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    Corporate Financial Reporting PDF

    Uploaded by

    Ishan Sharma
    The document provides financial information for several companies, including income statements, balance sheets, capital structures, and profit figures. It asks to calculate the economic value added (EVA) for each company based on the given data, such as capital employed, cost of capital, profits, and risk factors. EVA measures the profit generated above the minimum required return to investors and creditors.

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    Corporate Financial Reporting PDF

    Uploaded by

    Ishan Sharma
    65 views3 pages
    The document provides financial information for several companies, including income statements, balance sheets, capital structures, and profit figures. It asks to calculate the economic value added (EVA) for each company based on the given data, such as capital employed, cost of capital, profits, and risk factors. EVA measures the profit generated above the minimum required return to investors and creditors.

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    The document provides financial information for several companies, including income statements, balance sheets, capital structures, and profit figures. It asks to calculate the economic value added (EVA) for each company based on the given data, such as capital employed, cost of capital, profits, and risk factors. EVA measures the profit generated above the minimum required return to investors and creditors.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    65 views3 pages

    Corporate Financial Reporting PDF

    Uploaded by

    Ishan Sharma
    The document provides financial information for several companies, including income statements, balance sheets, capital structures, and profit figures. It asks to calculate the economic value added (EVA) for each company based on the given data, such as capital employed, cost of capital, profits, and risk factors. EVA measures the profit generated above the minimum required return to investors and creditors.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    Question.1 Prepare a value added statement for the year ended on 31.3.

    2018 and reconciliation of total


    value added with profit before taxation, from the Profit and Loss Account of Futures Ltd. for the year
    ended on 31.3.2018:
    ( in ‘000)
    Income :
    Sales 24,400
    Other Income 508 24,908
    Expenditure :
    Operating cost 22,360
    Interest on Bank Overdraft 75
    Interest on 9% Debentures 1,200 23,635
    Profit before Depreciation 1,273
    Depreciation 405
    Profit before tax 868
    Provision for tax 320
    Profit after tax 548
    Proposed Dividend 48
    Retained Profit 500
    The following additional information are given:
    (i) Sales represents Net sales after adjusting Discounts, Returns and GST
    (ii) Operating cost includes ₹82,50,000 as wages, Salaries and Other benefits to Employees.
    (iii) Bank Overdraft is temporary. [DEC., 2008 – 8 marks – New Course]

    Question 2. Value Added Ltd. furnishes the following Profit and Loss A/c :
    Profit and Loss A/c for the year ended 31st March, 2017
    Income Notes ₹(‘000)
    Turnover 1 29,874
    Other Income 1040
    30,914
    Expenditure
    Operating expenses 2 28693
    Interest on 8% Debenture 987
    Interest on Cash Credit 3 151
    29,831
    Profit before depreciation 1,083
    Less : Depreciation (342)
    Profit before tax 741
    Provision for tax 376
    Profit after tax 365
    Less : Transfer to Fixed Assets replacement reserve (65)
    300
    Less : Dividend paid (125)
    Retained Profit 175
    Notes:
    (1) Turnover is based on invoice value and net of GST.
    (2) Salaries, Wages and other employee benefits amounting to ₹ 14,761 (‘000) are included in
    operation expenses.
    (3) Cash Credits represents a temporary source of finance. It has not been considered as a part of
    capital.
    (4) Transfer of ₹ 54 (‘000) to the credit of deferred tax account is included in provision for tax.
    Prepare value added statement for the year ended 31st March, 2017 and Reconcile total value
    added with profit after taxation and application of value added. [Nov. 2007 – 8 marks]

    Question.3. Alpha Co. provides you with the following information :


    Equity share capital ₹ 100 lakhs
    8% Secured Loans ₹ 20 lakhs
    10% Unsecured Loans ₹ 30 lakhs
    Profit after tax ₹ 15,83,000
    Rate of Tax 40%
    Normal Bank Rate 12%
    You are required to Calculation EVA for Alpha Co. [RTP – Nov. 2006]

    Question.4
    Equity Share Capital 10,00,000
    Reserves and Surplus 3,00,000
    12% preference share capital 2,00,000
    10% Debentures 4,00,000
    Immovable property (held as investment) 1,00,000
    Profit after tax 2,00,000
    Rate of tax 40%
    Companies with Beta factor of 1 in similar business have market rate of return 15%. Beta factor
    of X Ltd. is 1.1 Calculate EVA assuming Risk Free Return – 7%.

    Question.5. From the following data compute the Economic Value Added:

    Share Capital ₹ 1,600 crores


    Long-term Debt 10% ₹ 320 crores
    Interest ₹ 32 crores
    Reserve and Surplus ₹ 3,200 crores
    Profit before Interest and Tax ₹ 1,432 crores
    Tax Rate 30%
    Beta Factor 1.05
    Market rate of Return 14%
    Risk Free Rate 10%

    Question.6 Equity Share Capital ₹ 5,00,000


    13% Preference Share Capital ₹ 2, 00,000
    Reserve and Surplus ₹ 6, 00,000
    Non trade investment (Face value ₹ 1, 00,000) Rate of Interest 10%
    20% Debentures ₹ 3, 00,000
    Profits before tax ₹ 2,00,000
    Tax Rate 40%
    WACC 13%
    Calculate EVA
    Question.7 From the following information concerning Nebula Ltd., prepare a statement showing
    computation of EVA for the year ended 31st March 2004 :
    Summarised Profit and Loss Account
    For the year ended 31st March 2004

    ₹ ₹
    Sales 20,00,000
    Cost of goods sold 12,00,000
    Gross Profit 8,00,000
    Expenses :
    General 2,00,000
    Office and administration 2,50,000
    Selling and distribution 64,000 5,14,000
    Profit before interest and tax (PBIT) 2,86,000
    Interest 36,000
    Profit before tax (PBT) 2,50,000
    Tax 40% 1,00,000
    Profit after tax 1,50,000
    Summarised Balance Sheet as on 31st March 2004

    Liabilities Amount Assets Amount


    Equity Shares 2,40,000 Fixed Assets (Net) 6,00,000
    Reserves 1,60,000 Current Assets
    Term Loan 2,40,000 Stock 1,20,000
    Current Liabilities 1,60,000 Debtors 60,000
    Bank 20,000
    8,00,000 8,00,000
    Other Particulars:
    (a) Cost of goods includes depreciation expense of ₹ ,60,000
    (b) The expectation return of Shareholders is 12%

    Question.8 The following information is available of a concern; Calculate E.V.A.:


    Debt capital 12% ₹ 2,000crores
    Equity capital ₹ 500crores
    Reserve and Surplus ₹ 7,500crores
    Risk-free rate 9%
    Beta factor 1.05
    Equity (maker) risk premium 10%
    Operating profit after tax ₹2,100crores
    Tax rate 30%

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