Page 1
ANSWERS OF MODEL TEST PAPER 3
INTERMEDIATE: GROUP – II
PAPER – 6: FINANCIAL MANAGEMENT & STRATEGIC MANAGEMENT
PAPER 6A : FINANCIAL MANAGEMENT
PART I – Case Scenario based MCQs
1. 1. (c) Calculation of cost of capital
Capital Weight Cost Product
Debt 0.3 10% 3.00%
Preference 0.2 11% 2.20%
Equity 0.5 15% 7.50%
Ko= 12.70%
2. (a)
3. (c)
4. (d)
5. (a)
Calculation of CFAT
Year 1 2 3 4 5 6
A) No. of quick
deliveries p.d.
10,000 12,000 13,800 15,180 15,939 15,939
B) No. of
overnight
deliveries p.d.
2,000 2,400 2,760 3,036 3,188 3,188
C) No. of quick
deliveries p.a.
36,50,000 43,80,000 50,37,000 55,40,700 58,17,735 58,17,735
D) No. of
overnight
deliveries p.a.
7,30,000 8,76,000 10,07,400 11,08,140 11,63,547 11,63,547
E) Chargeable
quick deliveries
18,25,000 21,90,000 25,18,500 27,70,350 29,08,868 29,08,868
F) No. of
delivery partners
1.5x(A+B)/
30
600 720 828 911 956 956
Revenue (in
crores)
From quick
deliveries (QD)
(E x 40) 7.30 8.76 10.07 11.08 11.64 11.64
From QD seller
commission
(C x 700 x
5%)
12.775 15.330 17.630 19.392 20.362 20.362
From Overnight
delivery
subscription
(B/2 x
5000)
0.500 0.600 0.690 0.759 0.797 0.797
523
Page 2
ANSWERS OF MODEL TEST PAPER 3
INTERMEDIATE: GROUP – II
PAPER – 6: FINANCIAL MANAGEMENT & STRATEGIC MANAGEMENT
PAPER 6A : FINANCIAL MANAGEMENT
PART I – Case Scenario based MCQs
1. 1. (c) Calculation of cost of capital
Capital Weight Cost Product
Debt 0.3 10% 3.00%
Preference 0.2 11% 2.20%
Equity 0.5 15% 7.50%
Ko= 12.70%
2. (a)
3. (c)
4. (d)
5. (a)
Calculation of CFAT
Year 1 2 3 4 5 6
A) No. of quick
deliveries p.d.
10,000 12,000 13,800 15,180 15,939 15,939
B) No. of
overnight
deliveries p.d.
2,000 2,400 2,760 3,036 3,188 3,188
C) No. of quick
deliveries p.a.
36,50,000 43,80,000 50,37,000 55,40,700 58,17,735 58,17,735
D) No. of
overnight
deliveries p.a.
7,30,000 8,76,000 10,07,400 11,08,140 11,63,547 11,63,547
E) Chargeable
quick deliveries
18,25,000 21,90,000 25,18,500 27,70,350 29,08,868 29,08,868
F) No. of
delivery partners
1.5x(A+B)/
30
600 720 828 911 956 956
Revenue (in
crores)
From quick
deliveries (QD)
(E x 40) 7.30 8.76 10.07 11.08 11.64 11.64
From QD seller
commission
(C x 700 x
5%)
12.775 15.330 17.630 19.392 20.362 20.362
From Overnight
delivery
subscription
(B/2 x
5000)
0.500 0.600 0.690 0.759 0.797 0.797
523
From OD seller
commission
(C x 750 x
7%)
3.83 4.60 5.29 5.82 6.11 6.11
Total Revenue 24.41 29.29 33.68 37.05 38.90 38.90
Cost (in crores)
Advertising 7 8 10 0 0 0
IT and customer
care
8 8 8 8 8 8
Delivery partner
salary
(F x 15000) 0.90 1.08 1.24 1.37 1.43 1.43
Delivery partner
commission
(C+D) x 20 8.76 10.51 12.09 13.30 13.96 13.96
Depreciation on
investment
in year 0
6 6 6 6 6
on
investment
in year 2
4 4 4 4 4
on
investment
in year 4
5 5 5
Total Cost 30.66 37.59 41.33 37.66 38.40 32.40
PBT -6.25 -8.30 -7.65 -0.61 0.51 6.51
Less: Tax 1.56 2.08 1.91 0.15 -0.13 -1.63
PAT -4.69 -6.23 -5.74 -0.46 0.38 4.88
Add:
Depreciation
6.00 10.00 10.00 15.00 15.00 9.00
CFAT 1.31 3.77 4.26 14.54 15.38 13.88
Computation of NPV
Year Particulars Cash Flows
(in crores)
PVF @
12.7%
PV
(in crores)
0 Investment -30 1 -30
1 Investment -20 0.887 -17.75
3 Investment -25 0.699 -17.46
1 Operating CFAT 1.31 0.887 1.16
2 Operating CFAT 3.77 0.787 2.97
3 Operating CFAT 4.26 0.699 2.98
4 Operating CFAT 14.54 0.620 9.01
5 Operating CFAT 15.38 0.550 8.46
6 Operating CFAT 13.88 0.488 6.77
6 Sale Proceeds (30+20+25)x2 150 0.488 73.21
NPV 39.35
524
Page 3
ANSWERS OF MODEL TEST PAPER 3
INTERMEDIATE: GROUP – II
PAPER – 6: FINANCIAL MANAGEMENT & STRATEGIC MANAGEMENT
PAPER 6A : FINANCIAL MANAGEMENT
PART I – Case Scenario based MCQs
1. 1. (c) Calculation of cost of capital
Capital Weight Cost Product
Debt 0.3 10% 3.00%
Preference 0.2 11% 2.20%
Equity 0.5 15% 7.50%
Ko= 12.70%
2. (a)
3. (c)
4. (d)
5. (a)
Calculation of CFAT
Year 1 2 3 4 5 6
A) No. of quick
deliveries p.d.
10,000 12,000 13,800 15,180 15,939 15,939
B) No. of
overnight
deliveries p.d.
2,000 2,400 2,760 3,036 3,188 3,188
C) No. of quick
deliveries p.a.
36,50,000 43,80,000 50,37,000 55,40,700 58,17,735 58,17,735
D) No. of
overnight
deliveries p.a.
7,30,000 8,76,000 10,07,400 11,08,140 11,63,547 11,63,547
E) Chargeable
quick deliveries
18,25,000 21,90,000 25,18,500 27,70,350 29,08,868 29,08,868
F) No. of
delivery partners
1.5x(A+B)/
30
600 720 828 911 956 956
Revenue (in
crores)
From quick
deliveries (QD)
(E x 40) 7.30 8.76 10.07 11.08 11.64 11.64
From QD seller
commission
(C x 700 x
5%)
12.775 15.330 17.630 19.392 20.362 20.362
From Overnight
delivery
subscription
(B/2 x
5000)
0.500 0.600 0.690 0.759 0.797 0.797
523
From OD seller
commission
(C x 750 x
7%)
3.83 4.60 5.29 5.82 6.11 6.11
Total Revenue 24.41 29.29 33.68 37.05 38.90 38.90
Cost (in crores)
Advertising 7 8 10 0 0 0
IT and customer
care
8 8 8 8 8 8
Delivery partner
salary
(F x 15000) 0.90 1.08 1.24 1.37 1.43 1.43
Delivery partner
commission
(C+D) x 20 8.76 10.51 12.09 13.30 13.96 13.96
Depreciation on
investment
in year 0
6 6 6 6 6
on
investment
in year 2
4 4 4 4 4
on
investment
in year 4
5 5 5
Total Cost 30.66 37.59 41.33 37.66 38.40 32.40
PBT -6.25 -8.30 -7.65 -0.61 0.51 6.51
Less: Tax 1.56 2.08 1.91 0.15 -0.13 -1.63
PAT -4.69 -6.23 -5.74 -0.46 0.38 4.88
Add:
Depreciation
6.00 10.00 10.00 15.00 15.00 9.00
CFAT 1.31 3.77 4.26 14.54 15.38 13.88
Computation of NPV
Year Particulars Cash Flows
(in crores)
PVF @
12.7%
PV
(in crores)
0 Investment -30 1 -30
1 Investment -20 0.887 -17.75
3 Investment -25 0.699 -17.46
1 Operating CFAT 1.31 0.887 1.16
2 Operating CFAT 3.77 0.787 2.97
3 Operating CFAT 4.26 0.699 2.98
4 Operating CFAT 14.54 0.620 9.01
5 Operating CFAT 15.38 0.550 8.46
6 Operating CFAT 13.88 0.488 6.77
6 Sale Proceeds (30+20+25)x2 150 0.488 73.21
NPV 39.35
524
2. (d) FL=%change in NP/%change in EBIT=6.9/6=1.15
3. (c) Since IRR of projects of company is greater than its cost of capital, the
company should retain all ist earnings i.e. DPR = 0. As per walter Po =
[0 + (0.15/0.125)10]/0.125 = 96
4. (d) 180 days
PART II – Descriptive Questions
1. (a) Determination of specific costs
(i) Cost Debt (Kd) =
(RV NP)
Interest (1 t)
N
(RV NP)
2
-
-+
+
=
( 100 96)
11(1 0.35)
10years
( 100 96)
2
-
-+
+
``
`
``
=
7.15 0.4
98
+ ``
`
= 0.077 or 7.70%
(ii) Cost of Preference Shares (K
p
) =
(RV NP)
PD
N
(RV NP)
2
-
+
+
=
( 100 95)
12
10years
( 100 95)
2
-
+
+
``
`
``
=
12 0.5
97.5
+ ``
`
= 0.1282 or 12.82%
(iii) Cost of Equity shares (K
e
) =
1
0
D
G
P
+ =
2
0.07
22 2
+
-
`
` `
= 0.17 or 17%
I – Interest, t – Tax, RV- Redeemable value, NP- Net proceeds, N- No. of
years, PD- Preference dividend, D1- Dividend at the end of the year, P0-
Price of share (net)
Using these specific costs we can calculate the book value and market
value weights as follows:
(a) Weighted Average Cost of Capital (K
0
) based on Book value
weights
Source of capital Book value
(BV)
Specific cost (k)
(%)
Total costs
[BV (×) k]
Debentures ` 8,00,000 7.7 ` 61,600
Preferences
shares
2,00,000 12.8 25,600
Equity shares 10,00,000 17.0 1,70,000
20,00,000 2,57,200
K
0
= ` 2,57,200/` 20,00,000 = 12.86 per cent
525
Page 4
ANSWERS OF MODEL TEST PAPER 3
INTERMEDIATE: GROUP – II
PAPER – 6: FINANCIAL MANAGEMENT & STRATEGIC MANAGEMENT
PAPER 6A : FINANCIAL MANAGEMENT
PART I – Case Scenario based MCQs
1. 1. (c) Calculation of cost of capital
Capital Weight Cost Product
Debt 0.3 10% 3.00%
Preference 0.2 11% 2.20%
Equity 0.5 15% 7.50%
Ko= 12.70%
2. (a)
3. (c)
4. (d)
5. (a)
Calculation of CFAT
Year 1 2 3 4 5 6
A) No. of quick
deliveries p.d.
10,000 12,000 13,800 15,180 15,939 15,939
B) No. of
overnight
deliveries p.d.
2,000 2,400 2,760 3,036 3,188 3,188
C) No. of quick
deliveries p.a.
36,50,000 43,80,000 50,37,000 55,40,700 58,17,735 58,17,735
D) No. of
overnight
deliveries p.a.
7,30,000 8,76,000 10,07,400 11,08,140 11,63,547 11,63,547
E) Chargeable
quick deliveries
18,25,000 21,90,000 25,18,500 27,70,350 29,08,868 29,08,868
F) No. of
delivery partners
1.5x(A+B)/
30
600 720 828 911 956 956
Revenue (in
crores)
From quick
deliveries (QD)
(E x 40) 7.30 8.76 10.07 11.08 11.64 11.64
From QD seller
commission
(C x 700 x
5%)
12.775 15.330 17.630 19.392 20.362 20.362
From Overnight
delivery
subscription
(B/2 x
5000)
0.500 0.600 0.690 0.759 0.797 0.797
523
From OD seller
commission
(C x 750 x
7%)
3.83 4.60 5.29 5.82 6.11 6.11
Total Revenue 24.41 29.29 33.68 37.05 38.90 38.90
Cost (in crores)
Advertising 7 8 10 0 0 0
IT and customer
care
8 8 8 8 8 8
Delivery partner
salary
(F x 15000) 0.90 1.08 1.24 1.37 1.43 1.43
Delivery partner
commission
(C+D) x 20 8.76 10.51 12.09 13.30 13.96 13.96
Depreciation on
investment
in year 0
6 6 6 6 6
on
investment
in year 2
4 4 4 4 4
on
investment
in year 4
5 5 5
Total Cost 30.66 37.59 41.33 37.66 38.40 32.40
PBT -6.25 -8.30 -7.65 -0.61 0.51 6.51
Less: Tax 1.56 2.08 1.91 0.15 -0.13 -1.63
PAT -4.69 -6.23 -5.74 -0.46 0.38 4.88
Add:
Depreciation
6.00 10.00 10.00 15.00 15.00 9.00
CFAT 1.31 3.77 4.26 14.54 15.38 13.88
Computation of NPV
Year Particulars Cash Flows
(in crores)
PVF @
12.7%
PV
(in crores)
0 Investment -30 1 -30
1 Investment -20 0.887 -17.75
3 Investment -25 0.699 -17.46
1 Operating CFAT 1.31 0.887 1.16
2 Operating CFAT 3.77 0.787 2.97
3 Operating CFAT 4.26 0.699 2.98
4 Operating CFAT 14.54 0.620 9.01
5 Operating CFAT 15.38 0.550 8.46
6 Operating CFAT 13.88 0.488 6.77
6 Sale Proceeds (30+20+25)x2 150 0.488 73.21
NPV 39.35
524
2. (d) FL=%change in NP/%change in EBIT=6.9/6=1.15
3. (c) Since IRR of projects of company is greater than its cost of capital, the
company should retain all ist earnings i.e. DPR = 0. As per walter Po =
[0 + (0.15/0.125)10]/0.125 = 96
4. (d) 180 days
PART II – Descriptive Questions
1. (a) Determination of specific costs
(i) Cost Debt (Kd) =
(RV NP)
Interest (1 t)
N
(RV NP)
2
-
-+
+
=
( 100 96)
11(1 0.35)
10years
( 100 96)
2
-
-+
+
``
`
``
=
7.15 0.4
98
+ ``
`
= 0.077 or 7.70%
(ii) Cost of Preference Shares (K
p
) =
(RV NP)
PD
N
(RV NP)
2
-
+
+
=
( 100 95)
12
10years
( 100 95)
2
-
+
+
``
`
``
=
12 0.5
97.5
+ ``
`
= 0.1282 or 12.82%
(iii) Cost of Equity shares (K
e
) =
1
0
D
G
P
+ =
2
0.07
22 2
+
-
`
` `
= 0.17 or 17%
I – Interest, t – Tax, RV- Redeemable value, NP- Net proceeds, N- No. of
years, PD- Preference dividend, D1- Dividend at the end of the year, P0-
Price of share (net)
Using these specific costs we can calculate the book value and market
value weights as follows:
(a) Weighted Average Cost of Capital (K
0
) based on Book value
weights
Source of capital Book value
(BV)
Specific cost (k)
(%)
Total costs
[BV (×) k]
Debentures ` 8,00,000 7.7 ` 61,600
Preferences
shares
2,00,000 12.8 25,600
Equity shares 10,00,000 17.0 1,70,000
20,00,000 2,57,200
K
0
= ` 2,57,200/` 20,00,000 = 12.86 per cent
525
(b) Weighted Average Cost of Capital (K
0
) based on market value
weights
Source of
Capital
Market Value
(MV)
Specific cost
(k) (%)
Total costs
[MV (×) k]
Debentures ` 8,80,000 7.7 ` 67,760,
Preference
shares
2,40,000 12.8 30,720
Equity
shares
22,00,000 17.0 3,74,000
Total
capital
33,20,000 4,72,480
K
0
= ` 4,72,480/` 33,20,000 = 14.23 per cent
(b) Total Assets = ` 400 crores
Total Asset Turnover Ratio = 2.5
Hence, Total Sales = 400 ? 2.5 = ` 1000 crores
Computation of Profits after Tax (PAT)
(` in crores)
Sales 1000
Less: Variable operating cost @ 65% 650
Contribution 350
Less: Fixed cost (other than Interest) 80
EBIT 270
Less: Interest on debentures (15% ? 200) 30
EBT 240
Less: Tax 40% 96
EAT 144
(i) Earnings per share
?
144 crores
EPS
10 crore equity shares
=
`
= ` 14.40
(ii) Operating Leverage
Operating leverage =
Contribution 350
EBIT 270
= = 1.296
It indicates the choice of technology and fixed cost in cost structure.
