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BV ASSIGNMENT 1

The document outlines an assignment for valuing equity shares of Sweetex Ltd. using its balance sheet and revalued asset figures. It also discusses the buyback of shares, employee stock ownership plans (ESOP), and the significance of the cost of capital in financial decision-making, including methods like WACC, CAPM, and DuPont Analysis. Additionally, it emphasizes the need to compare WACC and ROI, analyze equity risk through CAPM, and assess performance sustainability using DuPont Analysis.

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deepashree
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4 views

BV ASSIGNMENT 1

The document outlines an assignment for valuing equity shares of Sweetex Ltd. using its balance sheet and revalued asset figures. It also discusses the buyback of shares, employee stock ownership plans (ESOP), and the significance of the cost of capital in financial decision-making, including methods like WACC, CAPM, and DuPont Analysis. Additionally, it emphasizes the need to compare WACC and ROI, analyze equity risk through CAPM, and assess performance sustainability using DuPont Analysis.

Uploaded by

deepashree
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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BV & VBM ASSIGNMENT 1

1. From the following Balance Sheet of Sweetex Ltd. you are asked to-ascertain the value
of each Equity Share of the company:
Liabilities Rs. Assets Rs.
20,000 Equity Shares of 2,00,000 Goodwill 30,000
Rs. 10 each, fully paid Land 1,00,000
1,000, 6% Preference Shares 1,00,000 Plant 1,20,000
of Rs. 100 each, fully paid Investment(cost) 60,000
Reserves 60,000 stock 50,000
Sundry Creditors 40,000 Debtors 40,000
Provision for Taxation 20,000 Cash 24000
Other Liabilities 10,000 Preliminary exp. 6,000
Total 4,30,000 Total 4,30,000
For the purpose of valuing the shares of the company, the assets were revalued as:
Goodwill Rs. 50,000; Land and Building at cost plus 50%, Plant and Machinery Rs. 1,
00,000; Investments at book values; Stock Rs. 80,000 and Debtors at book value, less
10%.

2. Write a note on Buy back of shares by companies and what is the impact of PE ratio
upon buy back of shares.

3. Define Employee stock Ownership plan (ESOP).Types & uses of ESOP.

4. Mention the company (real-time example) take relevant values , Define the cost of capital and
its significance in financial decision-making.

Briefly introduce the methods used in the company on their capital structure: you need to
analyze: Weighted Average Cost of Capital (WACC), Capital Asset Pricing Model (CAPM),
and DuPont Analysis.

Insights & Interpretation

Compare WACC vs. ROI to see if the company is creating or destroying value.

Use CAPM to analyze equity risk and investor expectations.

Use DuPont Analysis to assess whether strong performance is sustainable.

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