Exercise = WC - 01

While preparing a project report on behalf of a client you have collected the
following facts. Estimate net working capital required for that project. Add 10% to
your computed figure to allow contingencies

Raw materials Per unit Tk.80

Direct labour Per unit TK.30

Overheads Per unit Tk. 60

Total cost Per unit Tk.170

Selling price per unit Tk.200

The following is the additional information available :

Level of activity 1,04,000 units of output.

Raw materials in stock average 4 weeks.

Work in progress ( 50% complete ) average 2 weeks.

Finished goods in stock average 4 weeks.

Credit allowed by suppliers average 4 weeks.

Credit allowed to Debtors average 8 weeks.

Lag in payment of wages 1 weeks.

Cash at bank expected to be Tk.25,000

You may assume that production is carried on evenly throughout the year (52
weeks). All sales are on credit basis only.
Problem: CF-1
The comparative Balance sheets of James Dyman Company are presented below:-

Particulars 2013 2012

Assets : Tk. Tk.
Cash 55,000 33,000
Accounts Receivable 20,000 30,000
Inventory 15,000 10,000
Prepaid expenses 5,000 1,000
Land 1,30,000 20,000
Building : 1,60,000 40,000
Accumulated depreciation (11,000) (5,000)
-building
Equipment : 27,000 10,000
Accumulated depreciation (3,000) (1,000)
-equipment
Total assets : 3,98,000 1,38,000

Particulars 2013 2012

Tk. Tk.
Liabilities and Shareholder
Equity :
Accounts payable 28,000 12,000
Income tax payable 6,000 8,000
Bonds payable 1,30,000 20,000
Common stock 70,000 50,000
Retained earnings 1,64,000 48,000
Total Liabilities and 3,98,000 1,38,000
Shareholders equity
 James Dyman Company
Income Statement
For the year ended December 31, 2013.

Particulars 2013 2012

Tk. Tk.
Net sales revenue - 5,07,000
Less : Cost of goods sold 1,15,000 -
Less : Operating expenses 1,11,000 -
(excluding depreciation)
Depreciation expense 9,000 -
Interest expense 42,000 -
Loss on sale of equipment 3,000 3,15,000
Income before income taxes - 1,92,000
Income tax expense - 47,000
Net Income 1,45,000

Additional information for 2013:

a. The company declared and paid Tk. 29,000 cash dividend.

b. Issued Tk. 1,10,000 of long term bonds in exchange for land.
c. A building costing Tk. 1,20,000 was purchased for cash. Equipment costing Tk. 25,000
was also purchased for cash.
d. The company sold equipment with a book value of Tk. 7,000 (cost Tk. 8,000 Less
accumulated depreciation Tk. 1,000) for Tk. 4,000 cash.
e. Issued common stock for Tk. 20,000 cash.
f. Depreciation expense was comprised of Tk. 6,000 for building and Tk. 3,000 for
equipment.

Required:
Prepare a statement of cash flow for 2013, under the indirect method.
Problem: CVP :
From the following data, calculate ;
I. Break Even point expressed in units and in taka.
II. Number of units that must be sold to earn a profit of Tk. 1, 20,000
per year.
III. How many units are to be sold to earn a net income of 15% of
sales?
IV. Number of units to be sold to earn a target profit of Tk. 1, 05,000
after income tax. (Assume Income Tax Rate to be 50%)

TK.
Selling price per unit 40
Variable manufacturing cost per 22
unit
Variable selling cost per unit 3
Fixed factory overheads 1,60,000
Fixed selling cost 20,000
Exercise: IBBL-2014
The information below is taken from the records of two companies in the same industry:

(Amount in ,000)

P. Ltd. Q. Ltd.
Tk. Tk.
Cash 210 320
Debtors-net 330 630
Stock 1,230 950
Plant and equipments 1,695 2,400

Total Assets 3,465 4,300

Sundry creditors 900 1,050

8% Debentures 500 1,000
Equity Share capital 1,100 1,750
Retained earnings 965 500

3,465 4,300

Sales 5,600 8,200

Cost of goods sold 4,000 6,480
Other operating expense 800 860
Interest expenses 40 80
Income taxes 380 390
Dividends 100 180

Ans wer each of the following questions by making a comparison of one or more relevant
ratios:

a) Which company is using the shareholders' money more profitably?

b) Which company is better able to meet its current debts?
c) If you were to purchase the debentures of one company, which company's debentures
would you buy?
d) Which company collects its receivable faster assuming all sales to be credit sales?
e) Which company retains the larger proportion of income in the business?