NMIMS Semester 3 JUNE 2024 Finance Assignments

Capital market and portfolio management

1) Net income = ₹3, 00,000/- preferred dividend = ₹30,000/- during the year. In addition it also had ₹30, 00,000 total shares outstanding during the year and ₹5, 00,000/- preferred stock. Calculate ROE of the organization. (10 mark)

2) Your collogue is interested to invest in derivative market. But he doesn’t have a good knowledge about it. He wants some information about different types of derivatives. Explain him different types of derivatives. (10 mark)

3) a) Your friend wanted to invest in stock market. But he is confused how much amount to invest in different stocks. With the help of sharpe ratio, help your friend to prepare optimum portfolio. (5 mark)

Stock

Sharpe Ratio

S1

1.5

S2

2

S3

2.5

Total

6

b) If you have Rs.10, 000/- & decides to invest 40% in mutual fund and rest in shares. Expected return from mutual fund is 8% & from shares is 12%. How will you calculate total expected return? (5 mark)

Strategic cost management

1) With the given information calculate the following for the year ended March 2023: a) Current Ratio b) D/E Ratio c) Interest Coverage Ratio d) COGS Ratio e) Return on Assets Comment on the value in terms of its adequacy (whether it is sufficient / good or not). Values may be rounded off to 2 decimal places.

Standalone Profit & Loss account in Rs. Cr. – Mar. 23 Mar. 22 INCOME

Revenue From Operations 83,251 56,336 Other Operating Revenues 1,709 1,110 Total Operating Revenues 84,960 57,446 Other Income 2,545 2,076 Total Revenue 87,505 59,522 EXPENSES Cost Of Materials Consumed 62,226 40,506 Purchase Of Stock-In Trade 3,407 2,375 Changes In Inventories Of FG,WIP And Stock-In Trade (1,075) (539) Other Expenses 739 204 Cost of Goods Sold 65,297 42,546 Employee Benefit Expenses 3,650 3,306 Finance Costs 273 223 Depreciation And Amortisation Expenses 3,154 2,451 Other Expenses 7,001 4,761 Total Expenses 79,375 53,287 Profit/Loss Before Tax 8,131 6,235 Total Tax Expenses 1,582 1,300 Profit/Loss For The Period 6,549 4,935

All expenses may be assumed to be operating expenses. Standalone Balance Sheet in Rs. Cr. Mar. 23 Mar. 22 SHAREHOLDER’S FUNDS Equity Share Capital 599 598 Reserves and Surplus 42,757 38,362 Total Shareholders Funds 43,357 38,961 NON-CURRENT LIABILITIES Long Term Borrowings 2,332 5,678 Other Long Term Liabilities incl. Deferred Tax 2,844 2,758 Long Term Provisions 1,207 913 Total Non-Current Liabilities 6,383 9,349 CURRENT LIABILITIES Short Term Borrowings 2,312 812 Trade Payables 17,146 12,894 Other Current Liabilities 5,975 4,661 Short Term Provisions 607 454 Total Current Liabilities 26,040 18,820 Total Capital And Liabilities 75,780 67,130 ASSETS NON-CURRENT ASSETS Tangible Assets 13,050 12,004 Intangible Assets 3,926 2,544 Capital Work-In-Progress 950 1,522 Intangible Assets Under Development 1,834 3,497 Fixed Assets 19,761 19,567 Non-Current Investments 17,539 17,208 Long Term Loans And Advances 177 960 Other Non-Current Assets 3,659 3,478 Total Non-Current Assets 41,136 41,213 CURRENT ASSETS Current Investments 9,548 7,902 Inventories 8,881 5,883 Trade Receivables 4,042 3,035 Cash And Cash Equivalents 4,482 3,651 Short Term Loans And Advances 2,177 1,846 Other Current Assets 5,514 3,602 Total Current Assets 34,644 25,918 Total Assets 75,780 67,130

2. Following is the Operating Statement of Vayu Pvt. Ltd. for March 2023.

Rs.

Sales (20,000 units @ Rs. 80 each)                16,00,000

Operating Costs:

Raw Materials                                                 600,000

Labour Costs                                                   400,000

Manufacturing Overheads (Variable)             200,000

Overheads (Fixed)                                          150,000

a) Calculate existing Profitability.

b) Find out the following:

1. Contribution Value and Per unit
2. PV Ratio
3. Break Even Sales Units & value

c) The firm receives an order of manufacturing 20,000 more units and supplying them at the rate of Rs. 50 each. As the Finance Manager advise the firm whether to accept or reject the order (Use CVP analysis only). Assume that the firm has adequate capacity to manufacture the additional units.

