Question Bank: JMD Tutorials

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com JMD Tutorials

The following is included in this document:
1. SSF Question Bank
2. Theory on Segment Reporting
3. Prelim paper I & II
4. Solution to Prelim paper I & II
JMD TUTORIAL’S
Question bank
Concepts
Sr. Pg. Sr. Pg.
1 Covenants in Term Loan 1 22 Net Asset Value (NAV) 22
2 Technical Appraisal 3 23 PMS 23
3 Economic Appraisal 3 24 NBFC 24
4 Margin Money 4 25 Taxability of ESOP’s 26
5 Fixed v/s Floating charge. 4 26 Sweat Equity Shares 27
6 First Charge and Second Charge 4 27 Road Show 28
7 Pari Passu Charge 4 28 Minimum Subscription 28
8 Primary and Collateral Security 4 29 Pro-rata Allotment 29
9 Mortgage v/s Hypothecation v/s Pledge 4/5 30 Book Building 29
10 Sensitivity Analysis 5 31 Bought out Deal 30
11 Moratorium Period 5 32 Private Placement 30
12 Flash Report 5 33 Preferential Allotment 31
13 Due Diligence in Term Loan 7 34 Statement in Lieu of Prospectus 33
14 Features of Hire Purchase 9 35 Shelf Prospectus 33
15 Primary v/s Secondary Market 11 36 Red Herring Prospectus 33
16 Functions of SEBI 12 37 Risk Factors in Prospectus 33
17 CRISIL 15 38 Deferred Tax Asset 36
18 Equity Grading 16 39 Deferred Tax Liabilty 36
19 Methods/ Types of Underwriting 17 40 Segment Assets
20 Fund based v/s Non Fund based 20 41 Segment Liabilities
21 Role of Lead Manager 20 42 Segment Revenue
43 Thin Capitalisation 44 Escrow Account
Theory Questions Pg.

1 What is the Procedure for Obtaining Term Loan. 2
2 What is Lease and its Benefits and explain different types of Lease. 8
3 Lease Financing vs. Hire Purchase Financing. 10
4 Credit Rating-Objectives, Advantages & Disadvantages 13
5 Functions of Merchant Banker 18
6 Mutual Fund-Advantages, Disadvantages and Types of Mutual Fund 21
7 EVA-Meaning, Significance, Advantages & Disadvantages 25
8 ESOP’s-Meaning, Advantages & Disadvantages 26
9 IPO-Procedure and Advantages & Disadvantages of IPO 27
10 Contents Of Prospectus 31
11 Briefly Explain Provisions of AS-22-Accounting for taxes on income 35
12 Briefly Explain Provisions of AS-17- Segment Reporting
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SEGMENT REPORTING (AS-17)
MEANING: Many enterprises deal in multiple products and services or operate in geographical areas that are
subject to differing rates of profitability, opportunities for growth, future prospects, and risks. Information
about different types of products and services of an enterprise and its operations in different geographical
areas - often called segment information - is relevant to assessing the risks and returns of a diversified or
multi-locational enterprise but may not be determinable from the aggregated data. Disclosure of such
information is called segment reporting.
Segment:
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There are two types of segments
1) Business Segment - Is a component of an enterprise which satisfies the following conditions—
• It is distinguishable component of an enterprise,
• It is engaged in providing an individual product or service or group of related products or services, and
• It is subject to risks and returns that are different from those of other business segments.
Factors that should be considered in determining whether products or services are related include:
- The nature of products or services;
- The nature of the production processes;
- The methods used to distribute the products or provide the services; and
- If applicable, the nature of the regulatory environment, i.e., banking, insurance or public utilities.
2) Geographical segment - Is a component of an enterprise, which satisfies the following conditions:
• It is distinguishable component of an enterprise;
• It is engaged in providing products or services within a particular economic environment. The risks
and returns of an enterprise are influenced both by
- the location of production or service facilities and other assets of an enterprise; or
- the location of its customers.
Reportable Segments:
Identification of Reportable Segments (Sub-segments)
Business segment or geographical segment which has been identified as reportable segment shall be further
divided to include sub-segments based on the following conditions:
• Segment Revenue from sales to external customers and internal transfer is 10% or more of the total
external and internal revenue of all segments
Or
• 10% or more of segment result
(Segment result means: if some segments are in loss then total of loss of all loss-making segments or if
some segments are in profit, total profit of all profit-making segments. Whichever is higher i.e. total
profit or total loss figure in absolute term.)
Or
• Segment asset is 10% or more of the total assets of all segments
• All the above three criteria must be applied first and—
- Further, Management may at its discretion choose any segment as reportable segment even if
such segment does not fulfill the criteria stated above.
- Ensure whether at least 75% of total external revenue should be in the reportable segments.
- If 75% of total external revenue is not in the reportable segments, then additional reportable
segments should be identified ignoring 10% threshold limits until at least 75% of total external
revenue is included in reportable segments.
Note: Any segment, which was reportable segment in the previous year on the fulfillment of 10% threshold
limit, should be reportable segment during current year even if 10% threshold limit in current year is not
fulfilled.
DEFINATION:
1) Enterprise revenue - Enterprise revenue is revenue from sales to external customers as reported in the
statement of profit and loss.
2) Segment Revenue - Segment revenue is the aggregate of—
• The portion of enterprise revenue that is directly attributable to a segment,
• The relevant portion of enterprise revenue that can be allocated on a reasonable basis to a segment,
and
• Revenue from transactions with other segment of enterprise.
Segment revenue does not include:—
(a) Extraordinary items
(b) Interest or dividend income including interest earned on advances or loans to other segments; and
(c) Gains on sales of investments or on extinguishments of debt.
However, segment revenue shall include items in (b) and (c) above if two operations of the segment are
primarily of a financial nature.
3) Segment Expenses - Segment expense is the aggregate of—
• The expenses resulting from the operating activities of a segment that is directly attributable to the
segment,
• The relevant portion of enterprise expense that can be allocated on a reasonable basis to the segment,
• Expenses relating to the transactions with other segments of the enterprise,
Segment expense does not include:

