NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Corporate Finance
Internal Assignment Applicable for April 2023 Examination
Assignment Marks: 30
Instructions:
All Questions carry equal marks. All Questions are compulsory
All answers to be explained in not more than 1000 words for question 1 and 2 and for question 3 in not more than 500 words for each subsection. Use relevant examples, illustrations as far as possible.
All answers to be written individually. Discussion and group work is not advisable.
Students are free to refer to any books/reference material/website/internet for attempting their assignments, but are not allowed to copy the matter as it is from the source of reference.
Students should write the assignment in their own words. Copying of assignments from other students is not allowed.
Students should follow the following parameter for answering the assignment questions.
For Theoretical Answer
| Assessment Parameter | Weightage |
| Introduction | 20% |
| Concepts and Application related to the question | 60% |
| Conclusion | 20% |
For Numerical Answer
| Assessment Parameter | Weightage |
| Understanding and usage of the formula | 20% |
| Procedure / Steps | 60% |
| Correct Answer & Interpretation | 20% |
- Calculate WACC with the following information. Which source of funding is most desirable and why? (10 Marks)
PQR Ltd. is coming out with a new equity issue of Rs. 10 lacs par value Rs. 100/share. The cost of issuing external equity is around 5%. Shareholders expect a return of 16% p.a. for the risk involved in parking their funds in PQR Ltd. PQR Ltd. also has retained earnings of Rs. 8 lacs as on date. It has a long term debt of Rs. 5 lacs taken at 8% p.a. Tax rate is @ 30% Preference shares capital of par value Rs. 6 lacs (Rs. 100 each), yield a return of 10% p.a. Market value of each equity share is Rs. 105 per share and that of Preference shares is Rs. 125/share.
- What is a Cash Cycle? Explain. Calculate using the following information. (Assume 360
| days in a year). | (10 Marks) | ||
| Opening Balances | |||
| Raw Material | 1,00,000 | ||
| WIP | 45,000 | ||
| Finishes Goods | 1,35,000 | ||
| Debtors | 6,00,000 | ||
| Creditors | 8,60,000 | ||
| Closing Balances | |||
| Raw Material | 2,00,000 | ||
| WIP | 65,000 | ||
| Finishes Goods | 1,25,000 | ||
| Debtors | 5,45,000 | ||
| Creditors | 9,75,000 | ||
| Costs Incurred during the year | |||
| Manufacturing Costs | 11,60,000 | ||
| Excise Duty | 18,80,000 | ||
| Selling and Distribution Expenses | 6,20,000 | ||
| Admin. Overheads | 2,00,000 | ||
| Total Sales | 2,01,96,800 | ||
| Total Purchases | 1,46,00,000 | ||
40% of sales are on credit and 70% of purchases are on credit
(5 Marks)
- a. What is Net Working Capital? Explain each element briefly. Look at the following Balance sheet extract and identify each element of the working capital and calculate NWC.
- b. With the following data, calculate DSO and Debtor Turnover Ratio. Explain the
| importance of each and make inferences. | (5 Marks) | ||||
| Rs. In Crores | |||||
| FY 2021-22 | FY 2020-21 | ||||
| Sales | 1,01,000 | 87,255 | |||
| Receivables | 36,347 | 33,331 | |||
| 60% of the sales are on credit basis | |||||
| ********** | |||||
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