BHEA.

BPA/01-00

CONFIDENTIAL APRIL 2021/SET A/PFN1223

TEST

COURSE : FINANCIAL MANAGEMENT

COURSE CODE : PFN1223

DURATION : 2 HOURS

INSTRUCTIONS TO CANDIDATES :

1. This question paper consists of TWO (2) questions.

2. Answer ALL questions.

3. The answers must be in handwriting. Please write your answers using a ball-point pen on
foolscap papers. The answer need to be submitted to your respective lecturer using
Scanner Apps:

i. Scan and submit the answer (in PDF) through OLES (Online Learning System) / Google
Classroom or any other medium OR

ii. Scan and email the answer (in PDF).

4. Plagiarism, copying and cheating will not be tolerated where marks will be deducted and
disciplinary actions can be taken.

NAME : ____________________________________________________
ID. NO. : ____________________________________________________
LECTURER : ____________________________________________________
SECTION : ____________________________________________________

DO NOT OPEN THIS QUESTION PAPER UNTIL YOU ARE TOLD TO DO SO

The question paper consists of 5 printed pages

 BHEA.BPA/01-00

CONFIDENTIAL APRIL 2021/SET A/PFN1223

QUESTION 1

A. Baker Blue Sdn Bhd has the following current assets and current liabilities:

(RM)
Cash 70,000
Marketable securities 40,000
Inventories 90,000
Total Current Assets 200,000

Accounts Payable 86,000

Bank loan 24,000
Accruals 40,000
Total Current Liabilities 150,000

Sales for the firm is RM600,000 and 20% of its are on credit sales and Cost of Goods Sold
is 15% of sales. The debtors usually pay in 90 days credit period. The firm has a current
annual outlay of RM350,000 on one cycle investments. The firm also pays 9% for its
negotiated financing. Assume 360 days per year.

Calculate :
i. Operating cycle. (2.5 marks)

ii. Cash conversion cycle. (2.5 marks)

iii. Firm’s annual savings if the cash conversion cycle reduce to 100 days. (3 marks)

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 BHEA.BPA/01-00

CONFIDENTIAL APRIL 2021/SET A/PFN1223

B. Given two companies Blue Bhd and Red Bhd used different capital management policies.
The summarizes statement of financial position are given below:
Blue Bhd Red Bhd
(RM ‘000) (RM’000)
Machinery 30,000 26,000
Building 10,000 44,000
Land 10,000 -
Inventories 7,800 3,000
Investment in Unit trust - 5,100
Cash 2,200 3,900
Debtors 8,000 4,000
68,000 86,000

Bonds 21,400 30,000

Bank Overdraft 6,060 15,000
Treasury bills 20,500 20,000
Long-term loan 20,040 21,000
68,000 86,000
Notes:
Both companies need to hold 20% of cash as permanent assets. Red Bhd hold 10% of
inventories as permanent assets. Meanwhile, Blue Bhd hold 30% of the machinery as
temporary asset.

Required:
i. Calculate permanent assets for each company (6 marks)

ii. Calculate temporary assets for each company. (6 marks)

iii. Calculate permanent sources of financing for each company. (2 marks)

iv. Calculate temporary sources of financing for each company. (2 marks)

v. Based on your answer above, Explain the strategies that being use by both
companies in managing its working capital? (6 marks)

(Total: 30 marks)
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CONFIDENTIAL APRIL 2021/SET A/PFN1223

QUESTION 2
A. MAMA Bhd, a furniture manufacturing company, is considering two projects, Aman Jaya
and Kurnia Jaya , The historical return for both two project is summarized as follows. The
probability distribution of returns for both projects in equal proportion of weight in each
year.

Project
Year Aman Jaya Kurnia Jaya
2016 18% 7%
2017 12% 15%
2018 10% 16%
2019 18% 18%
2020 20% 20%

Required:
i. Calculate the expected return for each project. (5 marks)
ii. Calculate the standard deviation for each project. (6 marks)
iii. Calculate the coefficient of variation. (2 marks)
iv. Which project would you choose to invest your money? Why? (1 mark)

B. Ahmad have gathered the following information on a few stocks for his investment.

Common shares Opening Closing Bonus Dividend

Price Price
PAIF stock 5.5 4.5 0.00 0.00
MAIK stock 3 3.05 0.001 0.005
PAITAF stock 7.80 7.90 0.00 0.00
SAIF stock 1.50 1.38 0.007 0.01

Calculate the holding period return (HPR) for each investment instrument. Which
investment would Ahmad choose and why?

(9 marks)

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CONFIDENTIAL APRIL 2021/SET A/PFN1223

C. The shareholder of Berani Jaya Bhd required rate of return is 30%. Currently, the
company’s risk-free rate is 10% while the market return is 20%. Calculate the beta.
(3 marks)

D.
i. Define return. (1 mark)

i. Describe THREE (3) types of return

(3 marks)

(Total: 30 marks)

(TOTAL: 60 MARKS)

END OF QUESTION PAPER

Prepared by: Verified by: Endorsed by:

Finance Team Arwa Binti Mohammad Nur Azlina Abdullah

KPTM Head of Course Head of Discipline