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CF Final PDF

The document is an assignment for a corporate finance subject for PGDM Batch 2019-2021 at GLBIMR. It provides details of the assignment such as the academic session, term, subject name, faculty name, section, and contact details. It also lists the name, section, GM number, and PGDM number of the student - Shwetark Singh from Section D.

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abhishek tyagi
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101 views4 pages

CF Final PDF

The document is an assignment for a corporate finance subject for PGDM Batch 2019-2021 at GLBIMR. It provides details of the assignment such as the academic session, term, subject name, faculty name, section, and contact details. It also lists the name, section, GM number, and PGDM number of the student - Shwetark Singh from Section D.

Uploaded by

abhishek tyagi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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ASSIGNMENT

PGDM BATCH-2019-2021
Academic session 19-21
Term-3
Type-Mid term
Subject- Corporate Finance
Faculty Name-Dr. Anu Thakur
Section-D
E-mail – [email protected]
Phone no.- 8146204814

Name-Shwetark Singh
Section – D
GM-19200
PGDM-19243
ANS 1:

Let’s know the four major decision of financial management and they are:

 Financing Decision- When, where and how to acquire funds.


 Investment Decision- It is concern with capital budgeting decisions.
 Dividend Decision- whether the firm should distribute all profits, or retain them
or distribute a portion and retain the balance.
 Liquidity Decision- How to maintain the liquidity in an organization.

My minor project company is Bridgestone. The annual statement of the company is attach in
the mail. According to the annual statement of the Bridgestone the company had taken the
decision in every sector of Financial Management. The annual statement is of Financial year
2018.

So talking about the decision taken by Bridgestone are:

1: Financing Decision:

By studying the Balance sheet and the other financial statement in the annual
statement I get to know no new fund is raised from any source of finance. Mostly the
repayment is done more as compare to the proceeds from these sources.

For example: Repayment of long term debts is done by the Bridgestone and
proceeds where made less as compare to repayment of debts.

2: Investment Decision:

By studying the annual statement, I came to know the Bridgestone had invested a
lot in various things which is a capital expenditure (Non-current Assets) by the
company. It is near about 59,288 million YEN. Even the company also gets the
proceeds from the sale of old non-current assets. Even the company also invested
the amount in Intangible assets too.

3: Dividend Decision:

Annual Statement tells, the company had a nice profit due to that the company had
more profit as compare to the year 2017. Even company had Retained earning too.
Some part of profit is also kept in Retained earnings and other is distributed to the
shareholders. And we can say that it is nearly about 20,000 million YEN which the
company kept for its retained earnings and we can see it in clearly in the balance
sheet of the company.

4: Liquidity Decision:

The current assets of the company are less as compare to the 2017. But the current
ratio is same as it was previous year. They had controlled over the working capital
which is 1,077,408 million YEN. So it is good for the company to have that much
working capital that also help to maintain the current assets over current liabilities
that too its double of the current liabilities.
ANS 2:

The Balance sheet of the Bridgestone is given in the Annual Report so the data is taken from
the Annual Report which is attach is the mail.

Let’s come to the answer, there are mainly four sources of finance in an
organization, from which the company generate their funds. They are:

 Debenture/ loan
 Preference share
 Equity
 Retained Earning

Here is some description about their holders or we can say the introduction:

 Debenture holder: Creditor for the company.


 Preference shareholder: partial owner of the company which carry preferential
rights over equity shareholder.
 Equity shareholders: Owner of the company
 Retained Earnings: It is the saving or we can say it’s an undistributed profit of
the company which company use for its future benefits.

(i) Raising fund from long term debts:


Bridgestone did not issue the debenture but it had taken long term loan from the
bank which we can see in the Financing activities in cash flow that is 15,824 million
YEN. The rate of the bank loan is 3% which we can see in the working note 6. The tax
rate is 30.8% which is taken from note 13.

Here is the formula to calculate the cost of loan:


After-tax cost of debt
Kd = Interest (1- tax rate) / Amount Received
=[(15824*3/100)(1-30.8/100)]/15824
=328.7/15824
=0.020
=0.020*100
=2.07%

(ii) Raising of funds by Preference shares:


So there is no preference share issued by the company(Bridgestone). So
there is nothing to calculate for cost of capital of preference share.

(iii) Raising of funds by Equity shares:


There is no equity share is issue even the 51,565,900 shares is being
cancelled by the company. Data taken from note number 8.
(iv) Retained Earnings:
From page number 4, under the heading of equity we get to know the return on
equity is 12.4%, and the market price of share is 3,384 this value is taken from the
internet.
The formula of retained earnings are:
= Kr = D1 / P0
= 12.4 / 3,384
=0.36%

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