It is level specific. When firm operates beyond operating break-
even level, then operating leverage is low. It indicates sensitivity
of earnings before interest and tax (EBIT) to change in sales at a
particular level.
526
Page 5
ANSWERS OF MODEL TEST PAPER 3
INTERMEDIATE: GROUP – II
PAPER – 6: FINANCIAL MANAGEMENT & STRATEGIC MANAGEMENT
PAPER 6A : FINANCIAL MANAGEMENT
PART I – Case Scenario based MCQs
1. 1. (c) Calculation of cost of capital
Capital Weight Cost Product
Debt 0.3 10% 3.00%
Preference 0.2 11% 2.20%
Equity 0.5 15% 7.50%
Ko= 12.70%
2. (a)
3. (c)
4. (d)
5. (a)
Calculation of CFAT
Year 1 2 3 4 5 6
A) No. of quick
deliveries p.d.
10,000 12,000 13,800 15,180 15,939 15,939
B) No. of
overnight
deliveries p.d.
2,000 2,400 2,760 3,036 3,188 3,188
C) No. of quick
deliveries p.a.
36,50,000 43,80,000 50,37,000 55,40,700 58,17,735 58,17,735
D) No. of
overnight
deliveries p.a.
7,30,000 8,76,000 10,07,400 11,08,140 11,63,547 11,63,547
E) Chargeable
quick deliveries
18,25,000 21,90,000 25,18,500 27,70,350 29,08,868 29,08,868
F) No. of
delivery partners
1.5x(A+B)/
30
600 720 828 911 956 956
Revenue (in
crores)
From quick
deliveries (QD)
(E x 40) 7.30 8.76 10.07 11.08 11.64 11.64
From QD seller
commission
(C x 700 x
5%)
12.775 15.330 17.630 19.392 20.362 20.362
From Overnight
delivery
subscription
(B/2 x
5000)
0.500 0.600 0.690 0.759 0.797 0.797
523
From OD seller
commission
(C x 750 x
7%)
3.83 4.60 5.29 5.82 6.11 6.11
Total Revenue 24.41 29.29 33.68 37.05 38.90 38.90
Cost (in crores)
Advertising 7 8 10 0 0 0
IT and customer
care
8 8 8 8 8 8
Delivery partner
salary
(F x 15000) 0.90 1.08 1.24 1.37 1.43 1.43
Delivery partner
commission
(C+D) x 20 8.76 10.51 12.09 13.30 13.96 13.96
Depreciation on
investment
in year 0
6 6 6 6 6
on
investment
in year 2
4 4 4 4 4
on
investment
in year 4
5 5 5
Total Cost 30.66 37.59 41.33 37.66 38.40 32.40
PBT -6.25 -8.30 -7.65 -0.61 0.51 6.51
Less: Tax 1.56 2.08 1.91 0.15 -0.13 -1.63
PAT -4.69 -6.23 -5.74 -0.46 0.38 4.88
Add:
Depreciation
6.00 10.00 10.00 15.00 15.00 9.00
CFAT 1.31 3.77 4.26 14.54 15.38 13.88
Computation of NPV
Year Particulars Cash Flows
(in crores)
PVF @
12.7%
PV
(in crores)
0 Investment -30 1 -30
1 Investment -20 0.887 -17.75
3 Investment -25 0.699 -17.46
1 Operating CFAT 1.31 0.887 1.16
2 Operating CFAT 3.77 0.787 2.97
3 Operating CFAT 4.26 0.699 2.98
4 Operating CFAT 14.54 0.620 9.01
5 Operating CFAT 15.38 0.550 8.46
6 Operating CFAT 13.88 0.488 6.77
6 Sale Proceeds (30+20+25)x2 150 0.488 73.21
NPV 39.35
524
2. (d) FL=%change in NP/%change in EBIT=6.9/6=1.15
3. (c) Since IRR of projects of company is greater than its cost of capital, the
company should retain all ist earnings i.e. DPR = 0. As per walter Po =
[0 + (0.15/0.125)10]/0.125 = 96
4. (d) 180 days
PART II – Descriptive Questions
1. (a) Determination of specific costs
(i) Cost Debt (Kd) =
(RV NP)
Interest (1 t)
N
(RV NP)
2
-
-+
+
=
( 100 96)
11(1 0.35)
10years
( 100 96)
2
-
-+
+
``
`
``
=
7.15 0.4
98
+ ``
`
= 0.077 or 7.70%
(ii) Cost of Preference Shares (K
p
) =
(RV NP)
PD
N
(RV NP)
2
-
+
+
=
( 100 95)
12
10years
( 100 95)
2
-
+
+
``
`
``
=
12 0.5
97.5
+ ``
`
= 0.1282 or 12.82%
(iii) Cost of Equity shares (K
e
) =
1
0
D
G
P
+ =
2
0.07
22 2
+
-
`
` `
= 0.17 or 17%
