1. .
STRATEGIC
CORPORATE
FINANCE
ASSIGNMENT
NAME- SONAM BENGANI JAIN
CLASS- FF7, IIPM
ROLL NO.- 78
Prof. Sanjay Samtani
.

2. 1. Covariance= 567.1916/24 = 23.63
Variance= 854.2282/24 = 35.60
Beta= 23.63 /35.60 = 0.66
2. Cost of debt
Kd= Amount of interest x 100 ( 1- tax)
Amount of debt
= (10.97 + 9.27) x 100
(114.63 + 78.62)
= 10.47 %
Cost of Equity
Ke = Rf + β (Rm- Rf )
Rm = CAGR (March 30,1997 to March 30, 2012)
Ke= 8.3 + 0.66 (11.4-8.3) = 10.34 %
WACC
Equity + Debt = 6.75+ 114.63 = 121.38
WACC = Equity x Ke + Debt x Kd
(Equity+ Debt) (Equity+ Debt)
= 6.75 x 10.34 + 114.63 x 10.47
(114.63 + 6.75) (114.63 + 6.75)
= 10.46 %
6. EVA = NOPAT-(CAPITAL EMPLOYED *WACC)
2010-11
NOPAT = PAT + Non- recurring exp + Revenue exp on R&D + Int Exp – Non – recurring income
NOPAT = 9.80 +10.97 INT.+11.94 DEP
= Rs 32.71 cr
CAPITAL EMPLOYED = Fixed Assets + Investment + working Capital
= 84.92 + 0.77 + (88.05 – 28.32)
= Rs 145.42 cr
WACC = 10.46 %
EVA = 32.71 – ( 145.42 * .1046) = 17.50

3. 7. Operating Leverage = % change in EBIT
% change in Sales
= (38.37 – 26.02 )
(123.99-98.58)
= 12.35
25.41
= 0.486
Financial Leverage = % change in EPS
% change in EBIT
EPS = PAT .
No. of O/s shares
DFL = 14.52 – 14.05
38.37 – 26.02
= 3.80
8. i) EPS
2010-11= (PAT- PREF. DEVIDEND)/ NO. OF SHARE (In crores)
(9.80- 0.) /0.675 = 14.52
2009-2010 = (9.49- 0 )/ 0.675 = 14.05
ii) P/E RATIO = Market Value per Share
Earnings per Share (EPS)
CLOSING PRICE ON 23 May 2012 = 35.05
2010-2011= 35.05 / 14.52 = 2.41
2009-2010 = 35.05 / 14.05 = 2.49
iii) DPS
D - Sum of dividends over a period (usually 1 year)
SD - Special, one time dividends
S - Shares outstanding for the period

4. 2010-11= 1.57/ .675 = 2.32
2009-10 = 1.42 / .675= 2.10
iv) D/E RAIO
2011-10 = 114.63 / 43.38 = 2.64
2010-09 = 78.62 / 35.14 = 2.24
V ) INTEREST COVERAGE RATIO :
= EBIT/ INTEREST
2011-2010 = 38.37 / 10.97 = 3.49
2010-2009 = 26.02 / 9.27 = 2.80
Vi) PRICE TO BOOK VALUE
2011-10 = 35.05 / 64.27= 0.55
2010-09 = 35.05 / 52.06 = 0.67
Vii ) PRICE TO EBIT
2011-10 = 35.05 / 38.37 = 0.91
2010-09 = 35.05 / 26.02 = 1.34
5. Sonata Software is paying very high returns to its equity shareholders.
Year return
2011 200%
2010 170%
2009 150%
2008 110%
2007 110%
Sonata’s competitors are Phoenix mills, Jindal Cotex, SIL Invest. Comparatively Sonata has been paying
good and sufficient dividend over the 5 years.