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MMPF 001

Mmpf 001 paper

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50 views2 pages

MMPF 001

Mmpf 001 paper

Uploaded by

amitsinghkst
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

Course Code : MMPF-001


Course Title : Working Capital Management
Assignment Code : MMPF-001/TMA/ JULY/2024
Coverage : All Blocks

Note: Attempt all the questions and submit this assignment to the Coordinator of your
study centre. Last date of submission for July 2024 session is 31 st October, 2024
and for January 2025 session is 30th April 2025.

1. Discuss the Industry Norm Approach and Economic Modelling Approach to the determination
of working capital.

2. The Profit and Loss Account for the year ended 31st March, 2024 and the Balance Sheet as on
that date, for Alpha Ltd. is as follows:

Profit and Loss Account for the year ended 31 st March, 2024

Particulars Rs. Lakhs Particulars Rs. Lakhs


Opening stock 1.75 Sales : Credit 12.00
Add: Manufacturing costs 10.75 Cash 3.00
12.50
Less: Closing stock 1.50
Cost of goods sold 11.00
Gross Profit 4.00
15.00 15.00
Administrative expenses 0.35 Gross Profit 4.00
Selling expenses 0.25 Other Income 0.09
Depreciation 0.50
Interest 0.47
Income –tax 1.26
Net Profit 1.26
4.09 4.09

Balance Sheet as on 31st March, 2024

Liabilities Rs. Lakhs Assets Rs. Lakhs


Equity shares of Rs. 10 each 3.50 Plant and machinery 10.00
10% Preference shares 2.00 Less: Depreciation 2.50
Reserves and Surplus 2.00 Net plant and machinery 7.50
Long-term loan (12%) 1.00 Goodwill 1.40
Debentures (14%) 2.50 Stock 1.50
Creditors 0.60 Debtors 1.00
Bills Payable 0.20 Pre-paid expenses 0.25
Accrued expenses 0.20 Marketable securities 0.75
Provision for tax 0.65 Cash 0.25
12.65 12.65

The market price of the shares of Alpha Ltd. on 31 st March, 2024 is Rs. 45

(Rs. Lakhs)

Reserves at the beginning 1.465


Net Profit during the year 1.260
2.725
Preference dividends 0.200
Equity dividends 0.525
Reserves at the close of year 2.000

Calculate the following Ratios – (1) Current ratio (2) Quick ratio (3) Debt- equity ratio (4)
Interest coverage (5) Fixed charge coverage (6) Stock turnover (7) Debtors turnover (8) Average
collection period (9) Gross profit margin (10) Net profit margin (11) Operating ratio (12) Return
on capital employed (ROCE) (13) Earnings per share (14) Return on shareholders’ equity (15)
P/E ratio and (16) Earning yield.

3. How does uncertainty affect Inventory Management? Explain any one model of Inventory
Management under the condition of uncertainty.

4. Explain the significance of trade credit. What are the factors that influence the availability of
trade credit?

5. Select any Small or Medium Enterprise (SME) of your choice. Discuss with them about why
they need to manage working capital and how it is done. What are the various barriers faced
by them in optimization of working capital.

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