(a) Extraordinary items
(b) Interest expenses, including interest incurred on advances or loans from other segment, unless the
operations of the segment are primarily of a financial nature;
(c) Losses on sales of investments or losses on extinguishments of debt unless the operations of the segment
are primarily of a financial nature;
(d) Income-tax expense; and
(e) General administrative expenses, head office expenses and other expenses that arise at the enterprise
level and relate to the enterprise as a whole.
4) Segment Result - Segment result is segment revenue less segment expenses (it is segment profit or loss).
5) Segment Assets
(a) Segment assets are those operating assets that are
• Employed by a segment in its operating activities, and
• Directly attributable to the segment or can be allocated to the segment on a reasonable basis (i.e.,
Current Asset, Tangible and Intangible Fixed Assets).
(b) Segment assets do not include—
• Income-tax assets
• Assets used for general enterprise or head office purpose.
(c) Segment assets are determined after deducting related allowances/provisions that are reported as direct
offsets in the balance sheet of the enterprise e.g., fixed asset less depreciation provision or debtors less
provision for doubtful debts.
6) Segment Liabilities
(a) Segment liabilities are
• Operating liabilities
• That result from the operating activities of a segment
• That either is directly attributable to the segment or can be allocated to the segment on a reasonable
basis (i.e., trade and other payables, accrued liabilities, customers advances, pro duct warranty
provisions, and other claims relating to the provision of goods and services)
(b) Segment liabilities do not include—
• Income-tax liabilities
• Borrowing and other liabilities that are incurred for financing rather than operating purposes.
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DISCLOSURE REQUIREMENTS:
The disclosure requirements of primary segments are as under:-
• Revenue from external customers.
• Revenue from transactions with other segments.
• Segment result.
• Cost to acquire tangible and intangible fixed assets.
• Depreciation and amortization expenses.
• Carrying amount of segment assets.
• Segment liabilities.
• Non-cash expenses other than depreciation arid amortization.
• Reconciliation of revenue, result, assets and liabilities.
The Disclosure requirements of Secondary Segments are given in table below:
PRIMARY FORMAT IS
BUSINESS SEGMENT
Required Secondary Disclosures
Revenue from external customers
by location of customers
Carrying amount of segment assets by location of assets
Cost to acquire tangible and
intangible Fixed assets by
location of assets
Other Required Disclosures

Basis of pricing mice-segment transfers and any change therein
Changes in segment accounting policies
Types of products and services in each business segment
Composition of each geographical segment
Code: PN - 246
JMD TUTORIAL’S
TYBMS – V SEM – FINANCIAL MANAGEMENT
PRELIMINARY EXAM - A - 2010-11
NB: All questions in Section I are compulsory.

