Financial Management 2 (FINM4101)

Faculty of Economics and Management Science (FEMS)

Semester: First Semester

Level: 400

Year: 2019

Answers (200 )
THE UNIVERSITY OF BAMENDA
FACULTY OF ECONOMICS AND MANAGEMENT SCIENCES (FEMS)
DEPARTMENT OF ACCOUNTING 2018/2019 FIRST SEMESTER EXAMINA TIONS
Course: FINM410.1 - FINANCIAL MANAGEMENT II
Level: 400 (Year three) Duration: 02 Hours
Instructions: Attempt all the questions. OHADA Charts of Accounts and non-programmable calculators are allowed.
Exercise N°-1: FINANCIAL ANALYSIS (SYSCOHADA) / 25 Marks
The accounting Balance sheet of BOSE PLC as at 31/12/2018 is summarized as follows:
ASSETS
Amount
LIABILITIES
Amount
Fixed Assets (1)
200 000 000
Owner’s Equity (2)
250 000 000
Stocks
140 000 000
Financial Debts
150 000 000
Customers and related claims
150 000 000
Suppliers and related accounts
85 000 000
Cash
10 000 000 _
Overdraft
15 000 000
Total
500 000 000
Total
500 000 000
(1) Of which 20 000 000 CFAF of development fees are to be considered as not feasible.
(2) Including net profit of 50 000 000 CFAF.
Additional Information:
Safety stock is evaluated at 120 000 000 CFAF.
Land has depreciated by 650 000 CFAF.
In two months. 30 000 000 CFAF of net profit shall be appropriated to reserves and the balance paid to
shareholders.
10 000 000 CFAF of financial provisions for risks and expenses are unjustified.
5 000 000 CFAF of customers’ debts shall only be recovered in 2020.
Required:
1) Carry out the necessary reclassification of Assets and Liabilities. / 10 Mks
2) Establish the Liquidity Balance sheet. / 5 Mks
3) Calculate the Liquidity Working Capital, the Working Capital Needs, permanent financing ratio, financial autonomy
ratio and general solvency ratio. / 5 Mks
4) Briefly comment on the financial situation of BOSE PLC and give two measures to be taken in order to improve on her
situation. / 5 Mks
Exercise N°- 2: WORKING CAPITAL MANAGEMENT / 20 Marks
BSL LTD is a commercial firm located in Bamenda that uses the Miller-Orr model for cash management. After some
analysis, the management of the firm decides to set a minimum cash balance of 489 600FCFA. The square root of the
variance of the daily cash is 3 000 and the cost of transferring money to or from their Bank is 50FCFA per transaction. The
interest rate is 2.7% per quarter.
Required:
1) Calculate the optimum cash balance(return point). / 5 Mks
2) Calculate the Spread. / 4 Mks
3) Calculate the upper limit. / 2 Mks
4) Present a diagramme representing the above financial situation and comment on it. / 9 Mks
FINANCIAL ANALYSIS (IFRS).
/ 25 Marks
You are given the following information on a business:
Sales .................................................................... 1 500 000 CFA F.
Cash ..................................................................... 75 000 CFA F.
Stock ................. .. ............................................... 425 000 CFAF.
Current liabilities ................................................. 350 000 CFA F.
Asset turn over..................................................... 1.25 times
Current ratio ....................................................... 2.5 times
Debt to assets ratio ... ......................................... 40%
Receivables turnover ........................................... 6 times.
Current assets composed of cash, marketable securities, accounts receivable and stock.
Required: Calculate the following balance sheets items: Accounts receivable, Marketable securities, fixed assets and
Long-term debts.
END/GOOD LUCK