Reference no: EM131242643
Question 01
A Company presently has total assets of Rs 3.2 million. In the total assets current assets are of Rs 0.2 millions. Sales of the corporate are Rs 10 million annually, and the before tax net profit margin is 12%. (Assume that the firm currently has no interest bearing debt).
Given the renewed fears of potential cash insolvency, an overly strict credit policy and imminent stockouts, the corporation is considering higher levels of current assets as a buffer against adversity.
The Management of the corporation is considering two new levels of currents i.e. Rs 0.5 million and Rs 0.8 million instead of the Rs 0.2 million presently held. Any additions to current assets would be financed with new equity capital.
A. Calculate the following ratios under the three levels of current assets. Also give your comments.
a) Total assets turnover
b) Before - tax return on Investment
c) Before - tax profit margin
B. If the new additions to current assets were financed with long - term debt at 15% interest, what would be the before - tax interest charges of the two new policies.
Question 02
A Public Limited Company is planning to borrow Rs.15 million in six months time for a six month period. The normal terms of borrowing prevailing in the market are KIBOR + 75 basis points. Current KIBOR rate is 8.5%. The company anticipates a surge in interest rates in the near future.
The quoted FRA rates are as under:
3V9 = 8.75 - 8.65
6V12 = 8.69 - 8.59
a) How the company can set up hedge against interest rate using FRA?
b) Assume that on the settlement date KIBOR is 9.05%. Calculate the effective interest rate of the company's borrowings.
|
Compute a new mrp that improves the base mrp
: Calculate a new MRP that improves the base MRP. Compare and contrast the types of production processing-job shop, batch, repetitive, or continuous-and determine which the primary mode of operation is and why.
|
|
Define the security strategies of defense in depth
: Define the security strategies of Defense in Depth and Layered Security along with comparing and contrasting the strategies by explaining, at least, two advantages and disadvantages of implementing each security strategy. Support your information..
|
|
Explain the general trend and trends within two subsets
: Choose, at least, three areas and explain the general trend and trends within two subsets of the area (i.e., security has subsets of physical, perimeter, monitoring) over the last three years. Use at least one figure from Google Trends showing a ..
|
|
Find q1 in terms of q2
: Charge q3 is free to move but happens to be in equilibrium (no net electrostatic force acts on it). Find q1 in terms of q2.
|
|
Calculate the ratios under three levels of current assets
: Calculate the following ratios under the three levels of current assets. Also give your comments.
|
|
Find the magnitude and direction of the force
: A 10 kg block is hanging from 2 ropes. One exerts a 50 N force at a 15º angle. The other exerts a 95 N force at a 60º angle. Find the magnitude and direction of the force that will bring the block int
|
|
Find the centre of gravity of the remainder
: A circular hole is punched out of a circular disc such that the diameter of the circular hole is a radius of the disc.If the diameter of the disc is 10cm,find the centre of gravity of the remainder.
|
|
Which are the key risk areas for the project
: There are multiple approaches to estimate the cost of any software project. List and explain at least two of these approaches? Explain the advantages and disadvantages of each approach. Which approach will you use to estimate the overall cost of ..
|
|
Discuss the role of the interest rate
: Discuss the role of the interest rate and the cost of financing on your purchase decision. Interest rates are derived from the supply and demand for money and the actions of the Federal Reserve System. What was the rate of interest you paid on your v..
|