JMD Tutorial’s JMD Tutorial’s Deepak Fulwadhaya 9820797729 Prakash Fulwadhaya 9967008172 JMD Tutorials - REVISION SHEET Question Bank for FRA Topic Sum numbers Vertical Formats Learn formats and list of items on Pg. 3. Problems -2,4,7 Common Size 1,7 & also go through extra practice sums given on pg. no 11 For comparative and trend – just go through the steps to solve given in revision sheet Fund Flow & Cash Flow Statements 4,5,7,8,9,10,14,15 Insurance Company accounts 3,6,9,12,14,19,20 Banking Company Accounts 6,8,16,18,21,23,26 Company Final Accounts 1,2,3,13,14,15,16,17,18,21. Sums & Theory given in Extra sheet Ratio Analysis 1,2,6,7,8,9,10,11,12,16,18,19,21,24,26.Functional Classification on pg.13 Theory Do ALL (Don’t keep theory for last minute. It is only 6 pages) Comparative and Trend- Format Steps for Comparative statements: 2 years will be given: make 4 columns. 1. Year 1: Amount 2. Year 2: Amount 3. Absolute increase/ decrease i.e Year 2 – Year 1 4. % increase / decrease i.e Column no 3/ Column 1 X 100 Note: If 3rd column is negative then 4th column will also be negative. The above formats is applicable for both Balance sheet and profit and loss Steps for Trend statements: normally 3 to 4 years are given Make extra columns for %. No of columns will be same as number of years. 1 year is taken as base year which is 100% and find % row wise for rest of the years. COMPANY FINAL ACCOUNTS-EXTRA PRACTICE SUM ON FIXED ASSET SCHEDULE (WHEN SALE OF ASSET TAKES PLACE IN BETWEEN THE YEAR) The Trial Balance of Ajay Ltd shows the following figures relating to Fixed Assets as on 31-3-2009 Particulars Rs. Plant & Machinery Land Goodwill Motor Vehicles Opening Depreciation Provision On Plant and Machinery On Motor Vehicles Sale proceeds of old machinery 4,20,000 1,60,000 1,00,000 80,000 1,78,000 44,000 60,000 Additional Information: 1) Depreciation to be provided during the year at 10% on Straight line method 2) There was an addition to Plant and Machinery on 30-6-2008 for Rs. 1,20,000 3) A Machinery costing Rs. 160,000 was sold on 30-6-2008, depreciation provided on it was Rs. 80,000 Prepare schedule of Fixed Assets. Hints for Plant and Machinery Sale is taking place not at the beginning but after using it for 3 months on 30.6.2008 Particulars Cost Accumulated depreciation WDV Opening balance 300000 178000 122000 Add: Purchase 120000 0 120000 Less: Sale 160000 80000 80000 Closing balance 260000 98000 162000 Calculation of Current Years Depreciation As depreciation is SLM breakup Cost of Rs.260000 into New Machinery Rs.120000 on which Depreciation @10% would be provided for 9 months Rs.9000 and balance is Old Machinery Rs.140000 on which Depreciation @10% would be provided for full year Rs.14000. Also in this sum Machinery has been sold not at the beginning but on 30.6.2008 after using it for 3 months, therefore Depreciation will be calculated @10% on 160000 for 3 months Rs.4000. Therefore Total Current years Depreciation is Rs.27000 (9000+14000+4000) which will go in Column 6 as current years Depreciation Cost 160000 AD 80000 WDV 80000 SP 60000 Loss 20000 FUND FLOW & CASHFLOW 1) If Net profit is given in adjustment-Ignore it 2) If Business Purchase Journal Entry does not tally-Difference in Dr side will be taken as Goodwill and difference in credit side will be taken as Capital reserve.
Vertical Formats Learn formats and list of items on Pg. 3. Problems -2,4,7
Common Size 1,7 & also go through extra practice sums given on pg. no 11
For comparative and trend – just go through the steps to solve given in revision sheet
Fund Flow & Cash Flow Statements 4,5,7,8,9,10,14,15
Insurance Company accounts 3,6,9,12,14,19,20
Banking Company Accounts 6,8,16,18,21,23,26
Company Final Accounts 1,2,3,13,14,15,16,17,18,21. Sums & Theory given in Extra sheet
Ratio Analysis 1,2,6,7,8,9,10,11,12,16,18,19,21,24,26.Functional Classification on pg.13
Theory Do ALL (Don’t keep theory for last minute. It is only 6 pages)
Comparative and Trend- Format Steps for Comparative statements: 2 years will be given: make 4 columns. 1. Year 1: Amount 2. Year 2: Amount
3. Absolute increase/ decrease i.e Year 2 – Year 1 4. % increase / decrease i.e Column no 3/ Column 1 X 100 Note: If 3rd column is negative then 4th column will also be negative. The above formats is applicable for both Balance sheet and profit and loss
Steps for Trend statements: normally 3 to 4 years are given Make extra columns for %. No of columns will be same as number of years. 1 year is taken as base year which is 100% and find % row wise for rest of the years.
COMPANY FINAL ACCOUNTS-EXTRA PRACTICE SUM ON FIXED ASSET SCHEDULE (WHEN SALE OF
ASSET TAKES PLACE IN BETWEEN THE YEAR)
The Trial Balance of Ajay Ltd shows the following figures relating to Fixed Assets as on 31-3-2009
Particulars Rs.
Plant & Machinery
Land
Goodwill
Motor Vehicles
Opening Depreciation Provision
On Plant and Machinery
On Motor Vehicles
Sale proceeds of old machinery
4,20,000
1,60,000
1,00,000
80,000
1,78,000
44,000
60,000
Additional Information:
1) Depreciation to be provided during the year at 10% on Straight line method
2) There was an addition to Plant and Machinery on 30-6-2008 for Rs. 1,20,000
3) A Machinery costing Rs. 160,000 was sold on 30-6-2008, depreciation provided on it was Rs. 80,000
Prepare schedule of Fixed Assets.
Hints for Plant and Machinery Sale is taking place not at the beginning but after using it for 3 months on 30.6.2008
Particulars Cost Accumulated depreciation WDV
Opening
balance
300000 178000 122000
Add: Purchase 120000 0 120000
Less: Sale 160000 80000 80000
Closing balance 260000 98000 162000
Calculation of Current Years Depreciation
As depreciation is SLM breakup Cost of Rs.260000 into New Machinery Rs.120000 on which Depreciation
@10% would be provided for 9 months Rs.9000 and balance is Old Machinery Rs.140000 on which
Depreciation @10% would be provided for full year Rs.14000. Also in this sum Machinery has been sold not at the beginning but on 30.6.2008 after using it for 3 months, therefore Depreciation will be calculated @10%
on 160000 for 3 months Rs.4000.
Therefore Total Current years Depreciation is Rs.27000 (9000+14000+4000) which will go in Column
6 as current years Depreciation
Cost 160000
AD 80000
WDV 80000
SP 60000
Loss 20000
FUND FLOW & CASHFLOW
1) If Net profit is given in adjustment-Ignore it
2) If Business Purchase Journal Entry does not tally-Difference in Dr side will be taken as Goodwill and
difference in credit side will be taken as Capital reserve.
Series A N.B. (1) All questions are compulsory. (2) Figures in the brackets to the right indicate the marks
Q 1. (A) Indicate the right answer with your reasoning: (10)
1. Unsystematic risk is
a. Internal risk
b. External risk
c. Controllable risk
d. Uncontrollable risk
e. Internal and controllable
2. The random walk theory suggests that the successive price changes are
a. Dependent
b. Interdependent
c. Correlated d. Uncorrelated
3. If the Efficient Markets Hypothesis is true:
i) Technical analysis will not help investors to make superior returns;
ii) Fundamental analysis will not help investors to make superior returns
Which of the following is correct? a) Neither i) nor ii)
b) i) but not ii)
c) ii) but not i)
d) Both i) and ii)
4. An individual who is carrying out technical analysis of the shares of a company would be likely to:
a. study annual report and accounts of the company
b. study the past pattern of share prices movements of the company
c. study the production process and marketing methods of the company
d. Compare the products produced by the company with those of its competitors.
5. Which measures the systematic or non-diversifiable risk of a security? (i) Beta (ii) Standard Deviation (iii) Variance (iv) Range
Q.1 (B) Mrs Agarwal had purchased on 1/7/2003, 100 shares of ABC @ Rs. 150 per share including
Brokerage and transaction tax of 1%. The face value of the share is Rs. 10. Company declared dividend as
under.
August 2003 Final Dividend of 40% for F.Y. 02-03 December 2003 Interim Dividend of 30%
August 2004 Final Dividend of 50% for F.Y. 03-04
December 2004 Interim Dividend of 20%
The company also declared Bonus shares in the ratio of 1:2 on 15th September 2004.
On 01/01/2005, she sold all her shares of ABC @ 510 per share, net of Brokerage and Transaction Tax @ 1%.
Calculate following for Mrs. Agarwal 1. Holding Period Return
2. Annual Rate of Return. (5)
OR
Q.1 (a) What are the approaches to investment decision making? (5)
(b) "Mutual Fund' acts as a boon to investors in general and small investors in particular". Explain. (5)
(c) Primary Market v/s. Secondary Market. (5)
Q.2 (a) Mittal Enterprises purchases a machinery for Rs. 1,00,000 on the 1st of January 1999. The cash flows expected from the machinery are as follows: (10)
The depreciation on machinery is to be provided @ 10% p.a. on written down value method. At the end of 2004 the machinery is sold at a loss of Rs. 7,500. The rate of interest being 9%, comment on your decision. The Present value of Re.
1 at 9 % discounting rate are .917, .842, .772, .708, .649
Q.2 (b) Krishnamurthy has inherited Rs. 1000 a year for the next 20 years. First payment being made in one
year’s time. However, he is in need of money immediately & would like to sell his income to any buyer who
would pay him the right price. Assume current market rate of interest is 9%. PVAF = 9.129 @9%, 20yrs a) What should be the right price he should accept?
b) How much of his income should he sell if he wants only Rs. 2500 at present? (5)
OR
Q.2) (a) What is DU Pont analysis? (7)
(b) Explain the role of SEBI and the future challenges faced by it. (8)
Q.3 The information below is taken from the records of two companies in the same industry (in 000). (15)
Particulars X Y
Cash
Debtors-net
Stock
Plant and equipments
210
330
1,230
1,695
320
630
950
2,400
Total assets 3,465 4,300
Sundry creditors
8% Debentures
Equity share capital
Retained earnings
900
500
1,100
965
1,050
1,000
1,750
500
Total liabilities 3,465 4,300
Sales
Cost of goods sold
Other operating expenses
Interest expenses
Income taxes
Dividends
5,600
4,000
800
40
266
100
8,200
6,480
860
80
273
180
Answer each of the following questions by making a comparison of one or more relevant ratios.
a) Which company is using the ordinary shareholders' money more profitably?
b) Which company is better able to meet its current debts?
c) If you were to purchase the debentures of one company, which company's debentures would you buy?
d) Which company collects its receivables faster, assuming all sales to be credit sales?
e) Which company is extended credit for a longer period by the creditors, assuming all purchases to be credit
purchases?
f) How long does it take the company to convert an investment in stock to cash?
g) Which company retains the larger proportion of income in the business?
h) If you were to purchase shares of one company, which company’s shares would you buy?
OR Q. 3(a) Pan India Products pays a dividend of Rs. 2.2 per share and this dividend is expected to grow at 12%
p.a. for three years, then at 10% for the next three years, after which it will stabilize at 5% forever.
What value would you place on the equity if 10.5% rate of return were expected? PVF = 1/(1+r)n (10)
Q.3 (b) A Bond of Rs. 1,000 face value with a coupon of 7% is redeemable after 5 years at a premium of 5%.
The required rate of return is 8%. The current market price of the bond is Rs. 940. Whether investment at current market price of Rs. 940 is advisable? The Present Value of Re. 1 at 8% discounting rate are, 0.9259,
0.8573, 0.7938, 0.7350 and 0.6806. (5)
Q.4) The rate of return on the Mutual fund and on the market portfolio are given below (15)
Year Fund A % Fund B % Market Portfolio %
1997
1998 1999
2000
2001
20
16 30
40
30
15
18 40
35
40
10
9 20
18
20
Calculate:
a. Expected return of A, B & Market portfolio,
b. Standard Deviation of A, B & Market portfolio, c. Beta of A & B
d. If the risk free rate of return is 10%. Rank these funds by Jensen’s, Sharpe’s and Treynor’s
Performances Indexes. OR
Q.4 (a) What is technical analysis? How it is different from Fundamental analysis ? (7)
Q.4 (b) What is an option ? What are the different types of options ? (8)
N.B. (1) All questions are compulsory. (2) Figures in the brackets to the right indicate the marks
Q (A) Indicate the right answer with your reasoning: (10) 1. Investment process takes into account
a. Time dimension
b. Today’s sacrifice
c. Prospective gain
d. All of the above
e. None of the above 2. 90 days Treasury Bills of Rs. 100 are sold for Rs. 97 per bill. The annualized rate of return on this
investment is:
a. 12.37%; b. 4.04%; c. 11.88%; d. 3%
3. The approach towards investment decision which involve the price movements of the securities and
drawing inferences from the price movement in the market is known as a. Fundamental Approach
b. Technical Approach
c. Psychological approach
d. Efficient market theory approach
4. When a portfolio consisting of 12 to 15 securities is built then,
a. Unsystematic risk can be reduced b. Systematic risk can be reduced
c. Total risk can be reduced
d. None of the above
5. If the Net profit margin (NPM) is 5% and Return on total assets (ROTA) is 20%, then the Total Asset
Turnover ratio is a. 100, b. 0.25, c. 4, d. none of the above.
Q1 (B) Give the full forms of the following: (5)
a) SBTS b) PMS c) NCDEX d) BOLTS d) OTCEI
OR
Q.1) a) Explain the term investment. What are the attributes/ Principles/ objectives of investment? (7) b) Investment is a game but you must know how to play it. Explain this statement keeping in view various
approaches to investment decision making. (8)
Q.2) Write short notes on:
a) Primary V/s. Secondary Market (4) b) Stock Market Indices – its functions and limitations (4)
c) SEBI & Future Challenges (4)
d) Stock Markets abroad (3)
OR
Q2) (A) The following information is available in respect of Company A and Company B: (10)
Particulars Company A Company B
Equity shares of Rs. 10/- each 20,00,000 25,00,000
9% Preference Shares 8,00,000 10,00,000
Reserves & Surplus 40,00,000 50,00,000
Profit after Tax 60,00,000 80,00,000
Proposed Equity Dividend 36,00,000 40,00,000
Market Price per share Rs. 96 Rs. 132
Depreciation 400000 700000
Calculate: 1. EPS; 2. Cash EPS; 3. P/E ratio; 4. Dividend Payout ratio; 5. Retention ratio; 6. Dividend Yield ratio; 7. Dividend Cover for Preference and Equity separately 8. Book Value per share. Advise which company
is worth investing.
Q.2) (B) Mr. Puneet is planning to invest Rs. 50000 on Xerox machine on 1st Jan 2002. He estimates net cash
income from Xerox machine in next 5 years as under: (5)
Year Estimated Inflows
2002 12000
2003 15000
2004 18000
2005 25000
2006 30000
At the end of 5th year machine will be sold at scrap value of Rs. 5000. In addition to investment in machine he will also invest Rs. 10000 for working capital at the beginning of venture. Advice him whether his project is
viable, considering interest rate of 10% p.a. PVF @ 10% for Year 1 to Year 5 are, .909, .826, .751, .683, .621.
Q.3) (A) As per the financial accounts for the last year, the company has paid dividend @ 20%. Amount of
paid up equity capital is Rs. 600000 and 10% preference share capital Rs. 1,00,000. Operating Profit is Rs.
4,00,000. The tax rate is 40%. The company expects a growth rate of 3%. The required rate of return is 10%. Compute value per Equity Share using: a) Dividend approach, (b) Dividend Growth Approach; (c) Earnings
approach (10)
Q.3) (B) what do you understand by Random Walk Theory? Explain its different forms. (5)
Q.3) (A) Munnas equity shares currently sells for Rs. 66 per share. His Finance Manager Mr. Circuit
anticipates a constant growth rate of 15% and dividend per share of Rs.3.00. (5) a) What is the expected rate of return if the share is sold for Rs.70?
b) If the required rate of return is at 20 percent, what would be the indicative value of the stock?
c) Is it worth investing in the share?
Q.3) (B) You are considering an investment in one of the following Bonds:
Coupon Rate Maturity Price (Rs. 100 par value)
Bond A
Bond B
12%
10%
10 Years
6 Years
Rs. 70
Rs. 60
What is YTM of each Bond & which Bond would you recommend for investment? (5)
Q.3) (C) An Rs.5000 bond with a 12% coupon rate matures in 8 years and currently sells at 96%. Is this bond
a desirable investment for an inverter whose required rate of return is 10%?
PVAF @ 10% for 7 years = 4.868 and PVF @ 10% for 8th year = 0.467 (5)
Q.4) (A) Following information is available in respect of the rate of return of two securities A and B in different
economic conditions: (8)
Condition Probability Rate of Return
Security A Security B
Recession
Normal
Boom
.20
.50
.30
-.15
.20
.60
.20
.30
.40
Find out the expected returns and the standard deviations for these two securities suppose an investor has Rs.
20,000 to invest. He invests Rs. 15,000 in security A and balance in security B, what will be the expected
return and the standard deviation of the portfolio?
Q.4) (B) The details of three portfolios are given below. Compare these portfolios on performance using the
Sharpe, Treynor and Jensen’s measures. (7)
Portfolio Average return Standard deviation Beta
JMD Growth Fund
Reliance Growth Fund
Templeton Growth Fund Market index
15%
12%
10% 12%
0.25
0.30
0.20 0.25
1.25
0.75
1.10 1.00
The risk free rate of return is 9%.
OR
Q.4) Explain in detail the steps/ elements/ phases in the construction of a portfolio. (15)
JMD TUTORIAL’s - FRA Prelims – Series B Q.1) On 31st March, 2008, the foll balances stood in the books of New Bank Ltd. after preparing final a/cs.
Particulars Rs. ‘000 Particulars Rs. ‘000
Share Capital Reserve fund
Fixed deposit accounts Savings bank accounts Current Accounts (credit) Money at call and short notice Investments at cost Profit and Loss Accounts (credit 1-4-2007) Dividend for 2007 Land and Buildings (after depreciation upto 31-3-2008) Cash in hand
7,000 4,900
13,300 42,000
1,12,000 4,200
42,000 2,940
700 14,890
840
Cash with RBI Loans, overdrafts and Cash Credits
Cash with other banks Borrowings from other banks Bills discounted and purchased Sundry creditors Bills payable Unclaimed dividend Bills for collection Acceptances on behalf of customers Net Profit for 2007-08
21,000 98,000
18,200 8,800 8,400
420 11,200
420 1,960 2,800 3,360
The net profit is after deducting provisions for bad debts Rs. 4,20,000 tax provision Rs. 14,00,000 and Rebate on bills discounted Rs. 70,000. Prepare Balance Sheet of the bank as on 31-3-2008.
OR
Q.1) (A) Following are the details of advances if Swedish Bank Ltd. as on 31st March 2008.
Bills purchased and discounted (others)
In India
Out of India
Term Loans in India
Priority sector
Public sector
Banks
Others
Term loans out of India
Banks
Others
Demand loans in India
Banks
Others
8,782
1,653
12,782
1,289
1,652
28,256
278
4,285
750
11,279
Cash Credits in India
Priority sector
Public sector
Others
Cash credits out of India
Banks
Others
Overdrafts in India
Banks
Others
Overdrafts out of India
Others
Demand loans out of India
Others
11,250
6,105
31,250
1,225
469
4,523
11,785
250
620
Prepare schedule 9 of Advances in the statutory format.
