Mgmt630 HRM630 Assignment No. 1 solution

The Assignment:

ABC Corporation is an Information Technology based company in Pakistan who has undertaken many successful projects. Realizing the importance of knowledge management, ABC Corporation formally decided to manage and utilize knowledge effectively. Discuss and explain any three drivers that compel the organization for effective knowledge management.”

Answer/solution:

There are many solutions for Knowledge Management (KM) ranging from a simple to sophisticated system that can help develop and manage the entire knowledge capital. Hence, it is important to embrace effective KM solution by focusing on identifying all the pain points of an organization. We should be aware of what we know, what we need to know, why we need to know, how we can gain knowledge and what are its value to our organizations.

KM/Business Processes

This is about the KM processes we follow in our business functions.

* Every business has many business functions such as strategy, planning, research, development, marketing, service, administration, training and so on.

* Each of these business functions involves extensive knowledge. There is always room for improvements, need for creativity and need for learning. Every function can be better and different when it is systematically approached.

* Managing the knowledge and needs involves various stages (knowledge life-cycle) from strategy to measuring its value. Lack of linkage between our actions and business needs drains our energy and makes our effort a futile exercise.

* Addressing the KM processes through best practices and knowledge life cycle in a systematic and innovative manner helps to meet the business challenges.

* KM is not about Business Process Re-engineering (BPR) but it is about identifying the knowledge activities in each of the business processes.

Knowledge Communities

It covers collaborative culture, community practices, collaborative learning and the people side of KM. * Human capital forms the core part of business processes. Everyone is involved in learning and development.

* Knowledge is becoming increasingly complex but the time available to develop, manage and utilize the knowledge is becoming shorter and shorter.

* These increasing complexities drive people to work in team and in harmony not only for execution but also for learning and thinking. Developing personal mastery and team mastery will take us towards our goal.

* Everyone has the capability to dream, learn, execute and communicate but connecting what we learn with other's learning is a challenge. It is essential to make everyone to perform at their optimum level.

* Whenever a team is involved in any of these processes, a common platform or a consistent model is needed to minimize chaos and maximize result. People can be part of the system unconsciously.

Core-Competency

To achieve core-competency is the collective capability, true intellect or unique talent of an organization developed over a period. It is an integral part of an organization.

* Core-competency is nothing but a combination of team capacity and collective intangible assets driven by a system that includes people, people and products (technology).

* It is the combination of people, knowledge and processes. It can also be called as "7th sense" or "organization's knowledge base in action". Knowledge is ultimately delivered in the form of products, contents and services.

* Developing core-competency takes time. Working as "one team" and building core-competency makes organization unbeatable.

* Proper understanding and implementation of KM is essential for this development.

* Core-competency should be in the subconscious mind of the organizations to ensure that the people naturally perform and embrace a common model to reach the common target without difficulties.

Fin621 Assignment No. 1 Announced

Semester “Spring 2011”

“Finanacial Statement Analysis (FIN621)”

Assignment No. 01 Marks: 15

“Adjusting entries and its effect”

Question:

Eagle Security Service (PVT) Ltd. provides security solutions to various offices and shopping centers in the city. The books of accounts of the company are closed at the end of the calendar year. The following transactions occurred during the financial year 2009.

1. On August 01, the company received Rs. 40,000 as advance payment from ABC Shopping Mall for security services that are to be performed for the period of four months starting from August 01. The accountant of the Eagle Security Service recorded the same amount by crediting the “services revenue account” on August 01, 2009.

2. XYZ Company Limited filed a lawsuit against the Eagle Security Service (PVT) Ltd. For claims of worth Rs. 30,000 but the suit has not yet been settled.

3. On December 01, 2009, the company received Rs. 36,000 from the “Stylish Jewelers” located on the Main Boulevard for security services to be performed for the period of six months starting from December 01,2009. The entire amount was credited to the “unearned services revenue account”

4. The company uses a rental building as head office for which rent is accrued of Rs. 80,000 for twelve months up to the end of December but the company usually records rent expense when the rent is actually paid. Rent is normally paid in the first month of next year.

