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ACC501 Business Finance Assignment 1 Solution Fall 2013

QUESTION:
ABC Company is engaged in manufacturing of electronic appliances. Following are the income statement and comparative balance sheet of ABC Company for the years 2010 and 2011. You are required to prepare Cash Flow Statement for ABC Company for the year ended 31st December, 2011 and Common Size Income Statement.
Cash Flow Statement Marks:15
Common Size Income Statement Marks:05

 

 

Notes:
1. Sales of old Machinery for Rs. 100,000 and purchased new for Rs. 150,000.
2. Purchased new land and building costing Rs. 150,000 for storing inventories.
3. Issued long-term 10% interest bearing bond of Rs. 126,000 and previously issued bonds also have the interest rate of 10%.
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.

Solution:

ABC Company Limited

Statement of Cash Flow

As on 31st December 2011

Sr. No.

Particular

Notes

Amount

(Rs.)

1.

 

 

2.

 

 

 

 

3.

 

 

 

 

 

 

4.

 

 

 

 

5.

Net Income before Tax

Add. Depreciation

Operating Profit Before Working Capital changes

(Increase) / Decrease in C. Assets

Less: Increase in Marketable Securities

Add: Decrease in Accounts Receivables

Less: Increase in Inventories

 

Increase / (Decrease) in C. Liabilities

Less: Decrease in Accounts Payable

Less: Decrease In Notes Payables

Less: Decrease in Accruals

Cash Generated From Operations

Less: Income Tax Paid

Net Cash Flow from Operations

Cash Flow From Investing Activities

Sale of Old Machinery

Less: Purchase of New Machinery & Equipment

Less: Purchase of New Land & Building

Net Cash Flow From Investing Activities

Cash Flow from financing Activities

Less: Dividend Paid

Add: New Bonds Purchased

Net Increase in Cash & Cash Equivalents

Opening Balance of Cash & Cash Equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

W-1

204,000

 72,000

276,000

   (5,000)

   5,000

  (13,000)

 263000

  (10,000)

    (5,000)

  (15,000)

 233,000

  (71,400)

 161,600

 100,000

 (150,000)

 (150,000)

  (38,400)

 (82,600)

126,000

    5,000

  10,000

  Closing Balance of Cash & Cash Equivalents  

  15,000

 

Working Notes

(W-1) Calculation of Dividends                                              Amount in Rupees

Retained Earnings In 2010                                                                    100,000

Add Net Income                                                                                          132,600

232,600

Less Retained Earnings In 2011                                                             150,000

Dividends                                                                                                    82,600           

 

ABC Company Limited

Common Size Statement

As on 31st December 2011

Sr. No. Particular

Amount

(Rs.) 2010

Amount

(Rs.) 2011

Percentages
2010 2011
1.

2.

 

 

 

 

3.

 

 

 

 

 

 

 

 

 

4.

5.

 

 

 

 

6.

 

7.

Assets

Current Assets

Cash

Marketable Securites

Accounts Receivables

Inventories

Total Current Assets

Fixed Assets

Land & Building

Machinery & Equipment

Furniture & Fixture

Others

Gross Fixed Assets

Less: Accumulated Depreciation

Net Fixed Assets

Total Assets

Shareholder’s Equity & Liabilities

Current Liabilities

Accounts Payables

Notes Payable

Accruals

Total Current Liabilities

Long Term Liabilities

Long Term Debts

Shareholder’s Equity

Common Stock

Retained Earnings

Paid-in-capital in excess of par

Total Shareholders’ fund

Total Shareholder’s Equity & Liabilities

 10,000

 20,000

 65,000

 45,000

140,000

 

300,000

230,000

120,000

 50,000

700,000

 56,000

644,000

784,000

 50,000

 40,000

 45,000

135,000

 94,000

350,000

100,000

105,000

555,000

784,000

 15,000

 25,000

 60,000

 58,000

158,000

450,000

280,000

120,000

 50,000

900,000

128,000

772,000

930,000

 40,000

 35,000

 30,000

105,000

220,000

350,000

150,000

105,000

605,000

930,000

1.28 %

2.55 %

8.30 %

5.74 %

17.86 %

38.26 %

29.37 %

15.31 %

6.38 %

89.28 %

7.14 %

82.14 %

100 %

6.37 %

5.10 %

5.74 %

17.22 %

12.00 %

44.64 %

12.75 %

13.40 %

70.80 %

100 %

1.61 %

2.70 %

6.45 %

6.24 %

17.17 %

48.40 %

3011 %

12.90 %

5.38 %

96.77 %

13.76 %

83.01 %

100 %

4.30 %

3.76 %

3.23 %

11.30 %

23.66 %

37.63 %

16.13 %

11.30 %

65.05 %

100 %

 

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