3. a. Sridevi is looking at investment opportunities for its 2 departments. The risk involved in both is different and hence, so is the cost of funding the project. The current return for both departments is an average of 10%. As per the initial assessments done, the details are as follows:

Dept. A                       Dept. B

Rs. Crores

Capital Investment                  200                              200

Projected Returns                   22                                24

Advise Sridevi on whether to accept the proposals using:

(i) ROI approach

(ii) Residual Income approach if Cost of funding the investment is 10% and 14% respectively.

b. Agarwal & Sons. Produces 3 different products X,Y and Z. The production is mainly done in line with the market demand of the previous month, in the order of Sales Price in case of any limit of resources. The company now wants to optimize its product mix to earn the maximum profitability. The following information is available.

You are required to advise on the optimum product mix for the company.

UoM

X

Y

Z

Sales Price

Rs. Per unit

500

450

400

Variable Manufacturing Costs

100

90

75

Variable Overheads

20

25

15

Total Demand

No. of units

1000

2000

4000

Machine hours reqd. for production

Hours Per unit

25

15

12

Total machine hours available for the year 1,00,000 hours only. Also, the company incurred Fixed Manufacturing Overheads of Rs. 1,00,000 and fixed Selling Expenses of Rs. 45,000. Both these expenses are generally apportioned in the ratio of no. of units produced.

Marketing of financial services

Q1. How various Commercial Banks play pivotal role in Marketing of Financial Services? Kindly explain the paradigm.

Q2. In what sense LIFE INSURANCE can have the Instrumental place in overall Financial Services? If yes, explain key types of Life Insurance

Q3a) How Indian Govt. contributing their Community Welfare role in Financial Services Marketing at Post Office & Other Places? Elaborate Paradigm.

Q3b) In case of Banks or Insurance Company or any other FI rendering of Financial Services what can be observed as most Distinct Characteristics of Financial Services? Elaborate any 4 to 5 Distinct Financial Services.

Taxation- Direct and Indirect

1. How do the setoff and carry forward rules in income tax assist taxpayers in managing their tax liabilities effectively, and what are the key considerations individuals and businesses need to be aware of when utilizing these provisions?

2. Explore the types of Goods and Services Tax (GST) implemented in India, including CGST, SGST, IGST, and UTGST. Additionally, discuss the key differences between direct and indirect taxes.

3. a. Discuss the concept of ‘Income from Other Sources’ under the Income Tax Act, 1961, elucidating the types of income included in this category and the tax treatment applicable.

b. Calculate income from other sources from the following information furnished by Mr. Narasimha Rao for the current assessment year:

• Agricultural income from land situated in India Rs. 30,000
• Agricultural income from land situated in Singapore Rs. 40,000
• Interest on Post office saving account Rs. 12,000
• Interest on government securities Rs. 16,000
• Interest on Public Provident Fund Rs. 17000
• Dividend from BRC Ltd (an Indian company) Rs. 50,000
• Dividend from UCL Ltd. (a foreign company) Rs. 36,000
• Winning from lottery Rs. 70,000 (net amount received)
• Rent from sub-letting of a flat Rs. 24,000.
• Mr. Narasimha has spent Rs. 7000 for realizing rent and pays a rent of Rs. 10,000.

Cost and management accounting

Q1. How does an in-depth understanding of cost behavior (fixed, variable, and semi-variable costs) influence strategic decision-making within a company? Provide a scenario where misinterpreting cost behavior could lead to a flawed business strategy.

Q2. A toy company gives you the following data for a month. You are required to calculate the variance based on profit.

Toy	Budgeted						Actual
	Quantity		Rate		Cost per unit	Quantity		Rate
A		900	50	45			1000		55
B		650	100	85			700		95
C		1200	75	65			110		78

Q3. a) Z Ltd initially planned to sell 5,000 units per month at an average price of Rs. 10 per unit, with a budgeted variable production cost of Rs. 4 per unit and fixed costs budgeted at Rs. 20,000, aiming for a monthly income of Rs. 10,000. However, due to raw material shortages, only 4,000 units were produced, increasing production costs by 50 paisa per unit. To offset this, the selling price was raised by Rs. 1.00 per unit. Additionally, Rs. 1,000 was spent on research and development to enhance the production process. A Performance Budget needs to be prepared, along with an analysis of the variances.

b) The variable costs to sales ratio stands at 70 percent, while the break-even point happens at 60 percent of capacity. With fixed costs amounting to Rs. 90,000, we need to determine the break-even point sales. Additionally, compute the profit at 75% of the capacity sales.