5. Entries are recorded for salaries expenses when employees are actually paid. Salaries are still to be paid amounting to Rs. 50,000 of one month till December 31, 2009.

6. On December 01, 2009 the company borrowed Rs. 300,000 from National Bank of Pakistan by issuing a 15% note payable due after six months. No entry is passed by the accountant yet.

7. On October 31, 2009 the company made a payment of worth Rs. 18,000 for insurance policy of one year starting from the beginning of November 01 2009. The whole amount was recorded as “prepaid insurance account”.

8. No depreciation expense for year has been recognized of the fixed asset having the cost of Rs. 80,000 and the book value of Rs. 51,200. Previously assets were depreciated (written down value method) @ 20% per annum.

Instructions:

1. For each above transaction pass the adjusting entry, if required; at December 31,2009. (Simply state “NO” with one line reason where adjusting entry is not required).

2. Explain the effect after adjustments on the “Expenses, Assets and Owners’ equity”of the company. Use the below format where “I” = increase , “D” = Decrease and “NE” = No Effect

Sr. No

Expense

Asset

Owners’ equity

1

2

3

4

5

6

7

8

Important Tips

1. This Assignment can be best attempted from the knowledge acquired after watching video lecture no. 1 to lecture no 13 and reading handouts as well as recommended text book).

Schedule

Opening Date and Time

April 22, 2011 At 12:01 A.M. (Mid-Night)

Due Date and Time

April 27 , 2011 At 11:59 P.M. (Mid-Night)

Note: Only in the case of Assignment, 24 Hrs extra / grace periodafter the above mentioned due date is usually available to overcome uploading difficulties which may be faced by the students on last date. This extra time should only be used to meet the emergencies and above mentioned due dates should always be treated as final to avoid any inconvenience.

Important Instructions:

Please read the following instructions carefully before attempting the assignment solution.

Deadline:

• Make sure that you upload the solution file before the due date. Noassignment will be accepted through e-mail after the due date.

Formatting guidelines:

• Use the font style “Times New Roman” and font size “12”.

• It is advised to compose your document in MS-Word 2003.

• Use black and blue font colors only.

Solution guidelines:

• Every student will work individually and has to write in the form of ananalytical assignment.

• Give the answer according to question, there will be negative marking

for irrelevant material.

• For acquiring the relevant knowledge don’t rely only on handouts butwatch the video lectures and use other reference books also.

Rules for Marking

Please note that your assignment will not be graded or graded as Zero (0) if:

• It has been submitted after due date.

• The file you uploaded does not open or is corrupt.

• It is in any format other than .doc (MS. Word)

• It is cheated or copied from other students, internet, books, journals etc…

Fin622 GDB No. 1 Announcement

Semester “Spring 2011”

“Corporate Finance (Fin622)”

This is to inform that Graded Discussion Board (GDB) will be opened according to the following schedule

Schedule

Opening Date and Time

April 19 , 2011 At 12:01 A.M. (Mid-Night)

Closing Date and Time

April 22 , 2011 At 11:59 P.M. (Mid-Night)

Topic/Area for Discussion

“ Capital budgeting”

Note: The discussion question will be from the area/topic mentioned above. So start learning about the topic now.

Discussion Question
Usually NPV and IRR techniques of project evaluation leads to the same ranking for given projects and make the decision to undertake project relatively simple. But sometimes it does happen that a ranking conflict arises by using both techniques i.e. both techniques provide contradictory ranking of given projects.

You are required to discuss the circumstances when NPV and IRR lead to a ranking conflict for two projects?

Your answer should be relevant and should not exceed 4 to 5 lines.
:::::::::::::::::::::::::
Solution:

NPV and IRR Conflict
Conflicts between NPV and IRR can arise in numerous circumstances: different lives, different sizes, different risk factors, or different timing of cash flows. The underlying cause of the conflict resides in the assumption of cash flow reinvestment. The process of discounting and time value of money is predicated on interest compounding and discounting is predicated on what discount rate is chosen. In IRR calculation, the implied interest rate of reinvestment of cash flows is IRR itself. In NPV calculation, it is the discount rate. Which of the two methods is correct depends on the choice of what is a more realistic rate of reinvestment of cash flows: IRR or discount rate. Most often the reinvestment opportunities that a company has are those that can earn its weighted average cost of capital, because it is what its projects earn on average. Relying on an assumption of weight average cost of capital as the reinvestment opportunity is also more conservative. Thus, NPV is most often the safest basis for decision.
But that may not be always the case. For instance, choosing projects that have positive NPV implies that they earn a higher return than risk adjusted cost of capital. This implies that we expect opportunities for reinvestment of cash flows at higher rates. Higher rates of return can also be required when future inflation is anticipated. To investigate the impact of cash flow reinvestment opportunity, advanced textbooks in financial management recommend calculating an adjusted NPV and an adjusted IRR. These are obtained by first calculating a terminal value which is the future value of cash flows compounded at the opportunity rate of reinvestment calculation of future value). Then the terminal value is discounted to the present using the weighted average cost of capital. Thus the adjusted NPV is given by
(Ct(1+k0)t ) * ((1 + kc )n – 1) / kcSAdjusted NPV = - I0 +
where I0 = initial outlay
Ct = cash flows
k0 = opportunity rate of reinvestment
kc = weighted average cost of capital
t = time period
n = length of project
Likewise, the adjusted IRR is given by
(Ct(1+k0)t ) * ((1 + x )n – 1) / xSAdjusted IRR = x where I0 =
By using the same rate of reinvestment of cash flows for NPV and IRR removes the conflict between NPV and IRR. The additional steps required in the calculation of adjusted NPV and IRR are not intuitively appealing. The complexity of the procedure makes it rather unpopular, and as long as conservative rates of reinvestment are used the results merely confirm the conclusion reached with the unadjusted NPV. This gives even more reason to rely on ordinary NPV. Also keep in mind the rough estimates often used in cash flow projections: the theoretical complexity seems somewhat remote from reality.
:::::::::::::::::::::::::::::::::::
Assuming these projects are mutually exclusive, the circumstances that lead to conflict include this: project a generating less cash flow in the first couple of years and then generating most of total cash flow in the last years of the project. project b is the opposite; it is generating most of its cash flow in the first couple of years and then generating the least in the last years of the project.

When everything is summed up for the two projects, project a has generated more cash flow than project b. However, the IRR is greater for project b. how is this so? remember that we are discounting the cash flows. So, project a having most of its cash flow in the last years meant it had to be discounted back more years, resulting in less present value. project b having most of its cash flow in the first years led to a greater return when NPV is zero.

What you see is that when the discount rate is zero, the NPV is greater for project a since it generated more total cash flow. As you increase the required return, you then see that at some point, there will be a crossover, and the NPV of project b will be greater than project a. This is how NPV and IRR leads to ranking conflict.

To sum up, if you have two projects in which project x has greater cash flows and most of those cash flows happen at the end of the project's cycle, it is more attractive if the discount rate is lower since the NPV will be higher than project y. for project y which has lower cash flows and most of those cash flows happen at the start of the project, it is more attractive if the discount rate is high since the NPV will be higher than project x.

Thus, in a situation where you could only choose one project and not both, you first would calculate the crossover point, the point in which both projects have the same NPV and required return. You would then check where the investors' expectations are concerning their required rate of return. If it is lower than the crossover discount rate, then project x is a better choice than project y.

Mgt402 Assignment solution

Solution:

Question # 1
Over/under applied FOH Rs.2,760 Under Applied
Adjustment on entire production:
Work in process cost 42,631
Finished goods cost 31,598
Cost of goods sold 821,031
Question # 2
Economic order quantity 10,000
Effect of cost reduction on EOQ 9,997 (No Effect)

Working:

Over/under applied FOH:

Applied FOH = Rs.290,000 x 30% of Direct Labor
= Rs.87,000
Actual FOH = Indirect Labor + Depreciation + Light & Power + Repair to Machinery + Misc. FOH
= 46,000 + 4,700 + 4,260 + 5,800 + 29,000
= Rs.89,760

