acc 501 midterm solved papers long questions solved

7/22/2019 Acc 501 Midterm Solved Papers Long Questions Solved

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w.vustudents.ning.compose you have $5,000 on deposit.

e day, you write a cheque for $1,000 and deposit $2,000.

at are your dis!ursement, co""ection and net f"oats#

er writing the cheque, you show a !a"ance of $%,000 on your !oo&s, !ut !an&

ws $5,000 whi"e the cheque is c"earing. So you have a dis!ursement f"oat of

00

positing $2,000 increases the !oo& !a"ance to $(,000, !ut the avai"a!"e !a"ance

ains the same unti" the cheque c"ears. So co""ection f"oat is )$2,000.

t f"oat + $1000 -)2,000 + )$1,000

/uestion (+ operating cash f"ow of s. 200,000. *et wor&ing capita" has

decreased !y s. 50,000 and there is a net capita" spending of s. 0 during tyear. a"cu"ate tota" cash f"ow. -mar&s

So"ution3

4ota" cash f"ow+200000)-)50000

toa" cash f"ow +250,000

/uestion (%+ sn& company find the profita!i"ity inde dividend 2 and price+ 20

-mar&s

so"ution+ 26200+0.01+1answer

Question No: 43 ( Marks: 3 )

Write down the components of total return in terms of dividend growth model.nswer

! " #$%&' g

his tells us that the total return* !* has two components

#$%&'is called the #ividend +ield. ,ecause this is calculated as the e-pected cash dividend /

the

current price* it is conceptuall/ similar to the current /ield on a ond

0rowth rate* g* is also the rate at which the stock price grows. 1o it can e interpreted as

capitalgains /ield


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What is the difference etween operating c/cle and cash c/cle2

he operating c/cle is the sum of the inventor/ and receivale periods

perating c/cle " nventor/ period !eceivale period

5ash c/cle

6he time etween cash disursement and cash collection. (We spend cash on da/ 3'* ut don7t

collect untilda/ $'8. so we have to arrange finances 9$*''' for $'8 3' " ;8 da/s)

61o we can descrie the cash c/cle as:5ash c/cle " perating c/cle ccounts pa/ale period

;8 da/s " $'8 da/s 3' da/s


uired return on the firm=s assets as a

whole.

60iven that a firms uses oth det and e>uit/ capital* this overall cost of capital will e a mi-tureof the

returns needed to compensate its creditors and stockholders.



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65ost of capital will reflect

65ost of e>uit/ capital65ost of det capital

5ost of ?>uit/

Question No: 4@ ( Marks: 8 )

#efine the following terms:

(i) #ealer n agent who u/s and sells securities from a maintained inventor/

t stands read/ to u/ securities from investors wishing to

sell them and sells securities to investors

wishing to u/ them

(ii) ,roker n agent who arranges securit/ transactions among investors*

matching investors wishing to u/ securities with investors wishing

to sell securities

he/ do not u/ or sell securities for their own accounts.Aacilitating trades others is their usiness

BC Manufacturing Company

Year ended December 31, 2009

1ales !s.B'*'''*'''

0ross profit margin B'C

perating profit margin 38C

Net profit margin BC !eturn on total assets $@C

!eturn on common e>uit/ D'C

otal assets turnover D

verage collection period ;' da/s

$. Requirement no 1 . 5alculate the value for 0ross profit2

D. o!utiona) 0ross profit " sale cost of goods sold

) 0ross profit " B'*'''*''' E $@'*''*'''c) 0ross profit " @4*'''*'''

3. Requirement no 2 . 5alculate the value for 5ost of goods sold2

4. o!utiona) 0ross profit margin ratio " (revenue E cost of goods sold)%revenue) B%$'' " (B'*'''*''' E cost of goods sold)%B'*'''*'''



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c) B%$'' F B'*'''*''' " B'*'''*''' E cost of goods soldd) @4'''''' " B'*'''*''' E cost of goods solde) 5ost of goods sold " B'*'''*'''@4'*''*'''f) 5ost of 0oods 1old " $@'*''*'''

