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Test1 FIN430 PJJ NEW JUNE24

TEST 1 QUESTION 1

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110 views3 pages

Test1 FIN430 PJJ NEW JUNE24

TEST 1 QUESTION 1

Uploaded by

naziryusoff94
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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NAME: TEST1/JUNE2024/FIN430

UNIVERSITI TEKNOLOGI MARA


TEST ONE (20%)

COURSE : INTRODUCTION TO CORPORATE FINANCE

COURSE CODE : FIN430

SEMESTER : MARCH – JUNE 2024

TIME : 1 HOUR AND 15 MINUTES

INSTRUCTION TO CANDIDATES

1. This question paper consists of THREE (3) questions.


2. Answer ALL question in the given answer sheets.
3. Show ALL necessary calculations
4. Do not bring any material into the examination room unless permission is given by the
invigilator

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of 3 printed pages

© Hak Cipta UiTM Kota Bharu CONFIDENTIAL


NAME: TEST1/JUNE2024/FIN430
2

QUESTION 1
a) Explain the meaning of risk and return trade off (5 marks)
b) List and explain two (2) reasons to hold cash (5 marks)

QUESTION 2
As the financial executive of the company, you are required to evaluate financial performance of Roti
Kawan Sdn Bhd for the year 2023. Below are the income statement and balance sheet of the company:

Roti Kawan Sdn Bhd


Balance sheet as at December 31, 2023
Current assets Current liabilities
Cash 20,000.0 Account payables 15,000.0
Account receivables 80,000.0 Notes payable 60,000.0
Marketable securities 25,000.0 Accrued expenses 18,750.0
Inventory 85,000.0 Others 18,750.0
Total current assets 210,000.0 Total current liabilities 112,500.0

Fixed assets Bank loans 400,000.0


Equipments 210,000.0
Building 840,000.0 Equity
Depreciation -210,000.0 Partners' contribution 487,500.0
Net fixed assets 840,000.0 Retained earnings 50,000.0
Total assets 1,050,000.0 Total liabilities and equity 1,050,000.0

Roti Kawan Sdn Bhd


Income statement for the year ending December 31, 2023
Sales 900,000.0
Cost of goods sold 540,000.0
Gross profit 360,000.0
Administrative expenses 135,000.0
Depreciation 52,500.0
Interest expenses 12,000.0
Profit before taxes 160,500.0
Taxes 20% 32,100.0
Net Income 128,400.0

© Hak Cipta UiTM Kota Bharu CONFIDENTIAL


NAME: TEST1/JUNE2024/FIN430
3

Competitors’ ratio
Current ratio 2.50 times Debt ratio 40.00%
Quick ratio 2.00 times Debt equity ratio 1.00 Times
Inventory turnover 10.00 times Gross profit margin 50.00%
Average collection period 15.00 days Operating profits margin 25.00%
Assets turnover 2.00 times Return on investment 15.00%
Based on the competitors’ ratio;
a) Compute all the relevant ratios (16 marks)
b) Comment on the company’s liquidity and profitability performance (4 marks)

QUESTION 3
Sling Bag Supply (SBS) is confronting a cash trouble for 2024. The ending balances for June were negative
RM500. You are required to estimate its cash budget for the third quarter. Actual and forecasted sales are
as follow:
June July August September October
RM125,000.0 RM 140,000.0 RM 145,000.0 RM 150,000.0 RM 155,000.0

SBS usually collects 60% cash from all sales and 30% a month right after. The sales balance is collected in
the next month. The monthly rental income are RM10,000. All material inputs are purchased a month in
advance, which is 40% of the expected sales. Half of the purchases are paid in cash and the balance is paid
a month after. Monthly salary is normally RM35,000. Expenditure on wages and utilities are expected to
be 4% and 5% of each month sales, respectively. SBS is to purchase a new mechanical device to improvise
its production line at RM75,000. The payment will be made equally in three consecutive months beginning
July.

Estimate the net quarterly borrowings/investment if SBS is to maintain RM35,000 monthly cash balance.
(20 marks)

END OF QUESTION PAPER


© Hak Cipta UiTM Kota Bharu CONFIDENTIAL

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