Over/under applied FOH = 87,000 - 89,760
= Rs.2,760 Under Applied


Cost of Goods Sold Statement

Direct Material Consumed 440,000
Add: Direct Labor 290,000
Add: FOH Cost (290,000* 30%) 87,000
Total Factory Cost 817,000
Add: Opening W.I.P 41,200
Less: Ending W.I.P (42,500)
Add: Opening Finished Goods 34,300
Less: Closing Finished Goods (31,500)
Cost of Goods Sold (At Normal) 818,500


Adjustment on entire production:

Work in process cost (42500 + 131) 42,631

Finished goods cost (31,500 + 98) 31,598

Cost of goods sold (818,500 + 2,531) 821,031


2- EOQ = √2 x RU x OC / UC x CC%

= √2 x 120,000 x 1,500 / 60 x 6%
= 10,000

Effect of cost reduction By 2% on EOQ

EOQ = √2 x RU x OC / UC x CC%

= √2 x 120,000 x 1,470 / 60 x 5.88%
= 9,997

MKT 501 quiz 2

Question # 1 of 15 ( Start time: 03:59:52 PM)

Total Marks: 1

Decisions regarding covering area of a product are included in which of the following marketing strategy of a market plan?

Select correct option:

Distribution

Promotion

Pricing

Product

Question # 2 of 15 ( Start time: 04:02:10 PM)

Total Marks: 1

A firm is developing a new product and has placed the advertisement of the product. The firm is at which stage of the new product development process?

Select correct option:

Commercialization

Concept development

Beta testing

Business Analysis

Question # 3 of 15 ( Start time: 04:03:10 PM)

Total Marks: 1

Tight cost control is associated with which of the following strategy?

Select correct option:

Market segmentation strategy

Market dominance strategy

Differentiation strategy

Cost leadership strategy

Question # 4 of 15 ( Start time: 04:03:51 PM)

Total Marks: 1

Which of the following 4Ps of marketing mix involves decisions regarding channels coverage, assortments, locations, inventories or transports?

Select correct option:

Product

Price

Place

Promotion

Question # 5 of 15 ( Start time: 04:05:18 PM)

Total Marks: 1

Which of the following are called value maximizers?

Select correct option:

Sellers

Customers

Marketers

Manufacturers

Quiz Start Time: 03:59 PM

Question # 6 of 15 ( Start time: 04:06:24 PM)

Total Marks: 1

Sales decline in the decline stage of the PLC because of technological advances, increased competition, and ___.

Select correct option:

Shifts in unemployment

Shifts in the economy

Shifts in consumer tastes and preferences

Foreign imports

Question # 7 of 15 ( Start time: 04:07:05 PM)

Total Marks: 1

Which of the following are products and services bought by final consumers for personal consumption? These include convenience products, shopping products, specialty products, and unsought products.

Select correct option:

Material and parts

Consumer products

Industrial products

Capital items

Question # 8 of 15 ( Start time: 04:07:36 PM)

Which of the following is NOT a technique of measuring customer satisfaction and monitoring customer’s complaint?

Select correct option:

Customer complaints database

Exit interviews

Web and telephone information hotlines

Business Analysis

Question # 9 of 15 ( Start time: 04:08:07 PM)

Total Marks: 1

During which stage of new product development does the firm consider profitability?

Select correct option:

Idea generation

Business analysis

Market testing

Product development

Question # 10 of 15 ( Start time: 04:08:42 PM) Total Marks: 1

Which of the following markets involve buying and selling of goods for their utility and enabling them to make or re-sell a product to others?

Select correct option:

Consumer markets

Business markets

Global markets

Government markets

Quiz Start Time: 03:59 PM

Question # 11 of 15 ( Start time: 04:09:43 PM)

Total Marks: 1

Which of the following is TRUE about marketing concept?

Select correct option:

The customer is always right

Business is about making money

Sell, sell, and sell

Keep prices low

Quiz Start Time: 03:59 PM

Question # 12 of 15 ( Start time: 04:11:11 PM)

Total Marks: 1

Which of the following BEST describes the consumer’s preference for products that are widely available to them?

Select correct option:

Production concept

Marketing concept

Selling concept

Product concept

Quiz Start Time: 03:59 PM

Question # 13 of 15 ( Start time: 04:11:54 PM)

Total Marks: 1

Which of the following emphasizes on profit margins rather than revenue?

