MS-04 SOLVED ASSIGNMENT JULY-DECEMBER 2017
IGNOU MBA MS-04 SOLVED ASSIGNMENT JULY-DECEMBER 2017 TERM
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Course
Code : MS-04
Course
Title : Accounting
and Finance for Managers
Assignment
Code : MS-04/TMA/SEM-II/2017
Coverage : All Blocks
Note : Attempt all the questions and submit this assignment
on or before 31st October,
2017 to the coordinator of your study center.
- Explain the meaning of Generally Accepted
Accounting Principles? Discuss in brief about the Accounting Concepts that
are being followed in your organisation. Give your suggestions if any.
- Discuss the different methods of
depreciation and how these methods differ from each other.
- The sales and profit of ABC Ltd for two
successive years is as follows:
|
|
Previous Year (Rs in lakhs)
|
Current Year (Rs in lakhs)
|
|
Number of
units sold
|
15,000
|
20,500
|
|
Sales
|
37,500
|
5,125
|
|
Profit/Loss
|
825
|
1,178.75
|
On the
basis of the information given above you are required to determine:
(a) The amount of fixed
costs incurred by the firm.
(b) The Break Even point
for the firm (both in rupees & units).
(c) The amount of sales
to earn a profit of Rs 25 crores.
(d) Margin of Safety if
actual sales of ABC Ltd is 17.5 crores.
- XYZ Ltd is a leading manufacturer of
decorative and industrial paints in
XYZ Ltd
is planning to launch two new brands of luxury emulsions-Supercoat and
Luxurycoat. The Supercoat paint would generate an additional Rs 600 crore sales
and require an extra Rs. 400 crore investment involving installation of
manufacturing and packaging machinery. While the additional fixed costs
requirement would be Rs 150 crore, variable cost to sales ratio would not
change. For manufacturing the Luxurycoat paint the additional investment
requirement and sales generated would amount to Rs 600 crore and Rs 800 crore
respectively. The variable cost ratio would remain constant but the fixed cost
are expected to increase by Rs 240 crore. The XYZ Ltd has four alternative
financing plans to choose from (Exhibit 3). Its current debt-equity ration is
5:1.
XYZ Ltd
has hired Amar as a financial consultant to carry out the following tasks:
(1) What would its
operating, financial and total leverages be next year without the new proposal?
(2) Assuming that the XYZ
Ltd finances the projects using financing plan (A), determine the three
leverages for the two projects individually. Which new brand is better?
(3) Which financing
option should XYZ Ltd choose to if only Supercoat is to be manufactured?
(4) Calculate the
financial breakeven points of each plan.
EXHIBIT
1
Income Statement, Current Year and Market Data (Rs crore)
|
Sales
|
Rs.5,000
|
|
Variable
costs (0.50)
|
2,500
|
|
Contribution
|
2,500
|
|
Fixed
costs
|
1,000
|
|
EBIT
|
1,500
|
|
Interest
|
500
|
|
EBT
|
1,000
|
|
Tax
(0.35)
|
350
|
|
EAT
|
650
|
|
Shares
outstanding
|
10
|
|
EPS
(Rs)
|
65
|
|
P/E
ratio
|
20
|
|
Market
price per share (MPS) (Rs)
|
1300
|
EXHIBIT
2
Balance Sheet As at March 31, Current Year (Rs crore)
|
Liabilities
|
|
Assets
|
|
|
|
Equity
capital
|
Rs.100
|
Fixed
assets
|
|
Rs.5,850
|
|
Reserve
and Surpluses
|
900
|
Current
assets:
|
|
|
|
10%
Debt
|
5,000
|
Inventory
|
Rs.550
|
|
|
Current
liabilities
|
950
|
|
300
|
|
|
|
_______
|
|
250
|
1,100
|
|
|
6,950
|
|
|
6,950
|
EXHIBIT
3
Financing Options/Plans (Rs crore)
|
Plans
|
Debentures
|
Equity Shares
|
Preference Shares
|
P/E
|
|||
|
Coupon rate
|
Amount
|
Number (crore)
|
Face value
|
Rate
|
Amount
|
||
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
(7)
|
(8)
|
|
A
|
0.12
|
Rs.1,000
|
-
|
-
|
-
|
-
|
14
|
|
B
|
-
|
-
|
100
|
Rs.10
|
-
|
-
|
30
|
|
C
|
0.11
|
400
|
60
|
10
|
-
|
-
|
20
|
|
D
|
-
|
-
|
70
|
10
|
0.11
|
Rs.300
|
28
|
- In your organisation or any other
organisation of your choice try to find out the factors that are taken
into consideration while making the dividend decisions.
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