Individual/Group Assignments (Optional)

Assignment 1:
1. Income Statement and Balance Sheet are two important frameworks to analyse the
financials of a corporation. Download a company’s financial statements (Balance Sheet
and Income Statements) and convert them to a standard form.

Objective: (a) Get familiarity with the industry data, (b) Convert the industry data to a
workable format to analyse better.

PS: A sample format is attached for your reference

Income Statement
  Mar-20 Mar-19
  12 months 12 months
Gross Revenue 48,000 44,500
GST & Other Levies 9,000 8,500
Net Revenue 39,000 36,000
Cost of Goods Sold 28,000 27,500
Other Expenses 2,000 2,000
EBITDA 9,000 6,500
Depreciation & Amortization Expenses 1,200 1,000
EBIT 7,800 5,500
Interest Expenses 400 350
PBT 7,400 5,150
Tax 2,400 1,650
PAT 5,000 3,500
Dividend Paid (including DDT) 2,400 1,500
Cash Transfer (to BS reserves) 2,600 2,000
*For simplicity, gross revenue here includes income from all the activities (Operating, Financing, &
Investing)

Balance Sheet (as on)

  Mar-20 Mar-19   Mar-20 Mar-19
Assets Equities & Liabilities
Fixed Assets 10,000 8,000 Equity Share Capital 3,000 3,000
Other Fixed Assets 1,200 2,500 Reserves and Surplus 10,000 6,700
Non-Current Assets 11,200 10,500 Total Shareholders’ Funds 13,000 9,700
Inventories 4,000 3,000 Long-term Borrowings 6,500 6,700
Trade Receivables 4,000 3,000 Other LT Liabilities 2,900 2,800
Cash & CE 2,400 2,000 Non-Current Liabilities 9,400 9,500
Other Current Assets 1,000 900 Short-term Borrowings 2,200 2,500
Total Current Assets 11,400 8,900 Trade Payables 3,000 2,900
Long-term Investments 5,000 5,000 Other Current Liabilities 2,000 1,800
Other Assets 2,000 2,000 Total Current Liabilities 7,200 7,200
Total Assets 29,600 26,400 Total Liabilities 29,600 26,400

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 Assignment – 2
1. Based on the TVM case, solve for the following:
a) Net gain (loss) when the house is sold after year five and year ten (Assume LTCG tax
of 10% without indexation)
b) Net gain (loss) when the house is sold after the fifth and tenth years. (Assume LTCG
tax of 20% with 5% YoY Indexation)

Assignment – 3
Read the news articles and critically analyse the following using Corporate Finance principles
and concepts of Financial Markets and Macroeconomic Dynamics.

https://epaper.livemint.com/Home/ShareArticle?OrgId=1811d053aaba&imageview=0

https://www.bloomberg.com/news/articles/2020-11-17/world-s-biggest-oil-firm-saudi-
aramco-kicks-off-jumbo-bond-sale

https://www.ndtv.com/business/saudi-aramco-worlds-largest-oil-producer-to-raise-8-
billion-from-five-part-bond-deal-2326622

1. Discuss the reasons for the fall in profits of the Saudi firm Aramco.
2. Explain the reasons for the need for raising the debt of USD8 billion.
3. As paying dividends is not an obligation, discuss reasons to distribute dividends even
when the company reserves are not sufficient?
4. As the Saudi government is in the majority (more than 98% stake) and the government
may print money to fund the investment needs, why is the government forcing the firm to
declare dividends?
5. The firm may opt for a single tranche (single maturity) financing. What could be the
reasons for a five-part dollar deal (five tranches maturing in three, five, ten, thirty, and
fifty years)?
6. Aramco sold USD500 million in three-year bonds at 110 basis points over U.S Treasuries
(UST), USD1 billion in five-year bonds at 125 bps over UST, USD2 billion in 10-year
notes at 145 bps over UST, USD2.25 billion in 30-year bonds at 3.3 per cent and
USD2.25 billion in a 50-year tranche at 3.55 per cent, the document showed.
a. Explain the reason for the increase in the spread as the bond maturity increased.
b. Explain the reasons for raising less capital by issuing short-term bonds and more
capital by issuing long-term bonds.
7. Citi, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley, NCB Capital were hired as
active book runners. Explain the responsibility of a bond underwriter.
8. The previous bond offering brought in more than USD100 billion in orders – making it
one of the most oversubscribed deals in history – and allowed the oil giant to borrow at a
lower yield than its sovereign parent. In general, agency bonds have a higher yield (risk)
than sovereign bonds. Discuss.
9. The yield on the USD3 bln Aramco bonds due in 2029 dropped to 2.11% from 3.04% at
the start of 2020, only slightly higher than the equivalent Sovereign bonds. Discuss.

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 a. Generally, an increase in the supply of bonds tends to decrease the bond price,
leading to an increase in yields. As price and yield have an inverse relation, the
bond yield should have increased.
b. Further, an increase in debt capital increases the financial leverage (risk). The
expected return (yield) on bonds increases as the risk increases.

Assignment – 4
1. Analysr the following:
a) Analyse six assignment questions based on the case Payout Policy of Infosys
b) Analyse assignment questions (3 and 4 only) of the case Global Synfuels