Select correct option:

Market leader

Market challenger

Market nicher

Market follower

Quiz Start Time: 03:59 PM

Question # 14 of 15 ( Start time: 04:12:44 PM)

Total Marks: 1

Among the various elements, the brand name, belongs to which of the following?

Select correct option:

Core product

Actual product

Augmented product

Specialty product

Quiz Start Time: 03:59 PM

Question # 15 of 15 ( Start time: 04:13:18 PM)

Total Marks: 1

Market –oriented firms focus on:

Select correct option:

Retailers

Distributors

Customers

Wholesalers

Mgt111 GDB solution

According to Laswell, politics is “who gets what, how, when and where.” Suppose you are Secretary of XYZ Ministry. You want to set up a new department of security in your organization to protect employees. This cover’s ‘what’ portion of Laswell’s definition of politics. Please explain ‘how’ organizational politics can be used in this case? Why politics is essential to setup a new department?

::::::::::::::::::

Solution:

Harold Lasswell defined values as desired goals and power as the ability to participate in decisions, and he conceived political power as the ability to produce intended effects on other people. In our particular scenario the secretary of XYZ Ministry wants a new department for the employees of the Ministry. To achieve this goal the Secretary must establish the fact that this new department is a need for the employees. Lasswell also maintained that power is held by the elite so the decision and work to establish the department must come through the secretary and after its completion the employees should be informed of it.

CS403 Assignment No. 2 Announced

Assignment No. 02

Semester Spring 2011

Database Management Systems-CS403

Total Marks: 15

Due Date: 25/04/2011

Objective: To learn and understand basic concepts of ER Diagram. Instructions: Please read the following instructions carefully before solving & submitting assignment: It should be clear that your assignment will not get any credit (zero marks) if: o The assignment is submitted after due date. o The submitted assignment does not open or file is corrupt. o The assignment is copied (from other student or copy from handouts). o The assignment is in the format other than MS Word (doc). o Student ID is not mentioned in the assignment File or name of file is other than student ID. For any query about the assignment, contact at cs403@vu.edu.pk

Q Draw an E-R diagram for each of the following situations: a. A University has many departments whereas each department belongs to that particular university. That university has also many buildings whereas each building belongs to that particular university. The University also has many employees whereas each employee belongs to that particular university. Every employee has only one parking space whereas each parking space belongs to only one employee. Department offers many study programs whereas each programs offered by only a single department. 7.5 Marks b. In a shopping Store there are many supervisors whereas each supervisor belongs to one store. Product belongs to a single vendor whereas vendor provides so many products. Product belongs to a single category whereas category has many products. A category belongs to a single shelf in a store whereas a shelf may have more than one categories’ products.7.5 Marks

Guidelines / Instructions

It is required to draw Entity Relationship Diagrams for each of the upper situations using Chen’s notation. A sample can be found at http://en.wikipedia.org/wiki/Entity-relationship_model . It is also required to clearly mention that either the relationship is One-to-One, One-to-Many or Many-to-Many

HRM627 Assignment No. 1 solution

Human Resource Development (HRM627)

Assignment No. 1 Marks: 15

Following are some scenarios for which you are provided with illustrations. You
are required to “NAME” what concept has been portrayed in each case; and also
brief characteristics of that particular concept.

Note: Only in the case of Assignment, 24 Hrs extra / grace period after the due date is usually available to overcome uploading difficulties which may be faced by the students on last date. This extra time should only be used to meet the emergencies and above mentioned due dates should always be treated as final to avoid any inconvenience.

Important Instructions:
Please read the following instructions carefully before attempting the assignment solution.

S. No. Scenario Illustration Concept
Characteristics of
identified
concept
1.
Ali arrives late at office and is threatened by his manager for this. Although his
manager himself does not care about time and always reaches late in meetings etc. In most organizations the boss can interrupt progress to hold an unplanned meeting in the middle of the work day; some bosses schedule a meeting for a specific time and expect all involved parties to be punctual.

2.
Mr. Sajid (the boss) thinks that most employees in his organization are only out for themselves, and their sole interest in the job is to earn money. Employees are assumed to put their individual concerns above that of the organization for which they work.

3.
Sara desires to work on a math equation, because a challenge of finding a solution provides sense of pleasure to her. Writing short stories because you really enjoy writing them, reading a nonfiction book because you are inquisitive about the topic.

Deadline:
• Make sure that you upload the solution file before the due date. No
assignment will be accepted through e-mail once the solution has
been uploaded by the instructor.

Formatting guidelines:
• Use the font style “Times New Roman” and font size “12”.
• It is advised to compose your document in MS-Word 2003.
• Use black and blue font colors only.

Solution guidelines:
• Use APA style for referencing and citation. For guidance search
“APA reference style” in Google and read various website
containing information for better understanding or visit
http://linguistics.byu.edu/faculty/henrichsenl/apa/APA01.html
• Every student will work individually and has to write in the form of an analytical assignment.
• Give the answer according to question, there will be negative marking for irrelevant material.
• For acquiring the relevant knowledge don’t rely only on handouts
but watch the video lectures and use other reference books also.

Rules for Marking
Please note that your assignment will not be graded or graded as Zero (0) if:
• It has been submitted after due date
• The file you uploaded does not open or is corrupt
• It is in any format other than .doc (MS. Word)
• It is cheated or copied from other students, internet, books, journals etc.
BEST of LUCK!

:::::::::::::::::::::::::::::::::::::::

Solution:

1. Critical parent ego
2. Adapted child ego
3. Natural child ego

:::::::::::::::::::::::::::::::::

1. Critical Parent Ego State
When you behave and respond with evaluative responses that are critical, judgmental, opinionated, demanding, disapproving, disciplining, and so on, you are in critical parent ego state. People in the critical parent ego use a lot of do’s and don’ts. Managers using the autocratic style tend to be in critical parent ego state because they use high task/directive behaviour

2. Adopted Child Ego State
When you behave with confronting responses that express rebelliousness, pouting, anger, fear, anxiety, inadequacy, procrastination, blaming others, and so on, you are in adapted child ego state. Managers should avoid behaving from the adapted child ego state because this type of behavior often leads to the employee becoming emotional and behaving in a similar manner. When managers are transacting with an employee in this ego state, they should not react with similar behavior, but should be in the adult ego state.

3. Natural Child Ego State
When you behave and respond with probing responses that shows curiosity, intimacy, fun, joyfulness, fantasy, impulsiveness, and so on, you are in natural child ego state. Successful managers do not tend to continuously operate from the natural child ego state

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Acc501 Assignment No. 1 solution

Virtual University Of Pakistan

ACC501 1 Spring Semester 2011

“Business Finance (ACC501)”

Assignment No. 01 Total Marks: 15

Question # 01
JJ Corporation’s last year Return on Equity (ROE) was only 2.5 percent. Management wants to improve Return on Equity (ROE), for this purpose they has developed a new plan and made following amendments:

For new plan total debt ratio is of 55 percent, it will result in interest expense of Rs. 300,000 per year. Projected EBIT of Rs. 1,000,000 on sales of Rs. 15,000,000 and it expects to have a total assets turnover ratio of 2. Under these conditions, the tax rate will be 30 percent.

Required:
1. What will be the effect of new plan on company’s ROE?
2. Either management should consider new plan or not?
NOTE: Show complete working for this in proper format

Question # 02
A textile company has Rs. 650,000 of debt outstanding and pays interest 65,000 annually on debt. Its annual sales are Rs. 3 million its tax rate is 35percent and its net profit margin on sales is 6 percent. Textile Company has applied for loan from bank. There is a conditionfrom bank for loan sanction, company has to maintain TIE ratio at least 4times, and otherwise bank will reject loan request.

Required:
1. Calculate Time Interest Earned Ratio (TIE).
2. By keeping in view your result, what do you think that bank will sanction loan on the basis of given condition of Time Interest Earned Ratio (TIE)?

Important Tips
1. This Assignment can be best attempted from the knowledge acquired after
watching video lecture no. 1 to lecture no 12 and reading handouts as well as
recommended text book).

