NMIMS Global Access
School for Continuing Education (NGA-SCE) Course: Financial Reporting & Analysis – I
Internal Assignment Applicable for December 2022 Examination
- You have recently joined a start-up which is into health food segment as a Management Trainee. Your manager has provided you with financial statements for 2 years and has asked you to use the tool of ratios to analyse and compare the performance of the company for the 2 years. Accordingly, you are required to calculate key ratios depicting – liquidity, efficiency, profitability, and solvency and comment about the performance of the company for the 2 years.
Statement of Profit and Loss
| ( Rs in Lakhs) | ||
| Particulars | 2022 | 2021 |
| Sales | 1800.00 | 1000.00 |
| Less: | ||
| Cost of Goods sold | 670.00 | 400.00 |
| Operating Expenses | 170.00 | 80.00 |
| Depreciation | 400.00 | 240.00 |
| Interest | 260.00 | 120.00 |
| Profit before tax | 300.00 | 160.00 |
| Tax | 90.00 | 48.00 |
| Profit after tax | 210.00 | 112.00 |
Please check the table below
| Balance Sheet | ( Rs in Lakhs) | |
| Particulars | 2022 | 2021 |
| Equity & Liabilities | ||
| Equity Share Capital | 3000.00 | 2000.00 |
| Retained Earnings | 410.00 | 200.00 |
| Non Current Liabilties | ||
| 12% Debentures | 2000.00 | 1000.00 |
| Term loan | 200.00 | 0.00 |
| Current Liabilities | ||
| Working capital loan | 402.00 | 400.00 |
| Trade payables | 80.00 | 90.00 |
| Total | 6092.00 | 3690.00 |
| Assets | ||
| Non Current Assets | ||
| Property Plant and Equipment | 4000.00 | 2400.00 |
| Accumulated depreciation | 640.00 | 240.00 |
| Net Property Plant and Equipment | 3360.00 | 2160.00 |
| Patents | 892.00 | 520.00 |
| Current Assets | ||
| Inventories | 160.00 | 100.00 |
| Accounts Receivables | 300.00 | 200.00 |
| Cash & Bank | 1380.00 | 710.00 |
| Total | 6092.00 | 3690.00 |
(10 Marks)
- As a financial Analyst you are entrusted with the task of analyzing the cash flow statement of StarTrek Ltd.
| Particulars | Amount | Amount |
| Cash flow from Operations | ||
| Net Profit before tax | 400000 | |
| Add: Depreciation | 145600 | |
| Add: Interest | 22500 |
| Less: Profit on Sale of Machinery | (10000) | 158100 |
| Cash Flow from operations before working
capital changes |
558100 | |
| Increase in Inventories | (94620) | |
| Increase in Receivables | (100000) | |
| Increase in Payables | 67270 | (127350) |
| Cash Flow from operations before tax | 430750 | |
| Less : Income tax paid | (120000) | |
| Net Cash Flows from Operating Activities(A) | 310750 | |
| Cash Flows from investing activities | ||
| Proceeds from sale of machinery | 40000 | |
| Purchase of Plant and Machinery | (640750) | |
| Purchase of Investments | (250000) | |
| Net Cash Flows from Investing Activities (B) | (850750) | |
| Cash Flow from financing activities | ||
| Interest paid | (22500) | |
| Term loan taken | 270000 | |
| Dividend paid | (157500) | |
| Equity share capital issued | 200000 | |
| Debenture issued | 250000 | |
| Net Cash Flows from Financing Activities (C) | 540000 | |
| Net Increase in Cash and Cash Equivalents
(A)+(B)+(C) |
0 | |
| Cash and Cash Equivalents at the beginning of the year | 15000 | |
| Cash and Cash Equivalents at the end of the year | 15000 |
Analyse the cash Flow statement with reference to the following:
1) Ability of the operating cash flows to service providers of capital
2) Financing the acquisition of fixed Assets.
3) Financial Flexibility
4) Whether the company will be able to sustain the existing rate of dividend for the next year. The share capital at the beginning of the year is Rs 10, 00,000.
5) Comment on the “Free Cash Flows” available with the company.
(10 Marks
3.a. Electro-waves ltd sells ‘Ear-pods’. The cost of finished product-( per unit) as per the accounting records is Rs 16,000; and the estimated selling price is Rs 17,000 and estimated selling expenses are Rs 1500. At what amount should the finished product be valued at the end of the accounting period? State the accounting principle and the value at which the stock should be recorded. Buy Solved assignment from us
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(5 Marks)
3.b. A company purchased a Machinery for Rs 4,00,000 with an estimated useful life of 10 years and an estimated residual value of Rs 20,000. It follows straight line method for charging depreciation. At the end of the three years, the management revised the Machinery’s remaining useful life to five years and residual value to Rs 15,000. What will be the depreciation expense for the 4th year? Why is it relevant to review the estimates of ‘useful life’ and ‘residual value’ of the fixed assets at the end of each year? (5 Marks)
NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Quantitative Methods – Concepts and Applications
Internal Assignment Applicable for December 2022 Examination
- What do you understand by Geometric Mean? Explain with suitable examples from investment decisions (10 Marks)
- What is CV? Explain how CV is used in portfolio risk analysis. (10 Marks)
- a. How normal distribution is different from Uniform Distribution? (5 Marks)
- b. With reference to Normal Distribution briefly explain some of its uses in investment analysis. (5 Marks)
NMIMS Global Access
School for Continuing Education (NGA-SCE) Course: Business Economics
Internal Assignment Applicable for December 2022 Examination
- Given below are the details about production in two countries – France and Indonesia.
These countries trade regularly with each other in two commodities Automobile and
Textile. Output per worker per day for Automobiles and Textile are given below.
| Automobile | Textile(yards) | |
| France | 10 | 20 |
| Indonesia | 5 | 40 |
Based only on the information given here, answer the following:
(a)Which country has an absolute advantage in the production of:
- Automobile ii. Textile
(b)Which country has a comparative advantage in the production of:
- Automobile ii. Textile
(c)Illustrate the gains for each country from trading based on comparative advantage.
(10 Marks)
- A representative economy is described by the following equations: Consumption function: C = 40 + 0.8 (Yd); Yd = disposable income Tax function: T = 0.2 Y
Investment function: I = 180 – 10r
Government spending function: G = 200
Net exports function: X = 40 – 0.1Y
- a. Find the equation for goods market equilibrium for the economy described above.
- Given that the real interest rate in the economy is 5%, calculate the equilibrium output in the goods market.
- c. How would the goods market equilibrium in the economy change if the income tax rate is increased to 0.3 and the marginal propensity to import decreases to 0.024?
(10 Marks)
- Case Analysis:
- UEx is a banking institution working in the area of microfinance in the Middle Eastern region. They are planning to start operations in India. Before entering Indian market, they would like to study the market structure of the microfinance industry in India to make an assessment about their scope in the Indian microfinance space. If you were to advise the on understanding the market structure, how would you go about with the analysis? Give rationale for the choice of your technique. (5 Marks)
- b. Assuming Indian microfinance institution is an oligopoly market with a few dominant players, how would you advise UEx in terms of their product placement and pricing strategy? Give a brief summary of your advice to UEx. (5 Marks)
NMIMS Global Access
School for Continuing Education (NGA-SCE) Course: Corporate Finance – I
Internal Assignment Applicable for December 2022 Examination
- Cummins Engines Ltd currently has 1.2 million common shares of stock outstanding and the stock has a beta of 2.2. It also has $ 10 million face value of bonds that have five years remaining to maturity and 8% coupon with semi-annual payments and are priced to yield 13.65%. If the company issues up to $ 2.5 million of new bonds, the bonds will be priced at par and have a yield of 13.65%; if it issues bonds beyond $ 2.5 million, the
expected yield on the entire issue will be 16%. The company management has learnt that it can issue new common stock at $ 10 a share. The current risk-free rate of interest is 3% and the expected market return is 10%. The company’s marginal tax rate is 30%. If the company raises $ 7.5 million of new capital while maintaining the same debt-to-equity ratio, what would be its weighted average cost of capital? (10 Marks)
- Assume that your father is now 50 years old and plans to retire after 10 years from now.
He is expected to live for another 25 years after retirement. He wants a fixed retirement income of Rs. 5,00,000 per annum. His retirement income will begin the day he retires,
10 years from today, and then he will get 24 additional payments annually. Your father has current savings of Rs. 10,00,000 and he expects to earn a return on his savings @
10% p.a., annually compounding. How much (to the nearest of rupee) must your father save during each of next 10 years to meet his retirement goal? (10 Marks)
- Westcoast Paper Ltd is expected to generate $ 1,500,000 in revenues and $ 500,000 in operating earnings next year. Currently, the company does not use debt financing and has assets of $ 2,000,000. Suppose the company were to change its capital structure, buying back $ 1,000,000 of stock and issuing $ 1,000,000 in debt. If we assume that interest on debt is 5% and income is taxed at 30%, what is the effect of debt financing on the company’s net income and return on equity if operating earnings may vary as much as
40% from expected earning operating earnings in following circumstances?
- When the company has no debt, and (5 Marks)
- b. When the company has debt to total assets = 50%. (5 Marks)
NMIMS Global Access
School for Continuing Education (NGA-SCE) Course: Ethical and Professional Standards
Internal Assignment Applicable for December 2022 Examination
- Araav Sharma is a junior equity analyst at Micro Investments Ltd. He was given a short deadline by his boss to write a report on the performance of CGSE Company, a leading player in the construction industry of the country. Araav had recently read in a newspaper about the recent influx of rich immigrants in the country who have fled from the neighboring warring lands and thinks this would boost the construction industry. In his report, Araav uses statistics from the Economic Census published by the government, but does not acknowledge the source of data. He concludes his BUY recommendation saying: “The fact that rich migrants in the country will invest their money in residential projects guarantees a bright outlook for CGSE Company.” Before submitting the report to his boss, Araav calls his portfolio manager and asks him to purchase CGSE Company shares. According to the Code of Standards, has Araav violated the CFA Institute Standards of Professional Conduct. Kindly explain with a proper justification. (10 Marks)
- “Financial analysts are free to act on conclusions based on both public and nonmaterial nonpublic information”. Explain the statement with reference to relevant standard and an example. (10 Marks)
- Joseph Francis is an equity analyst and runs an internet site where he posts his research regarding the health care industry regularly. He portrays himself as an independent analyst and always does his research thoroughly and diligently. Recently, he entered into an agreement with Mckinley Hospitals to promote its stock online for a flat fee. The same week Joseph posted a strong buy recommendation for Mckinley Hospitals stock without making any disclosures on his website.
- In this situation, what is Joseph supposed to do? Explain (5 Marks)
- b. Which is the relevant Standard he should consider here explain in detail and justify the sa (5 Marks)