: Answer any three questions in Section II.
SECTION I (MARKS 30)

Q1)
a) Concept Testing
1. Fund based and Non Fund based services
2. Thin Capitalisation
3. Segment Asset & Segment Liability
4. Sweat Equity Shares
5. Book Building
Q 1)
b) Attempt any 2
i) From following data compute for 2007-08:
(a) Current tax
(b) Tax expenses
(c) Deferred tax asset/liability
(d) Pass Journal Entry for Deferred tax asset/liability
(Amount in Rs.)
2007-08 2008-09 2009-10
Pre-tax accounting income 1,40,000
Temporary difference
Depreciation (80,000) (1,20,000) 2,00,000
Warranty cost 40,000 10000 30,000
Taxable Income 1,00,000
Income-tax rate 30% 30% 25%
ii) On 1/4/2006, JMD Ltd. a listed company granted 50 stock options each to 100 employees at Rs. 50
each. The Market Price of the Share is Rs. 150 and the Face value of the share is Rs. 10 each. The above
option is vested with immediate effect and the maximum exercise period is one year. During the year 60
employees exercised all the options; 30 employees exercised 20 options each and the rest of the options
lapsed. Show how the journal entries would appear in the books of JMD ltd.
iii) What are the appraisals carried out by the bank while evaluating a term loan proposal?
Q.2)Priya purchased a machine for $ 12 lacs on 30th June, 2004. Out of this $ 10 lacs was financed by a
foreign currency loan. On the date of acquisition, the exchange rate was 1$ = Rs. 46.
Priya closes books on 31st December every year. Depreciation is provided at 15% on WDV basis. Priya paid $
2 lacs on 31st December, 2004 and $ 1.5 lacs on 31st December, 2005. The exchange rate of Dollar was Rs.
46.50 on 31st December, 2004 and Rs. 47 on 31st December, 2005. You are required to show Journal Entries
in books of Priya Ltd for the above in accordance with AS 11 (Revised), and also prepare Loan Account and
Machinery Account in the Ledger of Priya Ltd.
SECTION II (MARKS 30)
Q 3) What is Credit Rating? What is the objective of credit rating? What are the advantages and disadvantages
of credit rating?
Q.4) On 1st January, 1997; M/s Tallboy & Co. Ltd. took delivery from Plain Vans Ltd. of 5 Motor Vans on hire
purchase system. 2,000 being paid on delivery and the balance in five instalments of Rs.3,000 each payable
annually on 31st December, the vendor company charges 5% interest p.a on yearly balances. The cash value
of Motor Vans was Rs. 15,000.
Show journal entries and the Vendors Account, Interest account and the Motor Vans Accounts in the books
of M/S Tallboy & Co. Ltd. for five years under:
1. Credit Purchase Method providing depreciation @ 20% on the diminishing balances.
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Q.5) As the manager of a financial services company, you have received a proposal seeking a term loan of Rs
300 lakh, from a firm planning an investment in fixed assets of Rs 500 lakh in a new project. The loan is
indicated to be repayable in three annual instalments commencing from the end of the second year. The
following information concerning the project is available:
Particulars 1 2 3 4
Gross profit (before depreciation) 75 100 150 150
Depreciation 50 45 40 35
Interest on term loan 25 45 30 15
Working capital borrowing (interest) 10 15 20 20
Provision for tax -- -- 10 30
Assuming other techno-economic criteria to be satisfactory, you are required to:
(a) Compute appropriate financial ratio which, in your opinion, would guide the financing decision, and
(b) Interpret briefly the ratio so computed and give your views on the proposal.
Q.6)The Income Statement and Balance Sheet of Five Star Ltd. Is given below:
Particulars Rs. Rs.
Lakhs Lakhs
Sales 500
Interest on Investments 10
Profit on sale of old asset 5
Total Income 515
Less:
Manufacturing cost 180
Administration cost 60
Selling and distribution cost 50
Depreciation 30
Loss on sale of an old Machine 5 325
EBIT 190
Less: Interest 20
EBT 170
Less: Tax @ 30% 51
PAT 119
The Cost of equity is to be calculated as per CAPM. The Risk free rate of return is 8%. The market rate of
return is 14%. The beta factor of the company is 0.8. The debt equity mix of the company is 0.20:0.80.
The average interest rate of the company is 15%. The total capital employed of the company is 150
lakhs. Determine the EVA of the company.
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ADMISSION IN PROGRESS FOR TYBMS VI SEM:

INTERNATIONAL FINANCE
INVESTMENT ANALYSIS AND PORTFOLIO MANGEMENT - IAPM
OPERATION RESEARCH
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experience in this newly introduced subject for TYBMS.
University toppers in all the attempts at TYBBI.
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BANDRA (W): 2 MIN FROM STATION. A/6, 1ST FLOOR, NUTAN NGR STY, NEAR BANDRA TALAO
DADAR/ VILE PARLE/ BORIVALI/ GHATKOPAR/ SION/ ANDHERI - ALL BRANCHES NEAR STATION
Code: KM - 007
JMD TUTORIAL’S
TYBMS – V SEM – SPECIAL STUDIES IN FINANCE
PRELIMINARY EXAM - B - 2010-11
NB: All questions in Section I are compulsory.

: Answer any three questions in Section II.

Q1)
a) Concept Testing
1) Pari Passu charge
2) Sensitivity Analysis
3) Underwriting
4) NAV
5) Escrow Account
Q 1)
b) Attempt any 2
i) JMD Ltd. is incorporated with an authorized capital of Rs. 20,00,000 divided into 20000 shares of Rs 100
each. The company issued 10000 shares in the price band of Rs. 250-280 per share. Applications were
received for 15000 shares as follows: Application for 8000 shares was received at the cap (upper) price band
whereas applications for 3000 shares were received at floor (lower) price band. The balance application was
received from a institutional investor at the rate of Rs. 270 per share. The directors decided to allot the shares
as follows:
• The applications received at the cap price band were allotted in full
• The applications received at the floor price band were rejected in full
• The institutional investors were allotted the balance shares.
The board of directors decided to allot the shares to all the investors @ Rs. 280 per share.
Pass the Journal entries required to record the above in the books of JMD Ltd. Show necessary workings.
ii) The NPAT is 210 crores. Tax rate is 30%. The company had paid interest of Rs. 100 crores. The capital employed of the
company is Rs. 800 crores. WACC is 20%. Calculate EVA.
iii) Primary market v/s. Secondary market
Q.2) Toy Ltd has a new project for the manufacture of computerized toy. The product is a novelty in the toy
market. The company estimates a five-year market life for the product. The maximum number it can produce
in any given year is limited to 40 lacs. The expected market scenario will support a sales equivalent of 25%,
60%, 100%, 100% and 40% of the capacity in the first, second, third, fourth and fifth year respectively.
Given below are details regarding cost of project:
Cost of Project Rs
Land Building and civil works 10,50,000
Machinery and equipment 79,00,000
Product Development 10,00,000
Working Capital margin 4,55,000
Total 1,04,05,000
The project will be financed by a combination of equity and term loans in the ratio as close to 20 : 80 as
practicable. Loans will carry an interest rate of 14% p.a on reducing balance basis. One year moratorium on
principal will be available after which, it will be payable in eight equal half yearly instalments. Selling price
per unit will be Rs.7. Material cost will be Rs.2 and conversion cost will be Rs.1 per unit. Product promotion
expenses for the first three years will be Rs.4 lacs, 3 lacs and 1.5 lacs respectively
Depreciation on land building and civil works and machinery is to be charged on straight-line basis. Total
Salvage value to be taken as 9,50,000 of both. Product Development expenses are to be w/off, in the next five
year. Tax rate is 35%.
1. Calculate the relevant ratios and comment on acceptability from the point of view of the lending
institution
2. Also prepare opening balance sheet and projected balance sheet at the end of year one.

Q 3) Explain Merchant Banking. What are the functions carried out by Merchant Bankers?

