Equity Shares 100000 Rs10000000 10 Preference Shares Rs 2000000 14 Debentures

Equity shares 100000 rs10000000 10 preference shares

This preview shows page 5 - 8 out of 9 pages.

Equity Shares (1,00,000) Rs.100,00,000 10% Preference Shares Rs. 20,00,000 14% Debentures Rs. 30,00,000 Scenario 1: Market value Proportion Cost% Weighted Value Equity Shares 150 0.75 17.7 13.275 Preference Shares 20 0.1 10 1 Debentures at 14% 30 0.15 14 2.1 Total 200 Weighted Average Capital Cost 16.375 Scenario 2 : Market value Proportion Cost% Weighted Value Equity Shares 125 0.56 24.12 13.4 Preference Shares 20 0.09 16 1.42 Debentures at 14% 30 0.13 14 1.87 Additional Debentures at 15% 50 0.22 15 3.33 225 Weighted Average Capital Cost 20.02 r.html
Image of page 5
17. A manufacturing company plans to sell 30,000 units of its products during the next year. The expected cost of goods sold per unit is as follows:Raw material Rs 100Manufacturing expenses Rs 30Selling, administration and financial expenses Rs 20Selling price Rs 200The duration at various stages of the operating cycle is expected to be as follows:Raw material stage 2 months Work-in-progress stage 1 monthFinished goods stage ½ monthDebtors stage 1 monthAssuming a monthly sales level of 2,500 units, what is the gross working capitalrequirement of the company? (Assume manufacturing expenses are incurred uniformlythroughout the production stage)Cost Break Up per UnitRsRaw Material100Manufacturing Expenses30Selling, administration and financial expenses 20Total Costs150Profit50Selling Price200Raw Material Storage Period2 monthsWork in Progress Period1 MonthFinished Goods Storage Period1/2 monthCredit Allowed by Suppliers0Debtors Collection Period1 Month
Image of page 6
Production 30000 RAW MATERIAL WIP FINISHED GOODS 3000000 500000 50000 0 125000 900000 75000 37500 600000 50000 25000 62500 0 187500 500000 62500 0 187500 Gross WC 131250 0 18. K Silk Ltd., has furnished the following details for the current financial year:Sales Rs.450 lakhAverage collection period 90 daysBad debt losses 5% of salesCollection expenses Rs.1 lakhCost of funds 15%Variable cost to sales ratio 60%The company is contemplating to enhance the collection efforts to reduce the amount ofreceivables and the incidence of bad debt losses. In view of the above, the company hasundertaken a new program which is likely to reduce the average collection period to 60days, decrease bad debt losses to 3% of sales but increase the collection expenses by Rs.4lakh. Assuming that the sales remain constant, what would be the change in profits ?
Image of page 7
Image of page 8

You've reached the end of your free preview.

Want to read all 9 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture