SVKM’s NMIMS Instructions:-
Anil Surendra Modi School of Commerce 1. All questions are compulso
2. Make suitable assumption
Program: BBA Semester: VI 3. Marks to the right indicate
Batch: 2018 - 2021 Academic Year: 2020 – 2021 4. Add sheets IF required
5. Do not modify the questio
Subject: Financial Modeling Marks: 50 6. Solve in this excel file itself
Question No.
Marks
Marks
Awarded
All questions are compulsory
Make suitable assumptions wherever necessary
Marks to the right indicate full marks
Add sheets IF required
Do not modify the question
olve in this excel file itself
1 2 3 Total
30 10 10 50
0
Q1. (30 Marks)
You are required to prepare Balance sheet and Income Statement for the next 3 years from the below given information
for Sam-pple Ltd.
2016 2017
Income Statement
Sales ₹ 56,406.00 ₹ 56,533.00
Cost of Sales ₹ 10,878.00 ₹ 11,883.00
Gross profit ₹ 45,528.00 ₹ 44,650.00
Depreciation ₹ 1,421.00 ₹ 1,425.00
Selling, General & Admn. Expenses ₹ 6,603.00 ₹ 7,533.00
EBIT ₹ 37,504.00 ₹ 35,692.00
Interest Income ₹ 90.00 ₹ 100.00
Interest Expense ₹ 77.00 ₹ 97.00
Pre-Tax Income ₹ 37,517.00 ₹ 35,695.00
Income Taxes ₹ 1,235.00 ₹ 1,203.00
Net income ₹ 36,282.00 ₹ 34,492.00
2016 2017
Balance Sheet
Assets
Cash and cash equivalents ₹ 41,838.00 ₹ 42,859.00
Accounts Receivable ₹ 1,675.00 ₹ 1,668.00
Inventories ₹ 1,327.00 ₹ 1,365.00
Other Current Assets ₹ 522.00 ₹ 639.00
Total Current Assets ₹ 45,362.00 ₹ 46,531.00
Property, Plant and Equipment, Net ₹ 24,692.00 ₹ 28,646.00
Goodwill, net ₹ 16,573.00 ₹ 13,715.00
Other intangible assets, net ₹ 1,504.00 ₹ 1,499.00
Deferred income taxes ₹ 115.00 ₹ 92.00
Other Non-Current Assets ₹ 541.00 ₹ 905.00
Total Non-Current Assets ₹ 43,425.00 ₹ 44,857.00
Total Assets ₹ 88,787.00 ₹ 91,388.00
Liabilities and Shareholders' Equity
Notes and loans payable ₹ 34.00 ₹ 54.00
Current portion of long-term debt ₹ 346.00 ₹ 250.00
Accounts payable ₹ 2,944.00 ₹ 3,178.00
Other Current liabilities ₹ 392.00 ₹ 254.00
Total Current Liabilities ₹ 3,716.00 ₹ 3,736.00
Long-term debt ₹ 4,430.00 ₹ 4,926.00
Deferred income taxes ₹ 252.00 ₹ 293.00
Other liabilities ₹ 1,785.00 ₹ 2,049.00
Provision for law suit ₹ 30,000.00 ₹ 30,000.00
Total Non Current Liabilities ₹ 36,467.00 ₹ 37,268.00
Total Sam-pple Ltd. Company shareholders' equity ₹ 48,604.00 ₹ 50,384.00
Total Shareholders' Equity ₹ 48,604.00 ₹ 50,384.00
Total Liabilities and Shareholders' Equity ₹ 88,787.00 ₹ 91,388.00
2016 2017
Product-wise Information
Cellphones
Poppo ₹ 13,384.00 ₹ 13,477.00
HuaHawai ₹ 15,401.00 ₹ 15,538.00
OneMinus ₹ 14,014.00 ₹ 13,923.00
Total Cellphones ₹ 42,799.00 ₹ 42,938.00
Hairpods ₹ 13,607.00 ₹ 13,595.00
Total Sales ₹ 56,406.00 ₹ 56,533.00
2016 2017
Supplemental Cash Flow Information
Capital expenditures ₹ 5,375.00 ₹ 5,651.00
Principal payments on debt ₹ 245.00 ₹ 346.00
Dividends paid ₹ 18,203.00 ₹ 19,377.00
2016 2017
Notes to Accounts - Equity (No of shares)
Opening 905.73 921.73
Shares issued for stock options 16.00 14.00
Closing 921.73 935.73
2019E 2020E
Notes to Accounts - Debt schedule
Principal debt repayment ₹ 895.00 ₹ 497.00
Interest due ₹ 95.00 ₹ 83.00
Sectoral Screener (Power Generation/Distribution)
Company Market Price EPS
CESC 626.5 69.23
Power Grid Corp 215.1 20.67
Torrent Power 417.8 25.76
PTC India 75.6 10.81
Guj Ind Power 84.15 16.4
IndiGrid InvIT 132 8.86
NTPC 109.65 10.22
Sterling & Wils 268.3 19.42
Nava Bharat Ven 70.3 7.83
NLC India 53.05 10.22
SJVN 26.3 4.2
NHPC 25.25 2.65
JSW Energy 86.95 3.03
Orient Green 2.14 0.4
he below given information
Required to forecast income statement and balance sheet
1. Sales will be forecasted using the product-wise information provided. After evaluating the m
2018
(' millions) Products
₹ 56,644.00 Cellphones
₹ 12,935.00 Poppo
₹ 43,709.00 HuaHawai
OneMinus
₹ 1,439.00
₹ 7,536.00 Hairpods
₹ 34,734.00 2. Cost of sales to be taken on the basis of average of historical percentage of sales
₹ 95.00 3. SG&A exp. are to be taken as the highest of the historical years % of sales, on the conservati
₹ 101.00 4. Depreciation should be forecasted on the basis of latest (2018) % of average net PPE.
5. Interest Income can be calculated as an average of historical percentage of closing cash bala
₹ 34,728.00 6. The tax rate applicable will be average of historical effective tax rates
₹ 1,155.00 7. Dividends to be paid at an average of historical D/P ratio
₹ 33,573.00 8. Capex to be forecasted on the basis of average historical percentage of sales
9. Other intangible assets will be ammortised by Rs. 29 millions p.a.
2018 10. Goodwill, Defrred Incomes taxes, Other Non Currrent assets are assumed to be at constan
(' millions) 11. For inorganic growth through series of acquisition, company plans to maintain cash balanc
12. Receivable days (on sales), Inventory days (on COGS) & Payable days (on COGS) are expect
₹ 43,948.00 13. However, Other CA and Other CL are to be taken as average of historical % of sales and % o
14. As per lawyer advice, the lawsuit will be settled in first year and the provision is paid off as
₹ 1,636.00 be there for the forecast period
₹ 1,425.00 15. The company has a revolving credit facility (to be used as plug factor) should there be any
₹ 799.00 16. Notes and loan payable, Deferred income taxes, Other non current liabilities are assumed
₹ 47,808.00 17. The number of stock options to be exercised can be assumed to be equal to historical aver
18. The exercise price of the option will be equal to 90% of MPS. The MPS for the forecast peri
₹ 32,872.00 19. The P/E multiple for the forecast period will be equal to the industry average
₹ 11,665.00
₹ 1,496.00
Construct a control panel allowing the user to change the below mentioned inputs (with devel
₹ 77.00 of the below mentioned output
₹ 924.00 OUTPUT:-
₹ 47,034.00 1. Operating profit margin & NP margin
2. Interest service coverage ratio
₹ 94,842.00 INPUTS:-
1. Interest rate on the revolver credit facility - changing by 1%
₹ 13.00 2. Minimum cash balance maintained - changing by INR 1,000
₹ 895.00
₹ 3,323.00
₹ 239.00
₹ 4,470.00
₹ 4,749.00
₹ 444.00
₹ 1,677.00
₹ 30,000.00
₹ 36,870.00
₹ 53,502.00
₹ 53,502.00
₹ 94,842.00
2018
(' millions)
₹ 13,578.00
₹ 15,518.00
₹ 13,902.00
₹ 42,998.00
₹ 13,646.00
₹ 56,644.00
2018
(' millions)
₹ 5,090.00
₹ 250.00
₹ 20,582.00
2018
(' millions)
935.73
19.00
954.73
2021E 2022E
(' millions)
₹ 238.00 ₹ 618.00
₹ 69.00 ₹ 65.00
nt and balance sheet
roduct-wise information provided. After evaluating the markets, the following estimates have been made
Growth rate
Expected to grow in a linear manner
Average of the historical growth rate
Expected to grow in a linear manner
Expected to grow in a linear manner
sis of average of historical percentage of sales
ighest of the historical years % of sales, on the conservative note
on the basis of latest (2018) % of average net PPE.