Q.4) ALL leasing company bought a machine costing Rs. 150000 with estimated useful life of four years at the
end of which residual value is expected at Rs. 7500. This machine is leased to user industries for full term at
varying lease payments.
Year Rs.
1 87500
2 40000
3 20000
4 11250
The lease is payable at commencement of the year
The present value of varying rates is as under:
Year-end 12% 14% 16%
1 0.893 0.877 0.862
2 0.797 0.769 0.743
3 0.712 0.675 0.641
4 0.636 0.592 0.552
You are required to:
1. Calculate implicit rate of interest
2. Prepare Lease schedule
3. Also state the presentation in Profit and Loss account and Balance sheet of the lessor
Q.5) Mr. Taitler purchased raw material from M/s Richo Inc of USA on 1st October, 2008 for US $ 8,400.
Amount to be paid in four equal half yearly installments commencing from 31st March, 2009 along with
interest @12% per annum.
Rate of exchange per US $ as on various dates was as follows:
1st October, 2008 Rs. 45 per US $
31st March, 2009 Rs. 46 per US $
30th September, 2009 Rs. 43 per US $
31st March, 2010 Rs. 44 per US $
Pass necessary journal entries in the books of Mr, Taitler for the years ended 31st March, 2009 and 31st
March, 2010.
Q.6) (a) Assume that Beta Ltd. began operations on January 1, 2008. During 2008, Beta Ltd. purchased
various marketable equity securities and on December 31, 2008 purchased debt security at face amount. The
cost and fair value of these securities at the end of 2008 were as follows:
Face value Cost Market Unrealized
Loss Gain
Red Ltd. Stock Rs. 10 2,000 2,500 500
Blue Ltd. Stock Rs. 10 3,000 2,600 400
White Ltd. Stock Rs. 10 1,000 1,200 200
Pink Ltd. Stock Rs. 10 1,500 1,350 150
Gold Ltd. Stock Rs. 1000 1,000 1,060 60
8,500 8,710 550 760
Show how the above investments will be reported as per AS-30:
a) Assuming all of the securities qualify as trading securities i.e FVTPL.
b) Assuming all of the securities qualify as available for sale securities
(b)From the following details of X Ltd. for the year ended 31-3-2007, calculate the deferred tax asset/liability
as per AS-22
Rs.
Accounting Profit 5,00,000
Book profit as per MAT 4,50,000
Profit as per Income-tax Act 50,000
Tax rate 30%
MAT rate 7.50%
SOLUTION TO PAPER – I

Q1)
a) Concept Testing
1. Refer JMD Theory Notes pg no 20
2. THIN CAPITALIZATION: – thin capitalization means a firm or company where the higher
proportion of funds is from loans and borrowings and not from equity capital. Some companies
take large loans to take the benefit of tax deduction. It means if the loan amount is high, the
companies need to pay higher amount of interest and tax burden will be lower. Means companies
may use it as a tax saving instrument. Like if the companies take the equity capital instead of
loan, then the companies need to pay dividend which is almost like interest amount and the
dividend is not tax deductible, one need to pay income tax first and then distribute dividend to
the shareholders. But now government is planning to introduce ‘thin capitalization’ rule to check
this type of tax evasion.
3. Segment Asset & Segment Liability- Refer JMD Theory Notes on AS-17
4. Sweat Equity Shares- Refer JMD Theory Notes pg no 27
5. Book Building- Refer JMD Theory Notes pg no 29
Q 1)
b) Attempt any 2
i) for 2007-08:
(i) Current tax= Taxable Income * Incometax rate= 100000*30%=Rs.30000
(ii) Tax expenses=Accounting Income* Incometax rate= 140000*30%= Rs.42000
(iii) Deferred tax liability=Tax Expense- Current Tax= 42000-30000= Rs.12000
(iv) Journal Entry for Deferred tax liability
Profit & Loss Account Dr Rs.12000
To Deferred Tax Liability Rs.12000
ii) EVA
NOPAT:
Let NPBT be Î 100 Î ??
Less: Tax Î 30
NPAT Î 70 Î 210
Therefore NPBT = 300

+ Interest = 100
EBIT = 400
NOPAT = EBIT – Tax = 400 – (400 X 30%)

NOPAT = 400 – 120 = 280
Cost of Funds:
= Capital employed X WACC
= 800 X 20% = 160
EVA = NOPAT – Cost of funds

= 280 – 160 = 120 crores
iii) Refer JMD Tutorials Theory Notes pg no 3
Q.2) Refer JMD Tutorials Practical Notes
Q 3) Refer JMD Tutorials Theory Notes pg no 13
Q.4) Refer JMD Tutorials Practical Notes