Q.1 (b) Following are the statements of interest on advance in respect of performing & non-performing assets. Find out the
income to be recognized for the year ended 31st March 2008. (Rs in Lakhs) 5 marks
Performing Assets Interest Earned Interest Received
C.C. and Overdrafts
Term Loan
Bills purchased and Discounted
1,800
480
700
1060
320
550
Non- Performing Assets
C. C. and Overdrafts
Term Loan
Bills purchased and Discounted
450
300
350
70
40
36
Q.2) From the following balances as at March 31, 2004 in the books of General Insurance Co. Ltd. prepare a Revenue
Account in respect of Fire Insurance business carried on by them.
Particulars Rs
Claims
Claims outstanding on April 1, 2003
Claims intimated and accepted, but not paid on March 31, 2004
Premium received
Re-insurance Premium
Commission
Commission on re-insurance ceded
Commission on re-insurance accepted
Expenses of Management
Provision for unexpired risk on April 1
Additional provision for unexpired risk on April 1
Re-insurance recoveries of claims
Survey expenses regarding claims
Loss on sale of Motor Car
Bad debts
Interest in income tax refund
Interest and Dividends (Net)
Income tax deducted thereon
Legal expenses regarding claims
Profit on sale of investments
Depreciation of Furniture
4,80,000
40,000
70,000
12,00,000
1,20,000
2,00,000
8,000
4,000
3,02,000
4,00,000
20,600
8,000
5,000
3,500
2,500
4,500
8,000
1,500
4,000
3,500
4,600
You are required to provide for additional reserve for unexpired risk at 1% of the net premium.
Goodwill Land & Building Plant & Machinery Cash Sundry Debtors Sundry Advances Stock
— 89,100 67,770 1,500
51,105 1,389
66,624
12,000 86,550 69,720 1,620
43,575 441
58,422
2,77,488 2,72,328 2,77,488 2,72,328
The following additional information is obtained: -
1. During the year ended 31st March 2002, an interim dividend of Rs. 16,000 was paid,
2. The assets and liabilities of another company were purchased for Rs. 36000 payable in fully paid shares or the
company. These assets consisted of stock Rs. 14,984, machinery Rs. 11,016 and goodwill Rs. 12,000 and creditors
Rs. 2,000, Additional plant for Rs. 3,390 was purchased.
3. Income tax paid during the year amounted to Rs. 15,000.
You are required to prepare a statement showing the source and application of funds for the year ending 31st March 2002
and a schedule of changes in working capital.
Q.4) Based on the following information, prepare Balance Sheet of Dhoni Ltd. as on 31st march, 2006.
Current Ratio Liquidity ratio Net Working Capital
Stock Turnover Ratio Turnover Ratio to Net Fixed Assets (COGS/FA) Ratio of Gross Profit to sales Average Debt Collection period Fixed Assets to Net Worth Long Term debt to Capital and Reserve
2.5 1.5
600000
5 2
20% 2.4 months
0.80 7/25
OR
Q.4) From the following balance sheet presented by Messrs. Deepak Ltd. prepare common size statement
Liabilities Rs. Assets Rs.
Share Capital
Reserves
Dividend Equalisation Reserve
Profit and Loss A/c.
15% Debentures
Public Deposits
Creditors
Outstanding Expenses
Proposal Dividend
Provision for Taxation
1,35,000
34,000
10,000
10,000
45,000
62,010
20,920
5,000
16,200
12,600
Goodwill
Preliminary Expenses
Land and Buildings
Plant and Machinery
Furniture
Investment
Debtors
Bank Balance
4,450
500
45,000
85,000
40,500
49,500
1,14,170
11,610
Total Rs.
3,50,730
Total Rs.
3,50,730
1. Fixed Assets are shown in balance sheet at Gross Value. Accumulated depreciation is 10% of gross block value and
wrongly included in Reserves.
2. Out of investments, which are otherwise current in nature, a sum of Rs. 1,500 is represented by the shares of a co-
operative society, who has allotted shares enabling the company to occupy its office premises.
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