I – Interest, t – Tax, RV- Redeemable value, NP- Net proceeds, N- No. of
years, PD- Preference dividend, D1- Dividend at the end of the year, P0-
Price of share (net)
Using these specific costs we can calculate the book value and market
value weights as follows:
(a) Weighted Average Cost of Capital (K
0
) based on Book value
weights
Source of capital Book value
(BV)
Specific cost (k)
(%)
Total costs
[BV (×) k]
Debentures ` 8,00,000 7.7 ` 61,600
Preferences
shares
2,00,000 12.8 25,600
Equity shares 10,00,000 17.0 1,70,000
20,00,000 2,57,200
K
0
= ` 2,57,200/` 20,00,000 = 12.86 per cent
525
(b) Weighted Average Cost of Capital (K
0
) based on market value
weights
Source of
Capital
Market Value
(MV)
Specific cost
(k) (%)
Total costs
[MV (×) k]
Debentures ` 8,80,000 7.7 ` 67,760,
Preference
shares
2,40,000 12.8 30,720
Equity
shares
22,00,000 17.0 3,74,000
Total
capital
33,20,000 4,72,480
K
0
= ` 4,72,480/` 33,20,000 = 14.23 per cent
(b) Total Assets = ` 400 crores
Total Asset Turnover Ratio = 2.5
Hence, Total Sales = 400 ? 2.5 = ` 1000 crores
Computation of Profits after Tax (PAT)
(` in crores)
Sales 1000
Less: Variable operating cost @ 65% 650
Contribution 350
Less: Fixed cost (other than Interest) 80
EBIT 270
Less: Interest on debentures (15% ? 200) 30
EBT 240
Less: Tax 40% 96
EAT 144
(i) Earnings per share
?
144 crores
EPS
10 crore equity shares
=
`
= ` 14.40
(ii) Operating Leverage
Operating leverage =
Contribution 350
EBIT 270
= = 1.296
It indicates the choice of technology and fixed cost in cost structure.
It is level specific. When firm operates beyond operating break-
even level, then operating leverage is low. It indicates sensitivity
of earnings before interest and tax (EBIT) to change in sales at a
particular level.
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(iii) Financial Leverage
EBIT 270
Financial Leverage = = =1.125
EBT 240
The financial leverage is very comfortable since the debt service
obligation is small vis-à-vis EBIT.
(iv) Combined Leverage
Combined Leverage =
Contribution EBIT
EBIT EBT
? Or Operating Leverage x
Financial Leverage
= 1.296 ? 1.125 = 1.458
The combined leverage studies the choice of fixed cost in cost
structure and choice of debt in capital structure. It studies how
sensitive the change in EPS is vis-à-vis change in sales.
(c) Working notes:
1. Computation of Current Assets and Current Liabilities:
Current Assets
Current Liabilities
=
2.5
1
or
Current Assets Current Liabilities
=
2.5 1
= k (say)
Or, Current Assets = 2.5 k and Current Liabilities = k
Or, Working capital = (Current Assets - Current Liabilities)
Or, `2,40,000 = k (2.5 - 1) = 1.5 k
Or, k = `1,60,000
? Current liabilities = `1,60,000
Current assets = `1,60,000 ? 2.5 = `4,00,000
2. Computation of Inventories
Liquid ratio =
s liabilitie Current
assets Liquid
Or, 1.5 =
1,60,000
s Inventorie - assets Current
`
Or, 1.5 ? `1,60,000 = `4,00,000 - Inventories
Or, Inventories = `1,60,000
3. Computation of Proprietary fund; Fixed assets; Capital and
Trade payables
Proprietary ratio = 75 . 0
fund y Proprietar
assets Fixed
=
? Fixed assets = 0.75 Proprietary fund
and Net working capital = 0.25 Proprietary fund
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