BAFI 2109 AMCT Financial Management Questions

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Which subject: Financial management BAFI2109
Calculations or thury:  calculations 

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Mr. Ali finished his Master degree from UK he decided to start his own business in Al Mulladha, Oman.
In the initial stage Ali is started preparing a business plan by consulting the experts from Oman. Ali got
an opportunity to meet Mr. Sulaiman, a successful entrepreneur in Oman, while discussing Mr. Sulaiman
has given some statements about the importance of finance. The following are the statements:
1. “Finance functions of a business are closely related to its other functions of management”
2. Finance is concerned primarily with financial decision-making within a business entity. A financial
manager plays a very important role in providing financial assistance and guidance to the organization.
Required:
Discuss the above two statements given by Mr. Sulaiman about the finance with proper examples.
The following information is extracted from the financial statements of Bluestar corporations., you are
asked to prepare cash flow statement for the year 2019.
Particulars
OMR 2018
OMR 2019
Prepaid expenses
2,600
2,400
Sundry Debtors
81,500
96,500
Bills receivable
26,500
21,500
Income received in advance
600
700
Bills payable
46,000
41,000
Creditors
14,000
16,000
Outstanding expenses
3,500
3,000
Furtherinformation: 1. Profit made during the year OMR 100,000 after considering the following items:
2.
3.
4.
5.
6.
7.
8.
9.
10.
Machinery was sold for OMR 5,000 during the year
the company purchased another company shares for 7,500
There was loss on sale of machinery OMR 1,000
12% preference shares were redeemed during the year for OMR 10,000
An Interest of OMR 1,500 was paid during the year
The company raised a long-term loan of OMR 25,000 from national Bank of Oman.
OMR 5,000 depreciation has been charged to fixed assets during the year, 2019
Purchase of Multinational company preference shares of OMR 5,500.
Debenture loan of OMR 2000 was repaid during the year 2019
C2
The capital of Al-Maraseem Company consists of 6% preference shares (110,000 shares of OMR 8 each)
and 250,000 outstanding equity shares of OMR 10 each. The company use to pay 12% dividends to its
equity shareholders and planning to continue the same this year.
Al-Maraseem Company had a profitable financial year which end up on 31st August 2019 with a Net
Profit before tax amounted to OMR 1.2 million. The company falls in 30% tax bracket. On 1st September
2018 the company had a Retained Earnings amounted to OMR 850,000.
A. Prepare the Statement of Retained Earnings for Al-Maraseem Company for the financial year ending
on 31st August 2019.
(5
marks)
B. Calculate the Earnings per Share (EPS) of Al-Maraseem Company.
(2.5 marks)
C. Compute the missing amounts in the following table:
(2.5 marks)
Year 1
Year 2
Opening balance of Retained Earnings
OMR 4,500
OMR ——–Net profit for the year
OMR 10,000
OMR 12,300
Tax rate
30%
30%
Dividends paid
OMR 3,800
OMR ——–Closing balance of Retained Earnings
OMR ——–OMR 6,700
XYZ Ltd., Company wishes to prepare cash budget from March 2019. Prepare a cash budget from the
following information.
Month
Sales(OMR)
Purchases(OMR)
Wages(OMR)
Manufacturing Expenses(OMR)
Selling and distribution Expenses(OMR)
January
21,500
20,000
4,100
3,400
900
February
23,000
15,000
4,200
3,500
700
March
29,000
15,000
4,500
3,300
1,000
April
37,000
23,000
4,600
3,200
1,100
May
35,000
18,000
3,900
2,900
1,200
Further Information: 1. Estimated cash balance on 1st March 2019 will be OMR 15,000.
2. Commission at 5% on sales to be paid within a month of the actual sales.
3. Credit allowed by suppliers 2 months and credit allowed to customers 1 month
4. Delay in payment of Manufacturing expenses and selling expenses 1 month
5. Delay in payment of wages 1 month
6. Advance tax of OMR 2500 payable in March and April.
7. 50% of the sales on cash basis and cash purchases 40%.
Note: Show all the necessary calculations for the above adjustments
Question text
E1
From the following information extracted from the Balance Sheet of XYZ Company, you are required to
calculate:
a.
Liquidity ratios for 2018 and 2019. (6 marks)
b. Solvency ratio for 2018 and 2019. (3 marks)
c.
Using your results from (a), comment on the liquidity of the company. (1 mark)
Particulars
2018
OMR
2019
OMR
Cash and bank balances
10,500
12,900
Property, plant and equipment
760,000
700,000
Short – term bank borrowings
50,000
55,000
Trade and other receivables
31,950
30,088
8% Debentures
800,000
800,000
Inventories
28,900
28,400
Vehicles
150,000
130,000
Share capital
2,500,000
2,500,000
Trade and other payable
14,100
18,300
10 years bank loan
500,000
480,000
III
corporations., you are asked to prepare cash flow statement for the year 2019.
Particulars
OMR 2018
OMR 2019
Prepaid expenses
2,600
2,400
Sundry Debtors
81,500
96,500
Bills receivable
26,500
21,500
Income received in advance 600
700
Bills payable
46,000
41,000
Creditors
14,000
16,000
Outstanding expenses
3,500
3,000
(5 marks)
B. Calculate the Earnings per Share (EPS) of Al-Maraseem Company.
(2.5 marks)
C. Compute the missing amounts in the following table:
(2.5 marks)
Year 1
Year 2
OMR ——–
Opening balance of Retained Earnings OMR 4,500
Net profit for the year
OMR 10,000
Tax rate
30%
OMR 12,300
30%
Dividends paid
OMR 3,800
OMR ———
Closing balance of Retained Earnings
OMR ——–
OMR 6,700
=
OMR
OMR
Cash and bank balances
10,500
12,900
760,000
700,000
Property, plant and equipment
Short-term bank borrowings
50,000
55,000
Trade and other receivables
31,950
30,088
8% Debentures
800,000
800,000
Inventories
28,900
28,400
Vehicles
150,000
130,000
Share capital
2,500,000
2,500,000
Trade and other payable
14,100
18,300
10 years bank loan
ܘܘܘܘܘܩ
Hn000
=
DT
XYZ Ltd., Company wishes to prepare cash budget from March 2019. Prepare a cash
budget from the following information.
Month Sales(OMR) Purchases(OMR) Wages (OMR) Manufacturing Selling and
Expenses (OMR) distribution
Expenses(OMR)
January 21,500 20,000
4,100
3,400
1900
February 23,000 15,000
4,200
3,500
700
March 29,000 15,000
4,500 3,300
1,000
April 37,000 23,000
4,60
3,200
1,100
May 35,000 18,000
3,900 2,900
1,200

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