Prob 75

Debtors
Stock Finished Goods
Stock Materials
Domestic
Export
Sundry Expenses

Credit
Wages
Stock
Rent
Clerical Staff
Manager
Misc Expenses

Working Capital
Including Contingencies

Amount
5,000.00
8,000.00
36,000.00
2,250.00
2,000.00
53,250.00

7,500.00
1,384.62
5,000.00
2,583.33
200.00
6,000.00
22,667.95
30,582.05
33,640.26
Dec

Prob 97
Estimated Sales
Actual Sales
Cash
Credit
Cash From Previous Mnth
Creditors (Cash Out)
Salary (-)
Capex (-)
Dividend (-)
Misc Expenses (-)
Bills Payable (-)
Cash Balance
Total Cash Received
Total Cash Outflow
Net Cash Balance
Loans
Interest

Prob 104
Sales
Purchases(-)
Salary(-)
Misc

Jan
500

520
400
100
104
208
280
75
15
500
1004
578
426
0

June
35
14
12
5

July
40
16
14
6

Int(-)
Sale of Shares (+)
Cash Sales(+)
Credit Sales
Returns
Bad Debts
Credit Sales Collected (+)
(+)
Payment (-)
Salary(-)
Net Cash
Minimum Cash Balance
Cash Balance

Prob 47

2
0
7
28
0.28
0.56
13.58

0
0
8
32
0.32
0.64
15.52
13.58
19
13
5.1
5

6
14.58
5

Baumol Model of Optimal Transaction Size Determination

Transaction Size
60,000
No of Transactions/year
90 )/( )
Transaction after no. of days
Average Cash Balance
throughout year

4
30,000

Target Cash Balance Middle

Prob 48 Limit
110.52
Upper Limit
331.56
Buy securities if cash balance goes above Upper Limit and Sell if it goes below lower Limit

Prob 49 No of Units
Sales Price
Cost Price
Revenue
Cost
Expected Profit

100
100
85
10000
8500
1500

Cash Realized
Cash Realized Later
Total Realized

3430
6370
9800

New Cost Price

New Sales
New Sales Price
Expected Revenue

90
125
115
14375

0.02778
0.11111

-1,231.10

3,421.80
6,309.30
9,731.10

Cost
Cash Realized After Discount
Cash Realized Later
Total Realized

Prob 50 Units
Price
Revenue
Gross Margin
COGS

-2,465.86

3521.88
10350
13871.88

0.02778
0.16667

200
45
9000
0.3
6300

31.5

-2,108.09
Present Value
8,408.09

Collection
Collection Days

8640
60

New Collection
Bad Debt
Sales

45
0.03
175

0.123287671

7638.75
5512.5

7,484.45
-1,971.95

Revenue
COGS

Prob 81
Sales
Units
VC
FC
TC
Investment in Debtors
Incremental Cost
Contribution
Profit
Incremental Profit
NPV
Return on Incremental Cost

Prob 84

11250

*All Figures in Rs. Crore

Sales
Bad Debts
Units
FC

25
300,000,000
30,000,000
180,000,000
60,000,000
240,000,000.00
16,666,666.67
120,000,000.00
60,000,000.00

30
60.00
1.50%
6
6

40
301,200,000
30,120,000
180,720,000
60,000,000
240,720,000.00
26,746,666.67
10,080,000
120,480,000.00
60,480,000.00
480,000
477,738.77
4.76%
4.7394719%
45
64.00
1.50%
6.4
6

VC
TC
Bad Debts Amount
Investment in Debtors
Incremental Cost
Contribution
Profit
Net Profit
Incremental Profit
Return on Incremental Cost

Prob 59
Alt 1
Alt 2
Alt 3

Prob 63
Alt 1
Month
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec

48.00
54.00
0.90
4.50
12.00
6.00
5.10

51.20
57.20
0.96
7.15
2.65
12.80
6.80
5.84
0.74
27.92%

Interest Rate

Deposit

18%
18000
21%
21000
15%
15000

10%

Line of Credit
1,500,000
Amount
190,000
450,000
700,000
800,000
1,500,000
1,200,000
900,000
500,000
400,000
360,000
150,000
-

Compensating Balance
300,000
Interest
1,900
4,500
7,000
8,000
15,000
12,000
9,000
5,000
4,000
3,600
1,500
0
71,500

0
20%

Balance Sheet
Assets
Fixed Assets
Current Assets

Prob 80

Aggressive
180
252
432.00

Equity
Long Term Liabilities
Short Term Liabilities
Current Liabilities

Feb
600

Mar
750

480
120
100
200
280
80

600
150
120
240
280
190

15
36
426
1080
611
469
74

15

22.8
43.2
216
150
432.00

469
1220
725
495
31

August
40
17
14
6

September
50
20
18
6

October
50
20
18
7

0
20
8
32
0.32
0.64
15.52
15.52
22
14
23.04
5

=(2

oes below lower Limit

2
0
10
40
0.4
0.8
19.4
15.52
23
16
5.92
5

0
0
10
40
0.4
0.8
19.4
19.4
26
18
4.8
5

 3,513.45
10,202.41
13,715.86

50
302,700,000
30,270,000
181,620,000
60,000,000
241,620,000.00
33,558,333.33
16,891,667
121,080,000.00
61,080,000.00
1,080,000
1,071,533.71
6.39%

60
64.50
1.70%
6.45
6

60
304,700,000
30,470,000
182,820,000
60,000,000
242,820,000.00
40,470,000.00
23,803,333
121,880,000.00
61,880,000.00
1,880,000
1,859,399.73
7.90%

75
65.30
2.00%
6.53
6

90
66.50
2.50%
6.65
6

51.60
57.60
1.10
9.60
5.10
12.90
6.90
5.80
0.70
13.79%

52.24
58.24
1.31
12.13
7.63
13.06
7.06
5.75
0.65
8.57%

53.20
59.20
1.66
14.80
10.30
13.30
7.30
5.64
0.54
5.22%

Loan Amount

Effective Rate

Amount Available

100,000.00

90,000.00
20.00%

100,000.00

79,000.00
26.58%

100,000.00

65,000.00
23.08%

Interest Rate on Used amount

12%
Commitment Interest
3,275
2,625
2,000
1,750
750
1,500
2,500
2,750
2,850
3,375
3,750
27,125

Interest Rate on Unused Amount

3%
Total Interest
5,175.00
7,125.00
9,000.00
9,750.00
15,000.00
12,750.00
10,500.00
7,500.00
6,750.00
6,450.00
4,875.00
3,750.00
98,625.00

Fee
$5000+4%

Moderate

Conservative
180
270
450.00

180
288
468.00

30
108
162
150
450.00

37.2
172.8
108
150
468.00

Prob 98
Opening Cash Balance
Sales
Estimated Sales
Cash
Credit Sales
COGS
COGS Paid (-)
COGS Balance Paid (-)
Operating Exp (-)
Var OP Exp (-)
Half Yearly Int Rate 12% (-)
Investment (-)
Cash Balance
Loan

November
60
25
20
7

December
65
28
22
7

Jan
Feb Mar
30000 30000 30000
75500 75000 90000
45300 45000
15100
56625 56250
45300

54000
30100
67500
45000
11325
15000 15000 15000
7550 7500 9000

22750 -7700

3775

0
0
12
48
0.48
0.96
23.28
19.4
27
19
8.68
5

2
0
13
52
0.52
1.04
25.22
23.28 25.22
32
35
21
8.5
5

Compensating Balance means maintaining a FD or a

security deposit with the Bankers
Loan Discount means interest payable upfront

P & L Account
EBIT
Int @ 16%
Int @ 18%
PBT
ROE
Working Capital (CA-CL)
Current Ratio (CA/CL)
CA/TA

Apr
30000
90000
54000
33000
67500
54000
11250
15000
9000

-2250

May
30000

Jun
30000

Jul
30000

Aggressive Moderate
53.00
54.00
34.56
25.92
7.78
19.44
10.66
8.64
0.47
0.29
-114.00
-42.00
0.69
0.87
0.58
0.60

Aug
30000

105000 120000 150000 150000

63000 72000 90000 90000
36000 39000 45000 54000 60000
78750 90000 112500 112500
54000 63000 72000 90000 90000
13500 13500 15750 18000 22500
15000 15000 15000 15000
10500 12000 15000 15000
27000
60000 15000
6000 -52500 -24750
6000
-46500 -24750

30000

22500

Conservative
55.00
17.28
31.10
6.62
0.18
30.00
1.12
0.62

Dells Business Model Advantage:

1. Low working Capital requirement.
2. Low capital requirement.
3. Total costs go down.
4. Loss due to product obsolescence lower ~ 3% of COGS. Since the inventory is
low, the loss is reduced in case if the inventory becomes obselete. Automatically
the profits become better.
5. Better trunover ratios for the company.
6. Since the inventory is new for Dell, it reduces the risk of reducing the product
price so there is reduced cannibalization on account of new and old product being
sold at the same price.
Cons:
1. Stock out risk is high since there is virtually no stock so cannot finish customer
order (if large) since inventory is low.

1996
5296

1995
1994
1993
1992
3475
2873
2014
890
52.40% 20.95% 42.65% 126.29%
2148
1594
1140
34.76% 39.82%
Accounts Payable
Accrued Liabilities
Other Liabilities

Sales

Total Assets inc %

Reserves

Prob 1 Pg 510
Sales
Assets
Current Liabilities
Accounts Payable
Notes Payable
Accurals
PAT
Payout Ratio
Reserves and Surplus

2007
5.000
3.000
1.000
0.250
0.500
0.250
0.250
0.175
0.075

2008
6.000
3.600
1.100
0.300
0.500
0.300
0.300
0.210
0.090

Total Assets

2007
1.200

2008
1.500 0.30000

Prob 6 Txtbk

If assets up by 20% the Share Holders Fu

Incremental current liabilities - Notes Pa
Since the increase in assets has to come

7.200

0.188

0.094

A/C Payable

0.375

0.469 0.09375

0.1163

Sales
Retained Earnings
Common Stock
Profit Margin
Payout Dividend
Reserves and Surplus

2.500
0.295
0.425
0.150
0.060
0.090
0.105

3.125

0.0413

2007
2000
1500
500

2008
2069 68.9655
3052
1552

Prob 4
Sales
Total Assets
Current Lianbilities
Notes Payable
A/C Payable
Accruals

200
200
100

Profit Margin
Payout Ratio
Reserves and Surplus

100
60
40

0.500
0.188
0.075
0.113
0.531

0.2667

533.33
0.1500

0.0200
0.0550

5296
3475
2873
2014
890

15.63% 46.42% Inventory

35.53% 34.76% Net Asset Change
59.74% 34.94% Account Receivable
110.90% 116.12%
50.04
56.51

p by 20% the Share Holders Funds and Other Liabilities also up by 20%
tal current liabilities - Notes Payable increase in proportion to Sales.
increase in assets has to come from reserves and other capital instruments, the current gap of 410,000 has to be raised.

0.01875

Assumptions
1. Plant running at 100% capacity.
2. Incremental Sales go beyond Capacity.
3. All profitability ratios are operating at the same rate.

0.001500
0.548500
2.00%

1.0345
0.74850
1.36463

be raised.

$6,354.31
3430