Capital employed Rs. 2000000 and WACC is 8%, EVA will be ______________

A firm has 5 lakh equity shares at Rs. 47.60 MPS, Whereas book value of equity share capital is Rs. 50 lakh and
reserves and surplus is Rs.40 lakh. Calculate MVA________

A firm has 120 lakh equity shares in market. EPS per share is Rs. 18.92 and PER is 2 times. Market
capitalisation of the firm will be ________.

A firm has 120 lakh equity shares at Rs. 37.85 MPS, Whereas book value of equity share capital is Rs. 1200
lakh and reserves and surplus is Rs.600 lakh. Calculate MVA________

If sales is 480000 and capital employed is Rs. 600000, Capital turnover will be ___________
If FCFFn is a year is Rs.4200000, cost of capital is 8%, and growth rate is 5%, So present value of Cash flow will
be ____________
1

Rs. 9167

Future benefit
Excess of average profit over
normal profit
Wealth of shareholders

Listed on the stock exchange

Subtracted

Net assets available to equity

shareholders
Value of fully Paid Share - calls
unpaid per share
NPAT - Preference Dividend

Time Value of Money

Cost of Capital

Added to cash outflow

M.P.S & E.P.S

NOPAT
Super Profit x No of year’s
Purchases
The company is a going concern

Intrinsic value
Profit that would be available to
equity shareholders
Average of Intrinsic and Yield
Value
Tangible trading assets should
be considered
Normal Rate of Return &
Average capital employed
Intangible Assets

Balance sheet Book value

Intrinsic

liquidation

economical value added

higher

deteriorating

MVA

Profit

discount rates

goodwill

scrap

market

unlisted

market

tangible assets - liabilities

CE*WACC {capital employed X
WACC
Amalgamation

Absorption

Friendly

Consent

Conglomerate
Horizontal

Culture

Ownership

Vertical

Rs.10.72

Q.48 Gross Assets 100,750

Rs.12.03
Less : Liabilities 7500

Rs. 34 500
Net Asset 93250
Rs. 23625
(-) Pref Share capital 45000

Rs. 31.50
Amt available to equity 48250

Rs. 27500
No of equity shares 4500

Rs.14.85
NA Per share Rs. 10.72

Rs.295.76

Rs. 107950
Q.49 1. Average Profit 218000

Rs. 124.70
2. FMP
Rs.158.25
Avg profit 218000
Rs.9095 Cr
(-) Tax 40% 87200
Rs. 72000
130800
Rs.360000
(-) Pref Dividend 9% 18000
Rs.2000000
112800
Rs.2000000
(-) Gen Rese 20% 22560
20%
FMP 90240

Rs.240000

Rs.148 lakh
3. Rate of FMP

Rs. 4542 lakh

90,240 X100

Rs.2742
400,000
0.8
22.56%
Rs. 147000000
4. Yield Value
22.56 X8
15
Rs. 12.03
Sr. No. Questions

_____ implies a situation where the combined firm is more valuable than the sum of the individual
1 combining firms.
_____ arise when increase in the volume of production leads to a reduction in the cost of production
2 per unit.
3 In vertical merger a firm may combine with its _____ of input.
In addition to economies of scale, a combination of two or more firms may results into cost reduction
4 due to _____.
In mergers and acquisition both the companies decide the _____ ratio for finalisation of purchase
5 consideration.
6 Amalgamation is governed by _____.
7 Pooling of resources by two or more companies under a common entity is called as.

8 In demerger a corporate body is ___________________.

In amalgamation, all the assets and liabilities of the tranferor company are pooled into the books of
9 transferee company at___________
10 In liquidation valuation, it is assumed that the company will be __________.
11 A new company is formed under___________

12 Purchase of shares from the non controlling shareholders in the open market is _________.
13 A merger in which one company takes over the company supplying raw material is a _____

14 EPS is calculated as______________.

15 Demerger is _____ of merger.

16 EPS = NPAT - Preference dividend/_____.

17 Financing of merger by debt is called _____ buyout.

18 Economies of scale.
19 Merger is the decision of _____ to pool the resources of the company.
20 Merger usually requires _____ companies.
21 In case of absorption, one company survives and other _____ its independent entity.
Acquisition results when one company purchases controlling interest in the _____ of another existing
22 company.

