Finance CAP Task 2

Answer 1

Increase
Shareholders' Cash Flow
S. No. Cash + Other Assets = Liabilities + /
Funds Category
Reduce
1,20,000 -
1&2 - - 57,500 No change
62,500
3 1,25,000 -1,25,000 - - Operating Increase
4 -9,00,000 - -9,00,000 - Financing Reduce
5 No Impact No change
6 -1,00,000 1,00,000 - - Investing Reduce
7 - 65,000 65,000 - No impact
8 -62,500 - 62,500 - Operating Reduce
9 - - 9,000 -9,000 No change
10 -4,500 - -4,500 - Financing Reduce
11 10,00,000 - - 10,00,000 Financing Increase
12 -95,000 3,95,000 3,00,000 - Investing Reduce
13 - - 7,800 -7,800 No change
14 - -4,650 - -4,650 No change
Question 2

1. Did Byte City’s cash and cash equivalents increase or reduce in 1999? In 2000? Why?
Byte City’s cash equivalents decreased in 1999. In the years 1999 and 2000 the
corporation has used up a lot a in investing activities. The employee spent huge
quantities on acquisition of capital goods like equipment and plant, land and
constructing. The agency may have financed the quantity invested thru mortgage,
debentures or problem of shares in 1999, as the organization has received coins from
financing sports to the music of $31. 67 million in opposition to $33. 94 million was
spent in investment sports.

2. How would you assess Byte City’s cash flows from operating activities?
Byte City’s cash flows from operating activities have seen a 5-fold leap from $0.59
million to $2.96 million. The organization’s growth plan may have been completed in
1999 thanks to which Byte City’s standard performance has advanced and led to better
earnings, therefore better coins flows from running sports. The company was supposed
to have higher coins flows from operating because it had invested a big amount in 1999
and no alternate in coins flows from operating activities could had been a factor for the
type of situation they were in
If Byte City purchased other companies in 1999 for more than $47 million, and
borrowedalmost $37 million, how does this new information affect your answer in
(b)?
If the organization has invested a quantity as massive as 47 million for buy of any other
agency and borrowed $37 million for the equal, it was necessary for Byte City to face
such projection. The organisation had borrowed the amount for investment and absence
of additional cash float could have created burden in the form of interest price of extra
amount borrowed. Such a situation might have been problematic for Byte City and
raised questioning over its image. Funding by means of Byte City had a major role to play
in improving the cash motion from operation.

3. If Byte City made zero payments on long-term debt in 1999, but its payments in 2000
totalled more than $26 million, evaluate its financing strategies?
The employer did no longer pay its long-term debt in 1999 but made bills totalling extra
than $26 million in 2000 shows that Byte City has restructured mortgage can be as a
problem of cheaper mortgage available in 2000. Organisation may additionally have paid
off their preceding loan and acquired a new mortgage at reduce hobby charges to shop
a large amount on interest value make their profitability better.

Question 3
Sales- Rs. 1000000, Trade Receivables: Rs. 180000, Cash: Rs. 50000, Marketable
securities:Rs.80000, Inventory at end: Rs.100000, inventory at beginning: Rs.60000, Bills
payable:Rs.20000, Creditors: Rs.100000, Expenses payable: Rs.80000, Long term loans: Rs.
2000000,Shareholder’s funds: 1000000, Net Profit before tax: Rs. 300000. Tax @ 30%, Gross
profit is20% of sales. Calculate the ratios.

A. Current Ratio = Current Assets / Current Liabilities

= 4,10,000 / 2,00,000
= 2.05

B. Quick Ratio = (Current Assets – Inventory) / Current Liabilities

= 3,10,000 / 2,00,000
= 1.55

C. Debt-Equity Ratio = Long Term Debt / Equity Shareholders’ Funds

= 20,00,000 / 12,10,000
= 1.65

D. Shareholders’ Ratio = Shareholders’ Equity / Total Assets

= 12,10,000 / 4,10,000
= 2.95

E. Return on Investments = (Net Profit *100) / Capital Employed

= (2,10,000 *100) / 30,00,000
= 7%

F. Assets Turnover Ratio = Sales / Total Assets

= 10,00,000 / 34,10,000
= 0.29

G. Inventory Turnover Ratio = Cost of Sales / Average Inventory

= 8,00,000 / 80,000
= 10

H. Net Profit Margin = (Net Profit * 100) / Sales

= (2,10,000 * 100) / 10,00,000
= 21%

Question 4
Ascertain the missing items (A, B, and C) in the following situation for the year 2019:
Assets, January 1 : $10,000
Assets, December 31: $14,000
Liabilities, January 1: A
Liabilities, December 31: $ 7,000
Owners’ equity, January 1: $ 8,000
Owners’ equity, December 31: B
Owners’ contributions in 2016: 0
Owners’ withdrawals in 2016: C
Net income: $ 2,000

A = $10,000 – $8,000
= $2,000

B = $14,000 - $7,000
= $7,000

C = $8,000 + $2,000 + 0 - $7,000

= $3,000