Corporate Finance

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Corporate Finance

3. Refer to the following data:

Balance sheet

1994 1995

Assets

Net fixed assets 14,000 14,800

Current assets

Cash 1,200 1,800

Marketable 2,000 2,500

Securities

Inventory 3,600 3,900

6,800 8,200

20,800 23,000

Liabilities

Equity 12,800 13,400

Long-term debt 5,000 500

Bank loan 2,000 3,000

Accounts payable 1,000 1,600

Other information: Depreciation = 1,600, and Profit after tax = 1,400. Prepare a statement of sources and uses.

4. On January 2, 1991, Vivek Singh, a young MBA, set up a manufacturing unit. 500,000 shares were issued at par (Rs 10).
   During the period—January through June—the company made the following expenditure:
   
   
   • Jan 15: paid Rs 7,500 in legal fees, printing expenses, etc., associated with the incorporation of the company.
   
   
   • June 15: spent Rs 62,500 on machinery.
   
   
   • June 20: purchased Rs 75,000 worth of plastics and chemicals for use in production.
     The company started full production during the second-half of 1991. In early July, a consulting engineer was paid
     Rs 23,750.
     During July–December, the company sold goods worth Rs 754,500. A large customer still owed Rs 69,500 at the end of
     the year. All other customers were paid in full. Additional chemicals and plastics were purchased for a total of Rs 175,000.
     All of these purchases were paid in cash.
     During the year the company spent Rs 22,500 on television and trade journal advertising.
     The company expended Rs 350,000 on direct labour and other manufacturing related overhead. An additional Rs 80,000
     was spent on corporate salaries and other corporate expenses.
     In early July, a further Rs 150,000 was spent on machinery.
     During the year the company had borrowed Rs 50,000 for a short time, and repaid the loan by the year end. The interest
     paid amounted to Rs 750.
     On December 31, the company had Rs 55,000 worth of plastics and chemicals in the warehouse. However, there were
     no finished goods.
     The machinery used in the production was expected to last 10 years, six months of which had already passed.
     Prepare a summary of cash transactions and a statement of cash flows for the year.
   
   
   
   


5. The historical balance sheets of a company are given here:

1982 1983 1984

Liabilities

Equity 34,650 33,056 33,032

Long-term liabilities 13,542 11,909 18,143

Current liabilities 15,554 11,915 15,647

Total 63,746 56,880 67,092

Assets

Net fixed assets 11,138 12,437 11,246

Table contd.