# Smu Mba Finance Assignments

SMU DRIVE FALL 2017 MBA 202 – financial management solved free assignment

Financial planning means deciding in advance the financial activities to be carried on to achieve the basic objective of the firm. Explain the factors that affect financial planning.

Factors affecting Financial Plan

10

10

2.

“Book value is an accounting concept”. Explain the factors of this concept.

Calculate the worth of the value of one share from the below details of Company ABC :

Current dividend is Rs. 10.

It expects to have a supernormal growth period running to 6 years during which the growth rate would be 30%.

The company expects normal growth rate of 10% after the period of supernormal growth period. The investor’s required rate of return is 18%.

factors explaining the concept of book value

5

10

Solution to the problem

5

3.

Explain the Cash Flow Estimation Principles.

Cash Flow Estimation Principles.

10

10

Q. No

Assignment Set -2

Questions

Marks

Total Marks

1.

Explain EOQ and Re – order point.

A manufacturing company has an expected usage of 1,00,000 units of a certain product during the next year. The cost of processing an order is Rs 200 and the carrying cost per unit per annum is Rs 2. Lead-time for an order is five days and the company will keep a reserve of two days usage.

Calculate EOQ and Re – order point. Assume 250 days in a year.

Explanation of EOQ and Re – order point

5

10

Calculation of EOQ and Re – order point

5

2.

Explain the capital Budgeting process and its appraisals

Solve the below given problem:

Given below are the details on the cash flows of two projects A and B. Compute pay-back period for A and B.

Cash flows of A and B

Year

Project A cash flows (Rs.)

Project B cash flows (Rs.)

0

(4,50,000)

(5,50,000)

1

3,00,000

2,00,000

2

1,50,000

2,50,000

3

50,000

3,00,000

4

2,00,000

3,50,000

5

1,00,000

2,00,000

Explanation of capital budgeting process and its appraisals.

6

10

Solution for the problem

4

3.

From the below details, show the effect of the dividend policy on the market price of company XYZ Ltd. shares using the Walter’s Model.

Equity capitalisation rate Ke is 10%

Earnings per share is given as Rs. 10

ROI (r) may be assumed as follows: 10% and 15%

Show the effect of the dividend policies on the share value of the firm for three different levels of r, taking the DP ratios as 20%, 40%, 60%, 80% and 100%.

Explanation of concepts of working capital

10

10

**MB0045: Given the following information in terms of per unit costs, prepare a statement showing the working capital requirement. **

**Raw material 60 **

**Direct labour 22 **

**Overheads 44 **

**Total cost 126 **

**Profit 18 **

**Selling price 140 **

**The following additional information is available: **

**Average raw material in stock one month **

**Average materials in process 15 days **

**Credit allowed by suppliers one month **

**Credit allowed to debtors two months**

**Time lag in payment of wages 15 days **

**Time lag in payment of overheads one month **

**Sales on cash basis 20% **

**Cash balance to be maintained 80,000 **

**You are required to prepare a statement showing the working capital required to finance a level of activity of 100,000 units of output. You may assume production is carried out evenly throughout the year and payments occur similarly. Assume 360 days in a year.**

**Solution: **

**Estimation of Working Capital **

** a) ****Investment in inventory **

**1. ****Raw material = RMC x RMCP**

** 360**

= 100,000 x 60 x 30

360

**= 500,000**

**2. ****Work in process inventory = COP x WIPCP**

** 360**

= 100,000 x 126 x 15

360

= **525,000**

**3. ****Finished goods inventory = COS x FGCP**

** 360**

= 100000 x 126 x 60

360

= **2,100,000**

**b) ****Investment in debtors = Cost of credit sales x DCP**

**360**

= 80,000 x 126 x 60

360

**= 1,680,000**

**c) ****Cash Balance = 80,000**

**d) ****Total Current Asset (A+B+C) = 4,885,000**

**e) ****Current Liabilities **

**1. ****Creditors = Purchase of raw materials x PDP**

**360**

= 100,000 x 60 x 30 / 360 = **500,000**

**Wages ** = 100,000 x 22 x 15 / 360 =91,667

**3. ****Overheads = **100000 x 44 x 30/360 = **366,667**

**f) ****Total Current Liabilities = 958334**

** Net Working Capital (D – F) = 3,926,666 **

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Tags: Business, Capital IQ, Finished good, Fiscal year, Inventory, Raw material, Trailing twelve months, Working capital

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