" Requirement no 3 . 5alculate the value for operating profit margin2

@. o!utiona) perating profit margin " operating income % revenue) 38%$'' " operating income % B'*'''*'''c) 38%$'' FB'*'''*''' " operating incomed) perating income " DB'*''*'''

; Requirement no #. 5alculate the value for perating e-penses2

B o!utiona) perating e-penses " (gross profit E operating income)) perating e-penses " @4'*''*''' E DB'*''*'''c$ %perating e&pen'e' ( 3)0,00,000

d) Net profit margin " Net profit(after ta-) % revenue F $''e) '.B " Net profit (after ta-) % B'*'''*'''f) '.BFB'*'''*''' " Net profit (after ta-)g) *et profit(after ta-) " @4*''*'''

G. Requirement no ". 5alculate the value for ?arnings availale for commonstockholders2

$'. o!utiona) ?arnings availale for common stockholders " Net profit (after ta-) "

@4''''') !eturn on assets " Net income % otal assetsc) $@%$'' " DB'''''' % otal assets

$3 Requirement no ). 5alculate the value for total assets2

$4 o!utiona) 1ince operating income is also called net income) otal assets " DB'*''*''' % ($@%$'')



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c) otal assets " $;8'*''*'''

$8 Requirement no +. 5alculate the return on common e>uit/2

$@ o!ution

a) !eturn on 5ommon ?>uit/ " Net income(after ta-) % share holder=s e>uit/) D'%$'' " @4*''*''' % share holder=s e>uit/c) 1hare uit/ " @4''''' % '.Dd$ are -o!der' /quity ( 32000000

e) otal sset turnover " 1ales % verage otal ssets

f) D " B'*'''*''' % verage otal ssets

g) verage otal ssets " B'*'''*''' % D

$ erage ota! ''et' ( #00,00,000

$;. Requirement no . 5alculate the ccount !eceivale*assuming 3@' da/s in afinancial /ear2

$B. o!utiona) verage 5ollection &eriod " (#a/s F ccount !eceivale)%5redit 1ale

) We assume total sale as 5redit 1ale

c) ; da/s " ( 3@' F ccount !eceivale) %B'*'''*'''

d) B'*'''*''' F ; " 3@' F ccount !eceivale

e) B'*'''*''' F ; % 3@' " account receivale

f$ ccount Receiab!e ( 1","","""

hat is the !asic goa" of a corporation#

nswer3 4he traditiona" answer is that the managers of the corporation are o!"iged to ma&e

efforts to maimi7e shareho"der wea"th. "ternative"y, the goa" of the financia" manager is tomaimi7e the current va"ue per share of the eisting stoc&.

g

/uestion3 hat is the difference !etween 8ross or&ing apita" and *et or&ing apita"#



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nswer3 4he term 8ross or&ing apita" refers to tota" current assets whereas *et

or&ing apita" is equa" to tota" current assets minus tota" current "ia!i"ities.

h

/uestion3 hat ro"e a 9inancia" :anager is supposed to p"ay #

nswer3 4o create va"ue, the financia" manager shou"d3 ) try to ma&e smart investment

decisions. ) try to ma&e smart financing decisions.

i

/uestion3 ;ow many &inds are there of !usiness structures#

nswer3 4here are three main &inds of !usiness structures3 ) So"e)proprietorship )

nvestment ) 9inancia"

>nstitution ) >nternationa" 9inance

n

/uestion3 hat u"timate o!=ective shou"d !e achieved !y ma&ing a capita" structure#

nswer3 4he u"timate o!=ective whi"e ma&ing a capita" structure is to maimi7e the overa""

va"ue of the firm.

o



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/uestion3 hat is meant !y the term Aapita" @udgetingA#

nswer3 apita" @udgeting is the process of p"anning ependitures on assets whose cash

f"ows are epected to etend !eyond one year. >n other words, the process of

p"anning and managing a firmBs "ong)term investments.

p

/uestion3 ;ow the !usiness structure ASo"e)


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8. o!utiond 8ross profit + sa"e ) cost of goods so"de 8ross profit + C0,000,000 D 1(0,00,000f 8ross profit + (%,000,000

@. Requirement no 2 . 5alculate the value for 5ost of goods sold2

%. #o$ution

g 8ross profit margin ratio + -revenue D cost of goods so"d6revenueh C6100 + -C0,000,000 D cost of goods so"d6C0,000,000i C6100 E C0,000,000 + C0,000,000 D cost of goods so"d

= (%000000 + C0,000,000 D cost of goods so"d& ost of goods so"d + C0,000,000)(%0,00,000

l) 5ost of 0oods 1old " $@'*''*'''

) Requirement no 3 . 5alculate the value for operating profit margin2

(. #o$ution

e Operating profit margin + operating income 6 revenuef 56100 + operating income 6 C0,000,000

g 56100 EC0,000,000 + operating incomeh Operating income + 2C0,00,000

F %e&uirement no 4' a"cu"ate the va"ue for Operating epenses#

C #o$ution

h) perating e-penses " (gross profit E operating income)i Operating epenses + (%0,00,000 D 2C0,00,000() *perating e+penses , !0"00"000& *et profit margin + *et profit-after ta 6 revenue E 100" 0.C + *et profit -after ta 6 C0,000,000m 0.CEC0,000,000 + *et profit -after tan .et profit-after ta + (%,00,000



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G. %e&uirement no 5' a"cu"ate the va"ue for Harnings avai"a!"e for common

stoc&ho"ders#

10. #o$ution

d Harnings avai"a!"e for common stoc&ho"ders + *et profit -after ta +(%00000

e eturn on assets + *et income 6 4ota" assetsf 1(6100 + 2C000000 6 4ota" assets

1 %e&uirement no ' a"cu"ate the va"ue for tota" assets#

1% #o$ution

d) 1ince operating income is also called net incomee) otal assets " DB'*''*''' % ($@%$'')f) otal assets " $;8'*''*'''

15 %e&uirement no /' a"cu"ate the return on common equity#

1( #o$ution

i eturn on ommon Hquity + *et income-after ta 6 share ho"derIs equity= 206100 + (%,00,000 6 share ho"derIs equity& Share ;o"derIs Hquity + (%00000 6 0.2$) #are o$ders 3&uity , !2000000

m) otal sset turnover " 1ales % verage otal ssets



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n) D " B'*'''*''' % verage otal ssets

o) verage otal ssets " B'*'''*''' % D

p$ erage ota! ''et' ( #00,00,000

1F. %e&uirement no ' a"cu"ate the ccount eceiva!"e,assuming (0 days in a

financia" year#

1C. #o$ution

r) verage 5ollection &eriod " (#a/s F ccount !eceivale)%5redit 1ale

s) We assume total sale as 5redit 1ale

t) ; da/s " ( 3@' F ccount !eceivale) %B'*'''*'''

u) B'*'''*''' F ; " 3@' F ccount !eceivale

v) B'*'''*''' F ; % 3@' " account receivale

4$ ccount Receiab!e ( 1","","""

ynta+ Corporation as te fo$$oing capita$ structure6

Deentures , 7 !'2 Bi$$ion

Common sares , 7 '52 Bi$$ion

8ota$ , 7 9'/ Bi$$ion

8e corporation as no preferred stocs in its capita$ structure' :nder te pre;ai$ing

maret conditions" financia$ ana$ysts a;e estimated a return of 1!< p'a for common

sare of te corporation' Deentures carry an interest rate of 9'55)



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So"ution

Case6 01

#ynta+ Corporation6

?i;en Information6

Deentures >D) 7 !'2 Bi$$ion

Common sares >3) 7 '52 Bi$$ion

8ota$ Capita$ #tructure inc$uding det and e&uity >@) 7 9'/ Bi$$ion

eturn on common stoc& 1.0 J

eturn on de!enture G.5 J

orporate 4a G J

=eigted a;erage cost of capita$ >=ACC)

