Additional Solved Sums, Financial Management, Prassanna Chandra

Part 2 1. As a general guideline, genuine paces of intrigue are determined by taking away the swelling rate from the ostensible rate. What is the mistake from utilizing this dependable guideline for ascertaining genuine paces of return in the accompanying cases? Ostensible rate (%)7121822 Inflation rate (%)4 6 810 Solution: [pic] 2. As a general guideline, genuine paces of intrigue are determined by deducting the swelling rate from the ostensible rate. What is the blunder from utilizing this dependable guideline for computing genuine paces of return in the accompanying cases? Ostensible rate (%)481119 Inflation rate (%)13 2 4 Solution: [pic] CHAPTER 3 1. Toward the finish of March, 20X6 the parities in the different records of Dhoni and Company are as per the following: Rs. in million Accounts Balance Equity capital 120 Preference capital 30 Fixed resources (net) 217 Reserves and surplus 200 Cash and bank 35 Debentures (made sure about) 100 Marketable protections 18 Term advances (made sure about) 90 Receivables 200 Short-term bank getting (unbound) 70 Inventories210 Trade lenders 60 Provisions 20 Pre-paid costs 10 Required: Prepare the asset report of Dhoni and Company according to the organization determined by the Companies Act. Arrangement: Balance Sheet of Dhoni and Company As on March 31, 20 X 6 Liabilities | |Assets | |Share capital | |Fixed resources |â | |Equity |120 |Net fixed resources |217 | |Preference |30 | |â | |Reserve and surplus |200 |Investments |â | |â | |Marketable protections |18 | |Secured advances | |Current resources, advances and advances |â | |Debentures |100 | |â | |Term advances |90 | |â | | Pre-paid costs |10 | |Unsecured advances | |Inventories |210 | |Short term ank getting |70 |Receivables |200 | |Current liabilities and arrangements | |Cash and Bank |35 | |Trade loan bosses |60 | |â | |Provisions |20 | |â | |â |690 |â |690 | 2. Toward the finish of March, 20X7 the equalizations in the different records of Sania Limited are as per the following: Rs. in million Accounts Balance Equity capital 250 Preference capital 80 Fixed resources (net)380 Reserves and surplus350 Cash and bank100 Debentures (secured)190 Marketable protections 30 Term advances (secured)120 Receivables420 Short-term bank getting (unbound) 110 Inventories310 Trade loan bosses 90 Provisions 70 Pre-paid costs 20 Required: Prepare the monetary record of Sania Limited according to the arrangement indicated by the Companies Act. Arrangement: Balance Sheet of Sania Limited as on March 31, 20 X 7 Liabilities | |Assets | |â | |â | |Share capital | |Fixed resources |â | |Equity |250 |Net fixed r esources |380 | |Preference |80 | |â | |Reserve and surplus |350 |Investments |â | |â | |Marketable protections |30 | |Secured advances | |Current resources, advances and advances |â | |Debentures |190 | |â | |Term advances |120 | |â | |Pre-paid costs |20 | |Unsecured advances | |Inventories |310 | |Short term bank acquiring |110 |Receivables |420 | |Current liabilities and arrangements | |Cash and Bank |100 | |Trade lenders |90 | |â | |Provisions |70 | |â | |â |1260 |â |1260 | 3. The relative asset reports of Evergreen Company are given underneath: (Rs. in million) Owners' Equity and Liabilities As on 31. 3. 20X6 As on 31. 3. 20X7 Share capital 70 Reserves and surplus 40 80 Long-term obligation 80 90 Short-term bank borrowings 80 85 Trade loan bosses 40 70 Provisions 10 20 Total320415 Assets Fixed resources (net)120210 Inventories 90 95 Debtors 60 65 Cash 25 30 Other resources 25 15 Total320415 The benefit and misfortune record of Evergreen Company for the year finishing 31st March 2007 is given beneath: (Rs. in million) Profit and Loss Account for the Period 1. 4. 20X6 to 31. 3. 20X7 Net sales750 Cost of merchandise sold 505 Stocks290 Wages and salaries105 Other assembling expenses110 245 Gross benefit Operating expenses135 Selling, organization and general120 Depreciation 15 Operating profit110 Non-working overflow or deficit(20) EBIT 90 Interest 25 Profit before charge 65 Tax 15 Profit after assessment 50 Dividends 10 Retained income 40 Required: (a) Prepare the arranged income articulation for the period 1. 4. 20X6 to 31. 3. 20X7 b) Develop the income character for the period 1. 4. 20X6 to 31. 3. 20X7 Solution: |A. Income from working exercises |-|Net benefit before charge and exceptional things | |85 |-|Adjustments for | |Interest paid | |25 | |Depreciation | |15 |-|Operating benefit before working capital changes |125 |-|Adjustments for | |Inventories | |(5) | |Debtors | |(5) | |Trade loan bosses | |30 | |Provisions | |10 | |Increase in different resources | |10 |-|Cash created rom tasks | |165 | |Income charge paid | |(15) |-|Cash stream before phenomenal t hings | |150 | |Extraordinary thing | |(20) |-|Net income from working exercises | |130 | |B. |Cash stream from contributing exercises |-|Purchase of fixed resources | |(105) |-|Net income from contributing exercises | |(105) | |C. Income from financing exercises |-|Increase in advances | |15 |-|Dividends paid | |(10) |-Interest paid | |(25) | |Net income from financing exercises | |(20) | |D. |Net increment in real money and money counterparts | |5 |-|Cash and money reciprocals as on 31. 03. 0X6 |25 |-|Cash and money reciprocals as on 31. 03. 20ãâ€"7 | |30 | NoteIt has been expected that â€Å"other assets† speak to â€Å"other current assets†. (b) A. Income from resources - Operating money flow90 - Net capital burning through (105) - Decrease in net working capital35 - Cash stream from assets20 B. Income to loan bosses - Interest paid25 - Repayment of long haul obligation (15) - Cash stream to creditors10 C. Income to investors - Dividends paid10 - Net new value rai sed 0 - Cash stream to shareholders10 We find that (A)=(B) + ( C) I. e. Income from assets=Cash stream to leasers + Cash stream to investors 4. The near accounting reports of Xavier Limited are given underneath: (Rs. in million) Owners' Equity and Liabilities As on 31. 3. 20X6 As on 31. 3. 20X7 Share capital 20 30 Reserves and surplus 10 18 Long-term obligation 30 25 Short-term bank borrowings 15 Trade leasers 10 15 Provisions 5 8 Total 90 111 Assets Fixed resources (net) 16 20 Inventories 44 55 Debtors 20 21 Cash 5 8 Other resources 5 7 Total 90 111 The benefit and deficit record of Xavier Limited for the year 2007 is given beneath: (Rs. in million) Profit and Loss Account for the Period 1. 4. 20X6 to 31. 3. 20X7 Net sales220 Cost of products sold 140 Stocks 90 Wages and compensations 35 Other assembling costs 15 80 Gross benefit Operating costs 40 Selling, organization and general 20 Depreciation 5 Operating benefit 15 Non-working excess or shortage 1 EBIT 16 Interest 4 Profit before charge 12 Tax 2 Profit after duty 10 Dividends 2 Retained income 8 Required: (a) Prepare the arranged income explanation for the period 1. 4. 20X6 to 31. 3. 20X7 b) Develop the income personality for the period 1. 4. 20X6 to 31. 3. 20X7 Solution: |A. Income from working exercises |-|Net benefit before charge and exceptional things | |11 |-|Adjustments for | |Interest paid | 4 | |Depreciation | 5 |-|Operating benefit before working capital changes | 20 | Adjustments for | |Inventories | |(11) | |Debtors | (1) | |Trade banks | 5 | |Provisions | 3 | |Increase in different resources | (2) |-|Cash created from tasks | 14 | |Income charge paid | (2) |-|Cash stream before uncommon things | 12 | |Extraordinary thing | 1 |-|Net incom e from working exercises | 13 | |B. |Cash stream from contributing exercises |-|Purchase of fixed resources | (9) |-|Net income from contributing exercises | (9) | |C. Income from financing exercises | 10 |-Increase in value |-|Repayment of term credits | (5) |-Dividend paid | |(2) |-|Interest paid | (4) | |Net income from financing exercises | (1) | |D. |Net increment in real money and money reciprocals | 3 |-|Cash and money counterparts as on 31. 03. 20X6 | 5 |-|Cash and money counterparts as on 31. 03. 20ãâ€"7 | 8 | NoteIt has been expected that â€Å"other assets† speak to â€Å"other current assets†. (b) ACash stream from resources - Operating money flow19 - Net capital spending(9) - Decrease in net working capital(9) Cash stream from resources 1 B. Income to loan bosses - Interest paid 4 - Repayment of long haul obligation 5 - Cash stream to lenders 9 C. Income to investors - Dividends paid 2 - Net new value raised(10) - Cash stream to investors (8) We find that (A)=(B) + ( C) I. e. , Cash stream from assets=Cash stream to lenders + Cash stream to investors CHAPTER 4 1. Head Company's net overall revenue is 8 percent, all out resources turnover proportion is 2. multiple times, obligation to add up to resources proportion is 0. 6. What is the arrival on value for Premier? Arrangement: Net benefit Return on value = Equity = Net benefit Net deals Total resources x Net deals Total resources Equity 1 = 0. 08 x 2. 5 x = 0. 5 or 50 percent 0. 4 Debt Equity Note : = 0. 6 So = 1-0. 6 = 0. 4 Total resources Total resources Hence Total resources/Equity = 1/0. 4 2. The accompanying data is given for Alpha Corporation Sales3500 Current ratio1. 5 Acid test ratio1. 2 Current liabilities1000 What is the stock turnover proportion? Arrangement: Current resources = Current liabilities x 1. 5 = 1000 x 1. 5 = 1500 Quick assets= Current liabilities x 1. 2 = 1000 x 1. 2 = 1200 Inventories= 300 3500 Inventory turnover proportion == 11. 7 300 3. The accompanying data is given for Beta Corporation. Sales5000 Current ratio1. 4 Inventory turnover5 proportion Acid test ratio1. 0 What is the degree of current liabilities? Arrangement: 4. Safari Inc. has benefit before assessment of Rs. 90 million. On the off chance that the organization's occasions intrigue secured proportion is 4, what is the all out intrigue charge? Arrangement: PBT= Rs. 90 million PBIT Times intrigue secured = 4 Interest So PBIT = 4 x Interest PBT = PB