23 In case of _____ there may be opposition to the take over bid.

24 Friendly and hostile are form of _____.
25 If cement manufacturing company acquires a company in civil construction, it will be case of _____ .
26 If a steel manufacturing company merges with cloth manufacturing, it is _____ merger.
27 In _____ entities of business operations are segregated in one or more components.
28 Consolidation is a _____ of two or more companies into a new company.
 A _____ company is a company that holds more than half of the nominal value of equity capital of
29 another company.
30 A _____ is called 2 + 2 = 5 effect.
31 Merger is evaluated as a _____ budgeting decision.

32 While calculating EPS.

33 A _____ agreement is known as merger.

34 Takeover is always friendly.

35 The following is the initial step in merger.

36 Merger means to _____ and acquisition means to _____.

Number of equity shares of ABC Ltd. is 10,00,000 and Earning After Tax is 50,00,000. What is EPS of
37 ABC ltd.
East Co. Ltd. has 40,000 equity shares and Rs. 2,00,000 as earning after tax. Calculate Earning Per
38 Share.
39 Omega Ltd has Profit after Tax Rs. 1800000 and no.of euqity shares 600000. Calculate EPS

40 If MPS is Rs. 42 and EPS is Rs. 5, PE Ratio will be ______________

No. of Equity shares of East Co. is 40000 and fost Co. is 10000. MPS for East Co. is Rs. 15 and Fost Co.
41 is Rs. 12. What will be the exchange ratio in case of merger ___________.
NPAT of east Co. is Rs .200000 and Profit of Fost Co. is Rs. 60000. No. of shares of East Co. is 40000
and East Co. issue 8000 shares to Fost Co. during merger. Hence New EPS after merger will
42 be________.
43 If PE ration of ABC Ltd is 8 times and EPS is Rs. 1, MPS will be _______.

44 If MPS of ABC Ltd is Rs. 25 and EPS is Rs. 2, PE ratio will be __________.

EPS of XYZ is Rs. 2 and EPS of ABC Ltd. Is Rs. 1. If merger based on EPS takes place and XYZ taken
45 100000 shares of ABC, what will be number of shares issued to ABC Ltd.________.
 1 2 3 4

Operating
Synergy Economies of scale Market penetration Economies

Economies of scale Synergy Operating Economies Diversification

Supplier Customer Employees Shareholders
Market
Operating Economies Synergy Maket Leadership penetration

Exchange Liquidity Profit & Loss Dividend payout

AS 14 AS 3 AS 21 AS 32
Merger Takeover Absorption Demerger
Split into two or more
bodies Completely dissolved Combimned Merged

Book value Fair Value Realisable value Market value

Liquidated Continued Consolidated Sold
Amalgamation Absorption Reconstruction Demerger
Vertical
Hostile takeover Friendly takeover Merger integration
Backward expansion Vertical integration Forward expansion Conglomerate

No. of Equity
Earning available to No. of Equity shares/Earning
Earning available to Preference shares/Earning available to
Equity Shareholders/No. Shareholders/No. of available to Equity Preference
of Equity shares Equity shares Shareholders Shareholders
Opposite Synonym Type Part
Number of Equity Number of Number of Preference Number of
shares Debentures shares Bonds
Leveraged Financial Merger Management
Reason of hostile
Reason for merger Reason for demerger Reason for liquidation takeover
Shareholders Government Customers Employees
Two Three Four Five
Loses Gains Acquires Obtains