=eigted a;erage cost of capita$ , >3&uity 8ota$ Capita$)Cost of %etained earning

>Det 8ota$ Capita$) Cost of det > 1 E Corporate ta+ rate)

=ACC , >3@) %e >D@)%d >1 E 8)

+ -$ (.52 !i""ion 6 $ G.FC !i""ionE 1J -$ .2( !i""ion 6 $ G.FC !i""ionEG.5 J- 1 D

GJ

+ -.(((FE.1 -.E.0G5-.(1

+ .0C((F1 .01G1%

+ .105GC5



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+ 10.5GC5J

+ 10.(0J

4he tota" weighted average cost of capita" for #ynta+ Corporation is 10'0


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a"cu"ate the NPVand IRRfor !oth pro=ects. hich pro=ect shou"d !e chosen and hy#

%*J3C8 A6

.et resent @a$ue >.@)6

* o L916-1rM L926-1r2M L96-1rM L9%6-1r%M L956-1r5M

+ ) 2%0,000 L 1%0,000 6 -1.11 M L C0,000 6 -1.112 M L (0,000 6 -1.11 M

L 20,000 6 -1.11% M L 20,000 6 -1.115 M

+ )2%0,000 - 1%0,000 6 1.11 - C0,000 6 1.221 - (0,000 6 1.(F(

- 20,000 6 1.51C1 -20,000 6 1.(C51

+ ) 2%0,000 12(,12( (%,G0 %,CF2 1,1F% 11C(G

+ ) 2%0,000 25G,GF1

.@ , %s' 19"9/1

Interna$ %ate of %eturn >I%%)6

> can !e ca"cu"ated !y tria" and error method3

t 11 J discount rate3



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*


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+ 15 0.FG%%

I%% , 15'/9 uit/ 8 marks



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What are the contents of the indentures 3 marks

/uestion P 1 - :ar&s

:ethod of a"cu"ating ?ie"d to :aturity#

/uestion P 2 - :ar&s

what is meant !y tota" assets management ratios# name any common ratio under thiscategory#

/uestion P -5 mar&s

@ond va"uation *umerica" question, given from discount !ond va"uation.#

/uestion :ateria"3

face va"ue + 1000

annua" coupon + C0

t + 15 years

:ar&et va"ue of the identica" !ond + 10J

/uestion P % -5 :ar&s

9ind the de!t equity# when profit margin ratio + 10J, 4ota" ssets 4urnover + 1.5times, OH

+ 15.F0J.

a"" the a!ove are the su!=ective questions with mied o!=ective questions, most"y from the !ond

va"uation, atios, Hnding 5 chapters are more important for o!=ective


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total >sns "D;

M5Q7s " DD

short >sns " 8

3 marks " 3 >sns

8 marks " D >sns.

1. hat do profita!i"ity ratios measure# *ame common"y used ratios used in thisregard. -

2. rite down the content of !ond indenture. -

.

%. hy the present va"ue of an ordinary annuity is "ess than that of an annuity due#

-5. rite interna" and eterna" uses of financia" statements information. -5

(. 9ind out the current price of the stoc& in the fo""owing case3 -5

(a). Mr sad u/s a share of stock toda/* with a plan to sell it in a /ear. its worth will e!s. G' at that time. along with a dividend pa/ment of !s. $' per share. !e>uired !ate ofreturn on investment is D8C.

(). 1N corporation has polic/ of pa/ing !s $8 per share dividend per /ear. hispolic/ is to continue definitel/ with a re>uired rate of return of D'C.

company has tota" annua" sa"es -25J on cash !asis of s.,000,000 and a gross

profit margin of 20 J. >ts current assets are s. 500,000Q current "ia!i"ities are s.

%0,000Q inventories are s. 2(0,000Q and cash is s. (0,000. a"cu"ate3 -a ;ow much

average inventory shou"d !e carried if management wants the inventory turnover to !e 5 times#

and -! ;ow rapid"y -in how many days must accounts receiva!"e !e co""ected if management

wants to have an average of s.2%0,000 invested in receiva!"es# -ssume a (5)day year.

