FM01 Account and Finance for Managers

Assignment No.I
Assignment Code: 2012FM01A1 Last Date of Submission: 15th April 2012 Maximum Marks:100

Attempt all the questions. All the questions are compulsory and carry equal marks.

Section-A Ques. 1 Ques. 2 Ques. 3 Explain two examples each of Liquidity Ratio, Efficiency Ratio, Leverage Ratio and Profitability Ratio. Give example of structure of Balance Sheet of a manufacturing company. Explain any two items from each side. Explain the following Accounting Concepts: (i) Dual Aspect concept (ii) Materiality concept (iii) Matching concept (iv) Conservatism concept The function of Financial Management is to review and control decisions to commit or recommit funds to new or ongoing uses. Thus, in addition to raising funds, Financial Management is directly concerned with production, marketing, and other functions within an enterprise. Discuss the statement in the context of an organization with which you are familiar Section-B From the following, prepare Cash Flow Statement of ABC Ltd. adopting the AS 3 (Revised) of ICAI. Income Statement For the year ended 31st March 1998 Sales Cost of Sales Gross Profit Depreciation Admin. And selling Expenses Interest expense Interest Income Dividend Income Foreign Exchange Loss Net profit before taxation and extraordinary item (Rs. 000) 30,650 26,000 4,650 450 910 400 300 200 40 3350

Ques. 4

Extra-ordinary Items: Insurance proceeds from earthquake settlement Net profit after extra-ordinary item Income Tax 3530 300

180

Page No. 1 of 3

Net profit Adapted from AS 3 (Revised), ICAI, New Delhi, pp. 12-19. Balance Sheet Assets 1997 Current Assets Cash in hand and balance with banks Short-item Investments Sundry Debtors Inventories Interest receivable Total current Assets Non-Current Assets Fixed Assets at cost Accumulated Depreciation Fixed Assets, net Long-Term Investments Total non-current assets Total Assets Liabilities and Share holders equity Current Liabilities Sundry Creditors Sundry Creditors Interest Payable Income Tax Payable Total Current Liabilities Long-tern debt Total Liabilities Shareholders Equity Share Capital Reserves Total Shareholders Equity Total Liabilities and Shareholders Equity 25 135 1,200 1,950 3,310 1,910 (1,060) 850 2500 3,350 6,6000 Rs. 000 1998 200 670 1,700 900 100 3,570 2,180 (1,450) 730 2500 3,230 6,800

3230

1,890 100 100 1,000 2,990 1,040 4,030 1,250 1,380 2,630 6,660

150 230 230 400 780 1,110 1,890 1,500 3,410 4,910 6,800

Additional Information (Rs. 000) 1. Amount raised from issue of shares was 250 and long-term borrowings amounted to 250. 2. Interest expenses was 400 of which 170 was paid during the year. 100 relating to interest expenses of the prior period were also paid during the year. 3. Dividend paid was 1,200. 4. Tax deducted at source on dividends received (included in the tax expense of 300 for the year) amounted to 40. 5. During the year fixed assets costing 350 was acquired by the firm. 6. Plant with original cost of 80 was sold for 20. Accumulated depreciation amounted to 60. 7. Foreign exchange loss of 40 represents the reduction in the carrying amount of a short-item investment in foreign currency designated bonds arising out of a change in exchange rate between the date of acquisition of the investment and the balance sheet date. 8. Sundry Debtors and Sundry Creditors include respectively of amount relating to credit sales and credit purchases only.

Page No. 2 of 3

FM01 Account and Finance for Managers

Assignment No.II
Assignment Code: 2012FM01A2 Last Date of Submission: 15th May 2012 Maximum Marks:100

Attempt all the questions. All the questions are compulsory and carry equal marks.

Section-A Ques. 1 Ques. 2 Ques. 3 Ques. 4 (a) Explain CAPM. (b) What is Security Market Line? Explain the graphical presentation of Break-even analysis. Explain the theories of Capital structure. Enumerate the limitations of Inter-Firm Comparison in the context of management decision. Section-B X Ltd. as current annual sales of Rs. 60 crores and an average collection period of 30 days. The company is considering liberalizing its credit policy. If the collection period is extended, sales and bad debts are expected to increase in the following way: Credit Policy I II III IV Increase in collection period 15 days 30 days 45 days 60 days Increase in Sales Rs. (crore) 4.0 4.5 5.3 6.5 Percent Bad Debt Losses 1.5 1.7 2.0 2.5

The firm sells its product for Rs. 10 per unit. Average cost at current level of sales is 90 percent for sales and variable cost is 80 percent of sales. If the current bad debt loss is 1.5% of sales and the required return is 18%, which credit policy should be pursued? Assume a 360-day year. State your assumptions, if any.

Page No. 3 of 3