Assignment 1
FALL SEMESTER 2015
Financial Management (MGT201)
Due date: November 27, 2015
Due
date: November 27, 2015 Total marks: 10
Objectives
§
To understand
financial statements.
§
To recognize and
extract meaningful information from the raw data of financial statements.
Question
Fahad
stitching unit has a financial year of 360 days ending on 31st December 2014. Firm makes 100% sales
on credit. Shareholders want to know where firm’s profitability stands in the
market but firm is not in the position to issue extensive financial information
to the users. Following data containing ratios is provided to the shareholders.
|
Long term debt to
equity
|
0.5:1
|
|
|
|
|
Total assets
turnover
|
2.5 times
|
|
|
|
|
Average collection
period
|
18 days
|
|
|
|
|
Inventory turnover
|
9 times
|
|
|
|
|
Gross profit margin
|
10%
|
|
|
|
|
Acid test ratio
|
1:1
|
|
|
|
Required
1.
Some shareholders have raised objection that given information is not
enough for their upcoming investment decisions. Therefore, there is a
significant demand for the whole picture of firm’s financial position. As a
financial analyst, how would you help them to extract following balance sheet
items for the year 2014 from the above given ratios? (Marks 8)
Fahad stitching unit
Balance sheet
As on 31st
December 2014
|
Assets
|
Rs.
|
Liabilities and Owner’s equity
|
Rs.
|
|
Cash
|
|
Notes and payables
|
100,000
|
|
Accounts receivable
|
|
Long term debt
|
|
|
Inventory
|
|
Common stock
|
100,000
|
|
Plant and equipment
|
|
Retained earnings
|
100,000
|
|
Total assets
|
|
Total liabilities and shareholder’s equity
|
|
- Why investors
give importance to the analysis of balance sheet? Should they also give
importance to firm’s income statement and why? (Marks 2)
Learning Outcome
After attempting this assignment, students would be able to
apply ratios and raw information for making financial decisions.
Note
Prepare balance sheet as
provided in the given format. Working/calculations of balance sheet items carry
marks and should be provided at the end.
Important
24 hours extra / grace period after
the due date is usually available to overcome uploading difficulties. This
extra time should only be used to meet the emergencies and above mentioned due
dates should always be treated as final to avoid any inconvenience.
Instructions
Deadline
§
Make sure to
upload the solution file before the due date on VULMS.
§
Any submission
made via email after the due date will not be accepted.
Formatting guidelines
§
Use the font
style “Times New Roman” or “Arial” and font size “12”.
§
It
is advised to compose your document in MS-Word format.
§
You may also
compose your assignment in Open Office format.
§
Use black and
blue font colors only.
Referencing Guidelines
§
Use
APA style for referencing and citation. For guidance search “APA reference
style” in Google and read various websites containing information for better
understanding or visit http://linguistics.byu.edu/faculty/henrichsenl/apa/APA01.html
Rules for Marking
Please note that your
assignment will not be graded or graded as Zero (0), if:
§
It is submitted
after the due date.
§
The file you
uploaded does not open or is corrupt.
§
It is in any
format other than MS-Word or Open Office; e.g. Excel, PowerPoint, PDF etc.
§
It is cheated or
copied from other students, internet, books, journals etc.
Note
related to load shedding: Please be proactive
Dear students!
As you know that Pre Mid-Term semester activities have
started and load shedding problem is also prevailing in our country. Keeping in
view the fact, you all are advised to post your activities as early as possible
without waiting for the due date. For your convenience; activity schedule has
already been uploaded on VULMS for the current semester, therefore no excuse
will be entertained after due date of assignments, quizzes or GDBs
No comments:
Post a Comment