BUSINESS&FINANCE

Timeallowed1hours Totalmarks100

[N.B. The figures in the margin indicate full marks. Questions must be answered in English. Examiner will take account of the quality of language and of the way in which the answers are presented. Different parts, if any, of the same question must be answered in one place in order of sequence.] Marks 1. What is span of control in Management? Narrate the factors influence the span of control in an organization. 2. Following are the financial statements of XYZ Limited: Income Statement of XYZ Limited For the year ended 31 Dec. 2009 2009 Taka 3,095,576 2,402,609 692,967 744 333,466 18,115 342,130 74,200 267,930 1.40 12.76 100 2008 Taka 1,909,051 1,441,950 467,101 2,782 222,872 21,909 225,102 31,272 193,830 1.00 9.23 75 2+4 10

Revenue Cost of sales Gross profit Other income Admin expenses Finance cost Profit before tax Tax Profit for the year Dividend per share Earning per share Market price per share

Balance Sheet of XYZ Limited As at Dec. 2009 Assets: Non-current assets: Tangible assets Current assets: Inventory Receivables Cash in hand Total currents assets Total assets Equity and Liabilities: Equity: Ordinary shares @Tk.10 each Share premium account Retained earnings Non-current liabilities: 10% Loan notes Current liabilities Total equity and liabilities 2009 Taka 802,180 64,422 1,002,701 1,327 1,068,450 1,870,630 210,000 48,178 630,721 100,000 881,731 1,870,630 2008 Taka 656,071 86,550 853,441 68,363 1,008,354 1,664,425 210,000 48,178 393,791 100,000 912,456 1,664,425

From the above please calculate the followings: a) Current Ratio, b) Quick Ratio, c) Asset Turnover Ratio, d) ROCE, e) Debt Equity Ratio, f) Gearing Ratio, g) P/E Ratio, h) Dividend yield, i) Dividend cover and j) Interest cover. 3. a) Explain why SWOT analysis is important for corporate appraisal process. b) What is Gap analysis? How does this help management in setting future strategies? 4. Apollo Drinks and Beverages Ltd. operate many outlets throughout the country. Some of the vending machines in one of its outlets provide very little revenue, so the company is considering removing the machines and installing equipment to dispense soft ice cream. The equipment would cost Taka 80,000 and have an eight-year useful life. Incremental annual revenues and costs associated with the sale of ice cream would be as follows: Please turn over 5 5

2 Sales Less: Cost of ingredients Contribution margin Less: Fixed expenses Salaries Maintenance Depreciation Total fixed expenses Net operating income Taka 150,000 90,000 60,000 27,000 3,000 10,000 40,000 20,000

The vending machines can be sold for Tk.5,000 scrap values. The company will not purchase equipment unless it has a payback of three years or less. Should the equipment be purchased? Required: i. Compute the net annual cash inflow. ii. Compute the payback period. 5. a) What do you understand by Cost Volume Profit (CVP) analysis? b) You are advised to calculate the Break Even Point from the following data: Fixed costs: Monthly Lease Rent Insurance Total Monthly fixed costs Variable Costs: Materials Labor Total Variable costs Selling price Taka 100,000 50,000 150,000 3,000 4,000 7,000 10,000 10 5 5 5 5

6. Following are opening and closing data of Apon Aloy Ltd.s balance sheet and income statement for the year 2009: Calculate approximate length of the cash operating cycle. 1 Jan. Taka 800,000 200,000 600,000 10,000,000 6,000,000 31 Dec Taka 900,000 250,000 700,000

Accounts Receivable Accounts Payable Inventory Credit Sales Cost of Goods Sold

7. Product A currently sells for Tk.5, and demand at this price is 1,700 units. If the price fell to Tk.4.60, demand would increase to 2,000 units. Product B currently sells for Tk.8 and demand at this price is 9,500 units. If the price fell to Tk.7.50, demand would increase to 10,000 units. In each of these cases, calculate: a) The price elasticity of demand (PED) for the price changes given; and b) The effect on total revenue, if demand is met in full at both the old and the new prices, of the change in price. 8. Write short notes on the followings: Management information system (MIS) Balanced scorecard Perpetual inventory methods Basic trade-off: cost of holding vs. cost of running out of cash\ Fiduciary relationship 9. What is corporate governance? What are the objectives of corporate governance? 10. a) Define crisis management and what are the different types of business crisis. b) How business crisis can be addressed. 11. State the economic advantages of International Fare Trade. The End 5 5 10

3+3 2+3 5 8