Mid term e+amination Ha$$ 2011

My today paper of ACC501

4here were 2 questions having tota" %5 mar&s

2G :/ 2 *umerica" and 2 su!=ective questions

most of the :/s were from Necture no 0C to onward



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/ no 2G3 hat is the difference !etween nomina" and rea" rate of return# mar&s

/ *o3 03 if the equity mu"tip"ier is 1.(0 profit margin CJ and tota" annua" turnover is 1.2 find

the OH#

/ *o 13 ompare the return on stoc& !ond and ris& on stoc& !ond# 5 mar&s

/ 23 > forgot the va"ues !ut numerica" was a!out ma+imum sustaina$e rate of grot

Ist dec

Difference eteen det and e&uity mars!Difference eteen rea$ and nomina$ rate mars5*ne is re$ate to det e&uity ratio formu$a mars!y is te rate of ordinary e&uity is $ess ten annuity due mars!and mc&s are a$$ aout te formu$a of ratioLsy an ordinary annuity is $ess tan annuity due mars !Difference eteen semiannua$ and &uarter$y coupon onds mars !=at is meant y protecti;e co;enant' o it can e c$assified'Descrie in detai$ mars 5%*A percent" di;idend payout ratio !0 percent" profit margin is 5 percent' ca$cu$atema+imum sustaina$e rate' mars 5

?acc"01 midterm no 2011 paper @ 'are ur paper?

ppr bht easy tha mcqs bi bht easy thy

total 32 qtn

28 mcqs

short qtn

fisher effect with example

why ordinary annuity is less than the annuity due

internal and external use of financial statement

bond wit face value $1000 coupon rate 80 with 10 % maturity a

for the 15 years

calculate bond valu

acc"01 current today paper' upa!od no444



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M/ paper was awesometotal 3D >uestion

DB mc>s which were mostl/ from ratio anal/sisand ,N#1 relatedlong >uestion were

$: dividend pa/out and retention ratio and theirrelationship

D: calculation of real interest rate when nominalrate and inflation was given.3: how we calculate the /ield to maturit/ of aond4:AH calculation 2 when principal was $D'''and GC interest rate four /ears investmentperiod.

28 MCQs

difference between public issued bond and public bond

(3)why value of ordinary annuity is less than due annuity?

(3)

What is dividend payout and retension ratio? and their



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relationship? (5)

calculate real rate if

a) o!inal rate is "5# and inflation rate is $#b)o!inal rate is "2# and inflation rate is 5#

what is optimal credit policy state? 3

what is difference between market value and book value? 3

how cost of debt can be measured? 3

define benchmarking and its method? 5

find out portfolio? 5

find out capita gain and dividend yeild and total percentage of return? 5describe difference type of firm's inventory and retail business? 5

what is the best cash policy

paper consists of 69 Questions

out of which 62 are multiple choice out of which some are from !ast papers

ACC501 CurReNT PAPER FINAL TRM FEBRUARY 2011

Question having total marks 03. are

"# $hat does %&tand alone principle% state

2# $hat does %ptimal credit !olicy% state

3# (dentify systematic and unsystematic risk from followings

"# (nterest )ate

2# &trike call in a company

3# *ross +omestic product

Question having total marks 05. are

"# !repare a !ro,ected income statement

2# +efine the term%-ankruptcy% and types of -ankruptcy cost

3# !repare li.uid )atios from a given -alance sheet

/# +efine following 0erms1

"# perating ycle

2# ash cycle



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3# (nventory !eriod

/# 4) !eriod

5# 4! !eriod

##

what is optimal credit policy state? 3

what is difference between market value and book value? 3

how cost of debt can be measured? 3

define benchmarking and its method? 5

find out portfolio? 5

find out capita gain and dividend yeild and total percentage of return? 5

describe difference type of firm's inventory and retail business? 5

what is the best cash policy
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acc 501 midterm solved papers long questions solved

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