Q.5) DSCR is the most appropriate ratio for the lending company as it indicates relationship between the total
cash funds available with the borrowing firm to pay instalments.
Note: Gross profit (before depreciation) is presumed to be EBDIT. In the above problem there are two interests
given i.e. one on term loan and second on working capital. In this case we are evaluating term loan. Therefore
to find cash available for repayment of term loan we would add back only interest on term loan to NPAT
Particulars 1 2 3 4
Gross profit (before depreciation)/ EBDIT 75 100 150 150
Less: Depreciation 50 45 40 35
Less: Interest on term loan 25 45 30 15
Less: Working capital borrowing (interest) 10 15 20 20
Less: Provision for tax -- -- 10 30
NPAT (10) (5) 50 50
Add: Depreciation 50 45 40 35
Add: Interest on Term Loan 25 45 30 15
Cash flow available for repayment of Debt 65 85 120 100
Instalment 25 145 130 115
DSCR (in times) 2.6 0.59 0.92 0.87
Comment: The DSCR is very unsatisfactory as it is less than one for all the three years in which instalments
are to be paid. The firm will not have enough cash to service instalment and is likely to commit default. The
proposal is not financially viable and term loan should not be sanctioned by the financial services company.
Q.6) NOTE: We have inserted new formula of cost of equity and final definition of NOPAT (as per the
books suggested).
For Cost of Equity: (learn this new formula as per Capital Asset pricing model : CAPM)
Ke = Rf + beta (Rm – Rf)
Where Rf = Risk free rate of return
Rm = Return on market portfolio
(Rm – Rf) = Risk premium of the market.
(note: the above formula will be used only when the above information is given. If dividend and
MPS is given then we use the same old formulas)
Ke = 8 + {0.80 (14 – 8)}
Ke = 8 + 4.8 = 12.8%
Kd = I(1 – t)
Kd = 15(1 – 0.30)
Kd = 10.5%
WACC
Source Proportion Specific Cost WACC
Debt 0.2 10.5 2.1
Equity 0.8 12.8 10.24
12.34
Cost of Funds = capital employed X WACC
= 150 X 12.34% = 18.51 lakhs
NOPAT = (NPBT + Interest + NOE – NOI) - Tax @ 30% Î NOTE THIS NEW FORMULA
NOPAT = (170 + 20 + 5 – 10 – 5) - Tax @ 30%
NOPAT = 180 – (180 X 30%)
NOPAT = 180 – 54 = 126 lakhs
(note: Depreciation is not to be added back)
(Write a note that Depreciation is added only when we find cash value added i.e CVA)
EVA = 126 – 18.51 = 107.49 lakhs

SOLUTION TO PAPER - II
Q1)
a) Concept Testing
1 ReferJMD Theory Notes pg no 4
2 Refer JMD Theory Notes pg no 5
5 Refer JMD Theory Notes pg no

Q1. B) i) Refer JMD Tutorials Practical Notes
ii) Refer JMD Tutorials Practical Notes
iii Refer JMD Tutorials Theory Notes pg no 13
Q.2) Hints & Important points:

Product Development expenses are to be written off over five years equally (10,00,000/5) = Rs. 200000
For calculation of cash available for repayment of Debt we normally add depreciation and interest to NPAT.
But in this sum even product development exp written off is to be added as it is a non cash expense.
Moratorium means holiday from repayment of principal.
Repayment is under equal principal method.
To understand the repayment schedule refer sum no 5 from JMD practical notes.
The projected income statement format is made below with some figures filled up. Rest of the figures u can fill
up from repayment schedule.
For opening and projected balance sheet refer sum no 8 of JMD practical notes.
Particulars 1 2 3 4 5
Max units 40,00,000 40,00,000 40,00,000 40,00,000 40,00,000
Actual Demand 25% 60% 100% 100% 40%
Units sold 10,00,000 24,00,000 40,00,000 40,00,000 16,00,000
Selling Price 7 7 7 7 7
Sales 70,00,000 1,68,00,000 2,80,00,000 2,80,00,000 1,12,00,000
Less: Expenses
Material @ 2 p.u 20,00,000 48,00,000 80,00,000 80,00,000 32,00,000
Conversion cost @ 1 p.u 10,00,000 24,00,000 40,00,000 40,00,000 40,00,000
Product promotion 400000 300000 150000 0 0
Product Development written off 200000 200000 200000 200000 200000
Depreciation 1600000 1600000 1600000 1600000 1600000
EBIT
Less: Interest
NPBT
Less: Tax @ 35%
NPAT
Add: Non Cash Expenses:
Depreciation 1600000 1600000 1600000 1600000 1600000
Product Dev Exp w/off 200000 200000 200000 200000 200000
Add: Interest
Cash available for repayment of Debt
Annual Instalment
DSCR
ICR
Q 3) Refer JMD Tutorials Theory Notes pg no 18
Q.4) Calculation of Implicit rate of return:
Lease is received in advance.
Year-end Lease 12% PV 14% PV 16% PV
0 87500 1 87500 1 87500 1 87500
1 40000 0.893 35720 0.877 35080 0.862 34480
2 20000 0.797 15940 0.769 15380 0.743 14860
3 11250 0.712 8010 0.675 7594 0.641 7211
4 7500 (SV) 0.636 4770 0.592 4440 0.552 4140
151940 149984 148191
The cost of Machine is Rs. 150000. PV 2 14% is 149984, the difference is insignificant. Hence implicit rate of
return is taken as 14%.
Investment Analysis Schedule/ Calculation of items for final accounts:
Year Investment MLP Interest @ 14% Reduction Net
at received in Investment
beginning Investment @ the end
1 2 3 = 1 X 14% 4 =2-3 5=1-4
0 150000 87500 0 87500 62500
1 62500 40000 8750 31250 31250
2 31250 20000 4375 15625 15625
3 15625 11250 2188 9062 6563
4 6563 7500 937 7500 0
Bal figure
Disclosure in the books of Lessor:

Income side of P & L A/c.
Incomes 1 2 3 4
Lease Rentals 8750 4375 2188 937
Asset Side of Balance Sheet

Asset 1 2 3 4
Lease Rent 62500 31250 15625 7500
Receivable (last year always write Scrap value)
Q.5) Refer Extra sum no 2 on forex from JMD sheet given in the last session.
Q.6) (a) Refer AS-31 sum from JMD sheet.
(b) Refer AS-22 sum no 3 from JMD sheet.
ALL THE BEST TO FACE THE REST

JMD TUTORIALS WISHES U GOODLUCK
ADMISSION IN PROGRESS FOR TYBMS VI SEM:

INTERNATIONAL FINANCE
INVESTMENT ANALYSIS AND PORTFOLIO MANGEMENT - IAPM
OPERATION RESEARCH
JMD has been teaching IAPM in TYBBI since last 6 years and has vast
experience in this newly introduced subject for TYBMS.
University toppers in all the attempts at TYBBI.
9967008172/ 9820797729

Question Bank: JMD Tutorials

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Theory Questions Pg.

Deepak Fulwadhaya 9967008172 Prakash Fulwadhaya 9820797729

Other Required Disclosures

NB: All questions in Section I are compulsory.

SECTION I (MARKS 30)

ALL THE BEST TO FACE THE REST

ADMISSION IN PROGRESS FOR TYBMS VI SEM:

NB: All questions in Section I are compulsory.

SECTION I (MARKS 30)

iii) Primary market v/s. Secondary market

SECTION II (MARKS 30)

Deepak Fulwadhaya 9967008172 Prakash Fulwadhaya 9820797729

SECTION I (MARKS 30)

Therefore NPBT = 300

NOPAT = EBIT – Tax = 400 – (400 X 30%)

EVA = NOPAT – Cost of funds

iii) Refer JMD Tutorials Theory Notes pg no 3

Q.2) Refer JMD Tutorials Practical Notes

SECTION II (MARKS 30)

Q 3) Refer JMD Tutorials Theory Notes pg no 13

Q.4) Refer JMD Tutorials Practical Notes

EVA = 126 – 18.51 = 107.49 lakhs

Deepak Fulwadhaya 9967008172 Prakash Fulwadhaya 9820797729

Q.2) Hints & Important points:

Moratorium means holiday from repayment of principal.

Repayment is under equal principal method.

Disclosure in the books of Lessor:

Asset Side of Balance Sheet

Q.6) (a) Refer AS-31 sum from JMD sheet.

(b) Refer AS-22 sum no 3 from JMD sheet.

ALL THE BEST TO FACE THE REST

ADMISSION IN PROGRESS FOR TYBMS VI SEM:

Deepak Fulwadhaya 9967008172 Prakash Fulwadhaya 9820797729

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