as an average of historical percentage of closing cash balance
age of historical effective tax rates
of historical D/P ratio
s of average historical percentage of sales
mortised by Rs. 29 millions p.a.
Other Non Currrent assets are assumed to be at constant at 2018 levels
es of acquisition, company plans to maintain cash balance of INR 50,000 MILLION at any point in time
ory days (on COGS) & Payable days (on COGS) are expected to be maintained at average of last 3 years.
are to be taken as average of historical % of sales and % of COGS respectively
will be settled in first year and the provision is paid off as compensation. Thus, the provision for lawsuit is not expected to
it facility (to be used as plug factor) should there be any funding requirement at an interest rate of 8% p.a
income taxes, Other non current liabilities are assumed to be constant at 2018 value
e exercised can be assumed to be equal to historical average
ill be equal to 90% of MPS. The MPS for the forecast period will be based on the P/E multiple
period will be equal to the industry average
e user to change the below mentioned inputs (with developer function) inorder to obtain the diagrammatic representation
OUTPUT:-
in
INPUTS:-
facility - changing by 1%
- changing by INR 1,000
have been made
point in time
of last 3 years.
ion for lawsuit is not expected to
est rate of 8% p.a
ltiple
n the diagrammatic representation
Q2. (10 Marks)
Sirus Electronics,a manufacturing company headquartered in USA,has a competitive advantage that will probably d
Analyst Jayne expects this deterioration to be reflected in declining sales growth rates as well as declining profit ma
To Value the company,Jayne has accumulated the following information.
Current Sales : USD 600 million
Over the next 5 years,the annual sale growth rate and the Operating profit margin are projected to be as follows:
Year 1 2 3 4 5
Sales Growth Rate (%) 18% 16% 12% 10% 8%
Operating Profit Margin (%) 13% 12% 11% 10% 9%
The stable growth rate is expected to be 6% after year 5.
Capital Expenditures in the amount of 60% of the sales increase will be required each year.
Investments in working capital equal to 25% of the sales increase will also be required each year.
Depreciation is expected to be 10% of Capex each year
WACC applicable is 9.97%
Tax rate is 10%
Required:
[Link] Firm Value of Sirus Electronics.
[Link] Jayne is uncertain about the Stable growth rate and Working Capital requirements for the future.
Prepare a Data table to compute the Firm Value with Stable growth rate of 4%,5%,6%,6.5%,7% and working capital
vantage that will probably deteriorate over time.
s well as declining profit margins
rojected to be as follows:
ents for the future.
5%,7% and working capital requirement to be 20%,22%,25%,27%,30% of the sales increase.
Q3. (10 Marks)
You have been asked to evaluate a new machine being considered by the M/s. SF Railroad Co.
The project is expected to entail the below cash flows during the life of 2 years
The discount rate applicable to the company is 10%.
Date Cash Outflow Cash Inflow
1-Apr-16 14000
14-Jun-16 2200
1-Sep-16 1800
24-Dec-16 3250
14-Feb-17 2000 1500
12-Apr-17 2100
1-Sep-17 2500
9-Dec-17 1250
10-Feb-18 3150
20-Mar-18 2250
Examine the feasibility of the project using appropriate NPV and IRR
