Principles of Finance (FINC2202)

Higher Institute of Commerce and Management (HICM)

Semester: Second Semester

Level: 200

Year: 2015

Answers (200 )
THE UNIVERSITY OF BAMENDA
HIGHER INSTITUTE OF COMMERCE AND MANAGEMENT (HICM)
PRINCIPLES OF FINANCE C.A
LEVEL 100, SECOND SEMESTER 2014/2015
COURSE MASTER: ARMSTRONG-PEACE N F
INSTRUCTIONS: Answer all questions
QUESTION 1 (10 marks)
The financial statement of BREADWINER Ltd presents the following information; Sales (all on credit)
40,000,000 FCFA in the year 2014,
Sales to total assets 2 times
Total debt to asset 30%
Current ratio 3 times
Inventory turn over 5 times
Average collection period 18 day's
Fixed assets turnover 5 times
Work Required: Using the information above; fill in title balance sheet below.
Cash
Current debt
Accounts receivable
Long term debt
Inventory
Total debt
Total current assets
Equity'
Fixed assets
Total assets
Total debt + equity
QUESTION 2 (15 Maries)
ACC WIZARD’S lot United Ltd presents the following information for the year ended 31
st
December 2014.
ELEMENTS
AMOUNT(in.FCFA)
Cost of goods sold
22,500,000
Preferred stock dividends ~ 157^00
Taxes
742,500
Selling and administrative expenses
4,050,000
Interest expenses
300,000
Turn over
30,000,000
Depreciation expense
750,000
Common stock shares outstanding
1,500,000
ASSETS
LIABILITIES# STOCKHOLDERS EQUITY
Current assets 2013 2014 Current liabilities (CL) 2013 2014
Cash
450,000
600,000
Accounts payable
675,00
0
1300,000
Marketable securities
150,000
150,000
Notes payable
1,500,00
0
1,500,000
Accounts receivable
(net)
2,550,000
3,000,000
Accrued expenses
525,00
0
450,000
Inventory
2,400,000
2,700,000
Total CL
2,700,00
0
3,150,000
Prepaid expenses
450,000
300,000
Long term liabilities
Total current assets
6,000,000
6,750,000
Bonds payable
600,00
0
1,350,000
Long term investments
300,00
0
750,000
Total liabilities
3300,000
4300,000
Plant & equipment
15,000,000
16,500,000
Stockholders’ equity
Less accumulated
depreciation
8,250,000
9,000,000
Preferred stock 100 FCFA par
value
750,00
0
750,000
Net plant & equipment
6,750,000
7,500,000
Common stock 1 FCFA par
value
1300,000
1,500,000
Capital paid in excess of par
3,750,00
0
3,750,000
Retained earnings
3,750,00
0
4300,000
1
Total stockholders’ equity 9,750,00
0
10500,000
Total assets
13,050,000
15,000,000
Total Liabilities and
stockholders’
equity
13,050,00
0
15,006,000 |
Work required: prepare the income statement, statement of retained earnings and cash fiow statement for
ACC WIZARD’S Int. United Ltd.
QUESTION 3 (5 Marks)
Cameroon-Emergency Int. Ltd’s projected income statement is as follows;
Base year
Year 2
Sales (in FCFA) 45,000
4.9,500
VC (1,800)
(2,025)
FC
(18,000)
(18,000)
EBIT
25,200
29,520
Interest
(1,200)
(1,200)
EBT 24,000
28,320
Tax (15%)
(3,600)
(4,248)
Net Income
20,400
24,072
Work Required: Calculate the degree of operating leverage, the degree of financial leverage and
the degree of combined leverage. GOODLUCK!!!