BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE PILANI, K. K. BIRLA GOA ‘CAMPUS FIRST SEMESTER 2016-17 Financial Management (ECON F318) / Fi F 3/5 Test 1 (Answer All Questions) Date: 23September2016 Time: 2PM-3PM Total Marks: 20 Q. 1. From the following Balance sheet of Exe Ltd. Prepare a Cash Flow Statement. (8 Marks) a eae 1 | | Liabilities aot | ple Assets ral ies Equity Share Capital | 3,00,000| 4,00,000 Land & Buildings 2,00,000 | _7,70,000 | Preference Share Capital | 1,50,000| 1,00,000 | Patents 4,15,000| 90,000 | Term Loan | - | 2,00,000 | Plant & Machinery | 80,000/ —2,00,000 | General Reserve 40,000 | 70,000 | Debtors | 1,60,000 2,00,000 Profit & Loss 30,000 | 48,000 | Stock 72,000, —1,09,000 Proposed Dividend 42,000) 50,000 | Bills Receivable 25,000| 30,000 Creditors 55,000 83,000 | Investment 15,000 2,10,000 Bills Payable | 20,000 16,000 | Cash at Bank 10,000 8,000 | Provision for Taxation | 40,000 50,000 | Sizz000 70.47.00, | B,77,000 10,17,000 | Additional Information (a) Depreciation of Rs. 10,000/- and Rs. 30,000/- have been charged on Plant and Land and Buildings in 2012 (b) An interim dividend of Rs. 30,000/- has been paid in 2012 (©) Rs. 70,000 Income Tax was paid during 2012. (d) Preference Shares have been redeemed at a premium of 10%. (e) An Investment of Rs. 10,000/- was sold at a profit of Rs. 3,000/- (f), Amachine having a book value of Rs. 20,000/- was sold for Rs. 15,000/- (g) Closing stock on 2011 was valued at 90% of the cost. However, stock of 2012 is correctly valued at cost. This needs to be considered Q.2. a) Moon & Co's Capital structure as of 31*' March, 2016 contains Equity shares as well as 10% preference shares as follows: (2 Marks) Equity shares capital — 20,00,000 shares @ Rs. 10/- each 5% preference shares ~ 10,00,000 shares @ Rs. 20/- each (Convertible into 2 equity shares @ Rs. 10/- each) Profit Before Tax — Rs. 50,00,000/- Tax Rate - 30%(b) ©) 3) Note: 4 Lakhs equity shares were issued on 01.10.2015. Calculate the Basic EPS & Diluted EPS. Finance manager of a company wants to buy a asset costing Rs. 10,00,000/- at the end of 10 years. He requests you to find out the annual payment required, if the savings earn an interest rate of 12% per annum (2 Marks) ‘ABC Company availed Rs. 50,00,000/- lakhs loan from IDBI at 11% interest per year. The amount has to be repaid in 10 equal semi-annual instalments. Calculate the instalments amount (2 Marks) With the help of the following ratios, Draw the balance sheet of the company. (6 Marks) Current ratio 25 Liquidity ratio 15 Net working capital Rs, 3, 00,000 Stock turnover ratio (cost of sales/closing stock) 6 times Gross profit ratio 20% Debt collection period 2 months Fixed assets turnover ratio (on cost of sales) 2 times Fixed assets to shareholders net worth 0.80 Reserves and surplus to capital 0.50‘BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE PILANI, K K BIRLA GOA CAMPUS =a FIRST SEMESTER 2016-17 TEST2 FINANCIAL MANAGEMENT (ECON 315/FIN315) Date:28 Oct 2016 Max Marks 20 Time : 2PM-3PM Q1. swastik Ltd, manufacturers of special purpose machine tools, have two divisions which are periodically assisted by visiting teams of consultants. The management is worried about the steady increase of expenses in this regard over the years. An analysis of the last year’s expenses reveals the following: Consultants’ remuneration Rs 2,50,000 Travel and conveyance Rs 1,50,000 Accommodation expenses Rs 6,00,000 Boarding charges Rs 2,00,000 Special allowances Rs 50,000 “The management estimates accommodation expenses to increase by Rs 2,00,000 annually. As part of cost reduction drive, Swastik Ltd is proposing to construct a consultancy centre to take care of the accommodation requirements of the consultants. This centre will additionally save the company Rs 50,000 in boarding charges and Rs 2,00,000 in the cost of executive training programme hitherto conducted outside the company’s premises, every year. The following details are available regarding the construction and maintenance of the new centre. (a) Land: at a cost of Rs 8,00,000 already owned by the company, will be used. (b) Construction: Rs 15,00,000 including special furnishing, (©) Cost of annual maintenance: Rs 1,50,000. (@ Construction cost will be written off (at a uniform rate) over 5 years, being the useful life, Assuming that the write-off of construction cost as aforesaid will be accepted for tax purposes, that the rate of tax will be 35 per cent and that the desired rate of return is 15 per cent, you are required to analyse the feasibility of the proposal and make recommendations. Use present value up to two digits. What will be the !RR ?- (8 marks)