problem 1)a) A Rs. 2500 face value bond carries a coupon rate of 10% and matures after 5 years. The bond amount will be amortized equally over its life. Find out the present value of the bond if the investors required rate of return is 12%?
b) The following financial statements are provided for certain company for the calendar year 2003- 2004 (Rs.lakh):
Balance sheet @ Dec 31 2003 2004
Share capital 100 100
Reserves and surplus 80 90
Long term debt 120 150
Short term bank borrowings 70 90
Trade creditors 80 70
Provisions 60 50
Total 510 550
Net fixed assets 250 280
Inventories 100 120
Debtors 130 120
Cash 20 15
Other assets(Intangible) 10 15
Total 510 550
Income Statements:
Particulars 2003 2004
Net sales 650 700
Cost of goods sold 460 450
Operating expenses 160 170
Non operating surplus 50 10
Interest 35 30
Tax 10 30
Dividends 25 20
Consider depreciation as 20% of operating expenses.
Required:
• Create a table of changes in the items of the Balance Sheet.
• Create amplified funds flow statement.
• Create sources and uses of funds on cash basis.
problem 2)a) prepare a brief note on
i) Price – Earning Ratio
ii) Cost of a Specific Source of Finance.
b) Estimate the net working capital from the following information:
Particulars Cost(Rs per unit)
Raw materials 42.4
Direct labor 15.9
Overheads 31.8
Selling price Rs.106 per unit. Production 1,00,000 units per year. Raw materials in stock 4 weeks. Work-in-process stage 2 weeks. Finished goods stage 4 weeks. Credit allowed by suppliers 4 weeks. Credit allowed to debtors 8 weeks. Lag in payment of wages 1.5 weeks Lag in payment of overheads 4 weeks Cash on hand Rs.1, 25, 000. 80% of sales are credit sales. Assume 52 weeks a year.