Share Capital Reserves Dividend Debenture

Leveraged
Hostile takeover Management buyout Friendly takeover buyout
Takeover Demerger Liquidation Divestment
Vertical Integration Horizontal merger Conglomerate merger Hostile takeover
Conglomerate Reverse Vertical Horizontal
Demerger Merger Divestment Joint venture
combination dissolution division breakup
Holding Public Subsidiary Associate
Synergy Profitability EPS Diversification
Capital Incremental Zero Based Revenue
Preference
dividend is
Preference dividend is Preference dividend is Preference dividend is deducted from
deducted from NPAT added to NPAT ignored NPBT
Buyout Bailout Friendly takeover Hostile takeover
It can be friendly as well It is always
as hostile 1 It has no types hostile
Shareholder's
Screening Board Approval Negotiation Approval
combine,
combine, takeover takeover, combine takeover, takeover combine

5 500 50 5000

5 15 25 35
Rs.3 Rs.15 Rs.5 Rs.8

8.4.times 9.4 times 6.4 times 5.4 times

5:04 3:08 15:12 5:03

Rs. 5.42 Rs.4.58 Rs.4.30 Rs 8.42

Rs.8 Rs.9 Rs.10 Rs.11

12.5 times 10.5 times 50 times 23 times

50000 40000 30000 20000

Sr. No.

10

11

12
13

14

15

16

17

18

19

20

21

22
23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43
44

45
Questions

The of making changes in the composition of a firms one or more business portfolio in order to have a more profitable enterpr

Internal Reconstrction requires

It is arrangement where one party grant another party the right to use trade name.

As per which regulation Indirect acquistion of shares or control

It is a form of corporate restructuring in which the entity's business operations are segregated into one or more components.

In this type, one company takes over the management of the target company with the permission of the board.

A joint venture is an entity formed by two or more companies to undertake financial activity together.
It means the transfer of one or more undertaking as a result of the sale for a lump sum consideration without values being
assigned to the individual assets and liabilities in such sales.

It is the opportunity for the unlisted companies to become public listed company, without opting for Initial Public offer (IPO).

Neha Ltd acquires 51 % share of Sneha Ltd than It would result in

What is Formula for calculation of P/E Ratio ?

Journal Entries for Recorded liablity decreased ?

Which type of the growth when it is only through the internal sources without change in the corporate entity.

Restructuring is done to increase ________ .

Corporate Restructuring is needed to improve _________ .

Corporate restructuring helps to achieve cost _______ .

Corporate restructuring is a process of changing ________ of business.

Corporate restructuring is to have _________ growth.

Corporate restructuring is a process of _________ .

Corporate restructuring is a process of _______ .

Merger is a strategy of corporate _________ .

The objective of Corporate restructuring is to develop _________ .

_________ is a form of restructuring.

Takeover increases __________ ________.

Takeover may be ________ or _________.

Reverse Takeover may be ________ or ________ .

When price per equity share is reduced during capital restructuring, journal entry for the same will be _______________.

When face value per preference share is reduced during capital restructuring, journal entry for the same will be ___________

When recorded assets are sold off during reconstruction, journal entry for the same will be __________

When reconstruction expenses are paid during reconstruction process, journal entry for the same will be __________.

When Preference dividend arrears settled by issue of share capital,journal entry for the same will be _____________.

When sacrifies made by the debenture holder, journal entry for the same will be _________

When sacrifies made by the creditors , journal entry for the same will be _________

When value of asset is appreciated, journal entry for the same will be _____________

When Goodwill is written off, journal entry for the same will be _____________

When P & L is written off, journal entry for the same will be _____________

Debit balance of Capital reduction A/C is transfferred to _________________ .

HCL Ltd. Issued 200000 euqity shares of Rs. 10 each at par. Journal entry for the same will be __________.

Capital reduction means reduction in the __________ value of the shares.

The scheme of reconstruction requires approval of _____________.

Creditors foregoing their claims in whole or part is ______________.

In reorganisation, shares surrendered are tranferred to _______

Fictitious assets are written off to _________.

In _________ no new company is formed.

_____________ resolution is passed by shareholders for approval of shcemes of reconstruction.

 1 2 3

Corporate Reconstruction Communication Ownership

Special resolution passed at Special resolution passed at Ordinary resolution passed at
general meeting Board meeting general meeting

Franchising Slumpsale Alliance

Regulation 5 Regulation 7 Regulation 6

Demerger Reverse merger Disinvestment

Friendly take over Hostile take over takeover

Joint Venture Strategic Alliance Franchising

Slump Sale Joint Venture Strategic Alliance

Reverse Merger Merger Amalgmation

Holding and Subsidiary
Relationship Vertical Merger Horizontal Merger

MPS/EPS EPS/MPS Earning after tax/No of Share

Liablity Account Dr To Capital Capital Reduction account Dr to Liablity account Dr To Cash
Reduction A/c Liablity Account Account
Organic Growth Inorganic Growth Co Genric Growth

Synergies Energies Profitable business operations

ROI RBI ROR

Reduction Expansion Creation

Company Firm
Organisation

Profitable
Loss Turnover
Consolidation
Liquidated Running
Compromise
Promise Defeat
Restructuring
Profits Loss
Core competencies
Large Companies Small companies
 Takeover
Handover Loss
Market share
Liquid Share Public Share
Hostile Bailout
Profit Bailout Sale Bailout
Horizontal, vertical
Vertical, Short Horizontal , Large

Equity shares capital A/C--Dr. To Equity shares capital A/C--Dr. To Capital reduction A/C --Dr. To
Capital reduction A/C capital Reserve A/C Equity shares capital A/C

Preference shares capital A/C--Dr. Preference shares capital A/C-- Capital reduction A/C --Dr. To
To Capital reduction A/C Dr. To capital Reserve A/C Preference shares capital A/C
Bank A/C---Dr
Bank A/C---Dr To Capital Assets A/C---Dr To
To Assets A/C Reduction A/C Bank A/C
Capital reduction A/C--Dr. Expense A/C--Dr. Bank A/C--Dr.
To To Bank To
Bank A/C A/C Expense A/C
Capital reduction A/C--Dr. Capital reduction A/C--Dr. Share capital A/C--Dr.
To
Share capital A/C To Bank A/C To Capital reduction A/C
Debentureholder A/C---Dr Capital reduction A/C---Dr Bank A/C---Dr To
To Capital reduction A/C To Debentureholder A/C Debentureholder A/C
Creditors A/C---Dr To Capital reduction A/C---Dr Bank A/C---Dr To
Capital reduction A/C To Creditors A/C Creditors A/C
Asset A/C --Dr Capital reduction A/C --Dr Assets A/C---Dr
To Capital reduction A/C To Asset A/C To Bank A/C
Capital reduction A/C --Dr Goowill A/C --Dr
To Goowill A/C To Capital reduction Bank A/C --Dr
A/C To Goowill A/C
Capital reduction A/C --Dr P & L A/C --Dr
To P & L A/C To Capital reduction A/C Bank A/C --Dr
To P & L A/C

Capital Reserve A/C P & L A/C Reserve and Surplus A/C

Equity Share capital A/C---Dr
Bank A/C---Dr Equity Share capital A/C---Dr
To Equity Share To Equity Share capital
capital A/C To Bank A/C A/C

Paid up Face value Market value

court Compnay registrar SEBI

Arrangement Settlement Sacrifies

Share Surrender A/C Share Forfeited A/C Share resissue A/C

Capital Reduction A/C Fictitious Assets A/C Capital Reserve A/C

Internal reconstruction Mwerger Amalgamation

Special Ordinary General

 4

Capital Structure
Ordinary resolution
passed at Board meeting

Joint Venture

Regulation 8

Takeover

Joint venture

Slump Sale

Franchising

Takeover

Hostile take over

Earning before tax/No of
Share
Cash Account Dr. to
Liablity Account
Conglomerate Growth
Reconcilation of
Oprations

CRR

Contraction
Trust

Shut down

Demerger

Loss

Shut down

Mid Size companies

 Amalgmation

Private Share

Loss Bailout

Horizontal, Medium

Capital Reduction A/C---

Dr. To Shares capital
A/C

Capital Reduction A/C---

Dr. To Shares capital
A/C
Capital Reduction A/C---
Bank A/C---
Dr. To Dr A/C
Assets To
Capital reduction A/C

To Bank A/C
Share capital A/C--Dr
To Bank A/C
Debentureholder A/C---
Dr To Capital
Reserve A/C
Creditors A/C---Dr
To Capital Reserve A/C
Bank A/C---Dr
To Assets A/C
Goodwill A/C --- Dr
To Capital Reserve A/C
P & L A/C --- Dr
To Capital Reserve A/C

Reserve A/C
share premium A/C---
Dr
To Equity
Share capital A/C

Book value

Shareholders

Forgone

share premium A/C

P & L A/C
Takeover

Majority
Sr. No. Questions

1 Hire purchase price is equal to______________

The cost price of truck is rupees 500000 and rate of depreciation charged is 20%
per annum. Under reducing balance method the amount of depreciation for the
second year is.
2

3 It is not the type of Lease.

Lease has no or zero residential value at the end of the year.
4
Financial lease is also called as.
5
It is a contract between the lessor and the leasee for the hire of specific assets for
6 specific period of time.

Under Fixed installment method of depreciation .What is amount of depreciation

on machinery having book value rupees 5 lacs depreciate at 10%p.a for 4tH year.
7

8 __________ contract gives right to use the asset for a specified period of time.

9 Under lease agreement, owner of the asset is called ___________.

Under lease agreement, the party that takes the asset on lease is called
10 ___________.
Under lease agreement, the party that takes the asset on lease and ownership of
11 assets rests with the ___________.

12 Lease finance is a contract between ____________

In ______________ leasing the lessee has to bear all the costs related to assets and
13 lessor does not render any service.
In ______________ leasing the lessor bears the risk of obsolenscence and
14 incidental risks.
In___________ lease, lessor involve one more financier who will have charge over
15 the leased asset.
In ___________ lease is a long period lease with clear intention of conveying the
16 ownership of title on the lessee.

17 Lease across national frontiers are called _____________ lease.

In _______________ buyer makes an intial down payment and balance amount as
18 installment.

19 In hire purchase, the first payment made by buyer is called ___________--.

 In hire purchase, the buyer become the owner of the asset after
20 paying___________.

21 Leasing agreeement is governned as per ________.

22 In Hire Purchase, Installment =

23 In Hire Purchase, repairs and maintenance is the reponsibility of _________.

The act of buying an asset without making full payment in the immediate future is
24 known as ___________.
Factoring involves_____________
25
1 2 3 4
Cash price minus interest Cash price plus Cash price plus
Cash price plus interest installment down payment

80,000 90,000 1,00,000 85,000

Trade lease Financial lease Dry lease Operating lease

Bloon lease Sales and by
Financial lease Operating lease buyback lease

Dry lease Party payout lease Full payout lease

Operating lease
Lease Hire purchase Factoring Partnership

50,000 40,000 30000 60,000

Lease Hire purchase Purchase Factoring

Lessor Lessee Owner Creditor

Lessee Lessor Buyer Debtor

Lessor Lessee Middleman Bank

Lessor and Lessee Lessor and Buyer Lessor and Bank Lessor and Seller

Financial Operating Banking Trading

Operating Financial Banking Trading

Leveraged Non leveraged Average Non average

Conveyance Leveraged Operating Financial

Cross border national Foreign Export

Hire purchase Lease Factoring Financial lease

Down Payment Installment Interest Principle

Last installment First installment Down Payment Interest

AS 19 AS 20 AS 20 AS 21
Downn payment+
Principle + Interest Principle Interest Interest

Hire Purchaser Vendor Broker Bank

Hire purchase Operating lease Financial Lease Sale

Borrowing against bills Payment to
Management of debtors Borrowing form bank of exchange creditors