Assignment Schedule

Opening Date and Time 18th April , 2011 At 12:01 A.M. (Mid-Night)

Due Date and Time 21st April , 2011 At 11:59 P.M. (Mid-Night)

Note: Only in the case of Assignment, 24 Hrs extra / grace period after the above mentioned due date is usually available to overcome uploading difficulties which may be faced by the students on last date. This extra time should only be used to meet the emergencies and above mentioned due dates should always be treated as final to avoid any inconvenience.

Important Instructions:
Please read the following instructions carefully before attempting the assignment solution.

Deadline:
• Make sure that you upload the solution file before the due date. No assignment will be accepted through e-mail once the solution has been uploaded by the instructor.

Formatting guidelines:
• Use the font style “Times New Roman” and font size “12”.
• It is advised t compose your document in MS-Word 2003.
• Use black and blue font colors only.

Solution guidelines:
• For acquiring the relevant knowledge don’t rely only on handouts but watch the video lectures and use other reference books also.

Rules for Marking
Please note that your assignment will not be graded or graded as Zero (0) if:
• It has been submitted after due date
• The file you uploaded does not open or is corrupt
• It is in any format other than .doc (MS. Word)
• It is cheated or copied from other students, internet, books, journals etc…
::::::::::::::::::::::::::::


Solution:


Calculating the ROE using Du Pont model:
From Debt ratio:
Debt ratio = 0.55
Therefore, the company has $0.55 in debt for every $1 in assets. Therefore, there is $0.45 in equity (1-$0.55) for every $0.55 in debt.
Debt-equity ratio = Total debt / Total equity
= $0.55 / $0.45
= 1.2
Equity multiplier = 1 + Debt-equtiy ratio
= 1 + 1.2
= 2.2
ROE = (Net income / Sales ) * (Sales / Assets) * (Assets / Total equity)
= Profit margin * Total asset turnover ratio * Equity multiplier

But Net income is calculated as:
EBIT $1,000,000
(-) Interest $300,000
-----------------------------------
EBT $700,000
(-) Taxes 30% $210,000
---------------------------------
Net income $490,000
------------------------------
ROE = ($490,000 / $15,000,000) * 2.0 * 2.2
= 0.03267 * 2.0 * 2.2
= 0.1437 or 14.37%
The company's ROE will increase by 11.87%
b) The company should take up the new plan as it is giving the higher ROE.

Eco403 GDB Solution

Ali, a Pakistani resident, purchased a car worth Rs. 3, 00,000 that was produced entirely in China. Does this transaction affect Pakistan’s GDP? Justify your answer.

Note: Your answer must be within the range of 50-100 words.

Solution:

Yes this transaction will cause a decrease in Pakistan’s GDP.
GDP = C + I + G + NX
And
NX = Total Export – Total Import
This transaction will decrease the Net export which will also decrease the GDP.

::::::::::::::::::::::::::::::

GDP of a country is always equal to the = Consumption(C) + Investment(I) + Government purchases(G) + Net Export (NX)

in our question it has been said that car was manufactured by China. it means that it was imported from china.
formula for Net Export is = tolal export - total import
so, if we will import anything than it will decrease our net exports...
due to a decrease in net export will cause a decrease in GDP,,

Fin630 Assignment No. 1 solution

Spring Semester 2011

“Financial Analysis & Portfolio Management (Fin 630)”

Assignment No. 01 Total Marks: 20

Question #01
Ellite Corporation has total assets of Rs. 6,000,000 of which Rs. 1,000,000 is inventory, Rs. 500, 000 is cash, Rs. 1,000, 000 is account receivable, Rs. 500, 000 is marketable securities and the balance is fixed assets. Ellite Corporation has total liabilities of Rs. 2,500, 000 of which current liabilities are Rs. 15, 00,000.


1. Calculate the current and quick ratio for Ellite Corporation.
2. If Ellite Corporation takes 250,000 from cash and pays off Rs. 250,000 of current liabilities, what happens to its current ratio and quick ratio?
3. If Ellite Corporation sells the inventory of Rs. 10, 00, 000 and places the proceeds from the sale of inventory in marketable securities, what happens to its current ratio and quick ratio?


Question #02
Currently Alpha Corporation’s shares are selling at $60 per share and company is paying dividend of $5 per share. Dividends are expected to grow at an annual rate of 3% for foreseeable future. Required rate of return for investors is 12% At the same time, Heller Corporation’s shares are selling at $58 per share and company is paying dividend of $4 per share. Dividends are expected to grow at an annual rate of 5% for foreseeable future. Required rate of return for investors is 12%


a) Calculate the current value of each stock on the basis of Dividend Discount Model.
b) On the basis of above calculation, determine either each stock is overvalued or undervalued.


Note:
Show complete working (formula and calculations) for each part of question.
2
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Solution:

Question # 1

(1)
Current Ratio = 3,000,000 / 1,500,000 = 2
Quick ratio = 2,000,000 / 1,500,000 = 1.34

(2)
Current Ratio = 2.2
Quick Ratio = 1.4

(3)
Current Ratio = 2
Quick Ratio = 2

Question # 2

(1)
Dividend Discount Model = P0 = 5 ( 1+ 3% ) / (12% - 3%)
= 57.22

Dividend Discount Model = P0 = 4 ( 1 + 5% ) / (12% - 5%)
= 60

(2)

Stock of Alpha Corps is overstated by 60 - 57.22 = Rs. 2.78
Stock of Heller Corps is understated by 58 - 60 = Rs. 2

_________________


Question #01
Ellite Corporation has total assets of Rs. 6,000,000 of which Rs. 1,000,000 is
inventory, Rs. 500, 000 is cash, Rs. 1,000, 000 is account receivable, Rs. 500, 000 is
marketable securities and the balance is fixed assets. Ellite Corporation has total
liabilities of Rs. 2,500, 000 of which current liabilities are Rs. 15, 00,000.

1. Calculate the current and quick ratio for Ellite Corporation.
Current Ratio: current asset/ current liabilities
Current asset: 1,000,000 + 500, 000 + 1,000, 000 + 500, 000 = 3000000
Current Ratio = 3000000 / 15, 00,000 = 2
Quick ratio: Current assets- Inventories/ Current Liabilities
= 2000000 / 1500000 = 1.33

2. If Ellite Corporation takes 250,000 from cash and pays off Rs. 250,000 of current
liabilities, what happens to its current ratio and quick ratio?
Cash = 250000
Current asset = 1,000,000 + 250, 000 + 1,000, 000 + 500, 000 = 2750000
Current liabilities =1500000-250000 = 1250000
Current Ratio = 2.2
Quick ratio: Current assets- Inventories/ Current Liabilities
Quick ratio: 1750000/1250000 = 1.4
Answer: both increases

3. If Ellite Corporation sells the inventory of Rs. 10, 00, 000 and places the proceeds
from the sale of inventory in marketable securities, what happens to its current ratio
and quick ratio?
Current Ratio: current asset/ current liabilities
Current asset: 500, 000 + 2,000, 000 + 500, 000 = 3000000
Current Ratio = 3000000 / 15, 00,000 = 2
Quick ratio: Current assets- Inventories/ Current Liabilities
= 3000000-0 / 1500000 = 2
Answer : current ratio remain same and quick ration increase

Question #02
Currently Alpha Corporation’s shares are selling at $60 per share and company is
paying dividend of $5 per share. Dividends are expected to grow at an annual rate of
3% for foreseeable future. Required rate of return for investors is 12%
At the same time, Heller Corporation’s shares are selling at $58 per share and
company is paying dividend of $4 per share. Dividends are expected to grow at an
annual rate of 5% for foreseeable future. Required rate of return for investors is
12%
a) Calculate the current value of each stock on the basis of Dividend Discount
Model.

Alpha Corporation
Dividend Discount Model = P0 = 5 (1+ 3%) / (12% - 3%)
= 57.22
Heller Corporation
Dividend Discount Model = P0 = 4 (1 + 5%) / (12% - 5%)
= 60
b) On the basis of above calculation, determine either each stock is overvalued or
undervalued.
Stock of Alpha Corporation is overstated by 60 - 57.22 = Rs. 2.78
Stock of Heller Corporation is understated by 58 - 60 = Rs. 2