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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.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M96600

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