1) Wcm | 1) MN Ltd. is commencing a new project for manufacture of electric toys. The following cost information has been ascertained for annual production of 60,000 units at full capacity: Amount per unit Rs. Raw materials 20 Direct labour 15 Manufacturing overheads: Rs. Variable 15 Fixed 10 25 Selling and Distribution overheads Rs. Variable 3 Fixed 1 4 Total cost 64 Profit 16 Selling price 80 In the first year of operations expected production and sales are 40,000 units and 35,000 units respectively. To assess the need of working capital, the following additional information is available: (i) Stock of Raw materials…………………………………...3 months consumption. (ii) Credit allowable for debtors…………………………..…1½ months. (iii) Credit allowable by creditors……………………………4 months. (iv) Lag in payment of wages………………………………..1 month. (v) Lag in payment of overheads…………………………..½ month. (vi) Cash in hand and Bank is expected to be Rs. 60,000. (vii) Provision for contingencies is required @ 10% of working capital requirement including that provision. You are required to prepare a projected statement of working capital requirement for the first year of operations. Debtors are taken at cost. | ||||||||||||||||||||||||||||||
2) Rm | A Company has sales of Rs. 25,00,000. Average collection period is 50 days, bad debt losses are 5% of sales and collection expenses are Rs. 25,000. The cost of funds is 15%. The Company has two alternative Collection Programmes: Programme I Programme II Average Collection Period reduced to 40 days 30 days Bad debt losses reduced to 4% of sales 3% of sales Collection Expenses Rs. 50,000 Rs. 80,000 Evaluate which Programme is viable. | ||||||||||||||||||||||||||||||
3) CM | 1) From the following particulars prepare a cash budget for the quarter ended 31st march 2010.
Other information: a) 10% of sales and purchases are on cash b) credit to debtors: 1 month. On an average 50% of debtors make payment on the due date while the rest make payment one month thereafter. C) credit from creditors: 2 months, 1% cash discount if payment is made within one month. D) It is estimated that 50% of creditors will be paid within one month E) Lag in payment of wages in 15 days F) Expenses generally paid in the same month. G) Plant costing Rs.1,00,000 installed on 31st Jan, on payment od 25% of the cost in addition to the installation cost of Rs.5000 and balance ti be paid in 3 equal installments from the following month including interest @ 12% p.a. on unpaid balance. Cash and bank balance on 1st Jan 2010 is expected to be Rs.2,00,000/- | ||||||||||||||||||||||||||||||
4) Coc | Shine Ltd wishes to raise additional finance of Rs.10 Lakhs for meeting its investment plans. It has Rs.2,10,000 in the form of retained earnings available for investment purposes. The following are the further details:- Debt equity mix 30% / 70% Cost of Debt Upto Rs.1,80,000 10% before tax Beyond Rs.1,80,000 16% before tax Earnings per share Rs.4/- Dividend pay out 50% of earnings Expected growth rate in dividend 10% Current market price per share Rs.44 Tax rate 40% You are required 1) To determine the pattern of raising the additional finance 2) To determine the post tax average cost of additional debt 3) To determine the cost of retained earnings and cost of equity Compute the overall weighted average after tax cost of additional finance. | ||||||||||||||||||||||||||||||
5) WACC | The following is the capital structure of a Company: Source of capital Book value Rs. Market valueRs Equity shares @ Rs. 100 each 80,00,000 1,60,00,000 9 per cent cumulative preference shares @ Rs. 100 each 20,00,000 24,00,000 11 per cent debentures 60,00,000 66,00,000 Retained earnings 40,00,000 Nil 2,00,00,000 2,50,00,000 The current market price of the company’s equity share is Rs. 200. For the last year the company had paid equity dividend at 25 per cent and its dividend is likely to grow 5 per cent every year. The corporate tax rate is 30 per cent and shareholders personal income tax rate is 20 per cent. You are required to calculate: (i) Cost of capital for each source of capital. (ii) Weighted average cost of capital on the basis of book value weights. (iii) Weighted average cost of capital on the basis of market value weights. | ||||||||||||||||||||||||||||||
6) CSP | Calculate the level of earnings before interest and tax (EBIT) at which the EPS indifference point between the following financing alternatives will occur. (i) Equity share capital of Rs.6,00,000 and 12% debentures of Rs.4,00,000 Or (ii) Equity share capital of Rs.4,00,000, 14% preference share capital of Rs.2,00,000 and 12% debentures of Rs.4,00,000. Assume the corporate tax rate is 35% and par value of equity share is Rs.10 in each case. | ||||||||||||||||||||||||||||||
7) Lev |
EBIT (Earnings before Interest and Tax) 15,750 Earnings before Tax (EBT): 7,000 Fixed Operating costs: 1,575 Required: Calculate percentage change in earnings per share, if sales increase by 5%.
Company A / Company B Equity Capital Rs.6,00,000/ Rs.3,50,000 12% Debentures Rs.4,00,000/ Rs.6,50,000 Output (units) per annum 60,000 /15,000 Selling price/ unit Rs.30/ Rs.250 Fixed Costs per annum Rs.7,00,000/ Rs.14,00,000 Variable Cost per unit Rs.10 /Rs.75 You are required to calculate the Operating leverage, Financial leverage and Combined leverage of two Companies. | ||||||||||||||||||||||||||||||
8) CB | A company is considering the replacement of its existing machine which is obsolete. The company is faced with two alternatives: a. To buy MACHINE A which is similar to the existing machine OR b. To go for MACHINE B which is more expensive and has much greater capacity. The cash flows, at the the present level of operations, under the two alternatives are given: Cash flows in lakhs of rupees at the end of year Machine 0 1 2 3 4 5 Machine A -25 Nil 5 20 14 14 Machine B -40 10 14 16 17 15 The company’s cost of capital is 10%. The FM tries to evaluate the machines by calculating following: 1. Net Present Value 2. Profitability Index 3. Pay back period He is unable to make up and seeks your help. The Present value of Rs.1 at 10% discount rate are: Year 0 1 2 3 4 5 P.V 1.00 0.91 0.83 0.75 0.68 0.62 | ||||||||||||||||||||||||||||||
9) BR |
X Ltd . Y Ltd. Liabilities : Share Capital 1,00,000 50,000 Profit & Loss A/c 10,000 – Creditors 25,000 5,000 Loan X Ltd. — 15,000 1,35,000 70,000 Assets : Sundry Assets 1,20,000 60,000 Loan Y Ltd. 15,000 – Profit & Loss A/c — 10,000 1,35,000 70,000 A new company XY Ltd. is formed to acquire the sundry assets and creditors of X Ltd. and Y Ltd. and for this purpose, the sundry assets of X Ltd. are revalued at Rs. 1,00,000. The debt due to X Ltd. is also to be discharged in shares of XY Ltd. Show the Ledger Accounts to close the books of X Ltd. |
Saturday 17 September 2011
Fm Revision set 5
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment