North South University ASy

School of Business & Economics, BBA

FIN 254

Full Marks: 35

Short Questions [5+5 = 10 marks]

1. What is Free Cash Flow? Calculate the Free Cash Flow of ACI Formulations Ltd. using
the information given and the financial statements below in pages 3 and 4:
The company had net fixed asset investment and net current asset investment of Tk.153
million and Tk.-188 million respectively, reported depreciation expense of Tk. 5 million
and a tax rate of 35%.

2. How much money would you have today if you deposited Tk. 15,700 four years ago and
your deposit has earned an annual return of 8% compounded quarterly? What rate of
return did you effectively earn annually?

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 North South University ASy
School of Business & Economics, BBA

Problem Questions

3. If you make the following investments at the beginning of each year for five years, then
how much money would you accumulate at the end of five years if your deposits earn an
annual return of 7.5%?

Year Cash Flows

1 $3250

2 $6775

3 $4030

4 $1155

5 $6500

[5 marks]

4. Following are the Income Statement and the Balance sheet of “ACI Formulations
Limited” for the year 2018 and 2019. Finance costs are the interest expenses. A new CFO
was appointed and he wanted to know about the results of the ratios for 2019 in the
following areas: Liquidity, Activity, Debt Management and Profitability.

Calculate the following ratios in 2019 and comment on them: [4 × 5 = 20 marks]

a. Quick ratio

b. Inventory Turnover

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 North South University ASy
School of Business & Economics, BBA

c. Time Interest Earned Ratio

d. Net Profit Margin

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 North South University ASy
School of Business & Economics, BBA

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