This document provides instructions for an internal assignment for a Corporate Finance course. It asks students to send their semester and specialization to receive fully solved assignments via email or phone. The assignment contains 3 questions worth 30 marks total. Question 1 asks about the importance of leverage as a relationship between financial variables. Question 2 asks the finance manager of AB Ltd. to discuss Cost-Volume-Profit techniques to satisfy management's interest in forecasting profits from changes in sales and costs. Question 3 has two parts, the first asking to calculate the net present value of a project with given cash flows and discount rate, and whether the project should be accepted. The second part asks to calculate the net operating cycle from given financial statement data.

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NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Corporate Finance
Internal Assignment Applicable for December 2015 Examination
Assignment Marks: 30
Instructions:
 All Questions carry equal marks.
 All Questions are compulsory
 All answers to be explained in not more than 1000 words for question 1 and 2 and for
question 3 in not more than 500 words for each subsection. Use relevant examples,
illustrations as far as possible.
 All answers to be written individually. Discussion and group work is not advisable.
 Students are free to refer to any books/reference material/website/internet for attempting
their assignments, but are not allowed to copy the matter as it is from the source of
reference.
 Studentsshould writethe assignmentin their own words.Copying of assignmentsfromother
students is not allowed.

2. Question. 1. “Leverage being defined as the relationship between
two financial variables”. Why the study of leverages is an important
concept in finance? (10 marks)
Answer: Leverage isdefinedasthe relationshipbetweentwofinancial variables.Leverage meansthe
use of fixed cost in most efficient manner which will allow you to increase the overall level of
profitability in your firm. In simple words, leverage has the capability of levelling of tax earning of
company which makes it perfect evaluator of company’s risk value and return.
The leverage is important due to several reasons which include:
Operatingrisk measurement:Whenoperating leverage is at its peak and when it is rising then this
can be one of the most efficientwaybutwhenthe salesis fallingdownthenthiscouldbe really very
risky.
Question. 2. You being the finance manager of AB Ltd. The
management is interested in CVP analysis which helps in
forecasting profits, in analyzing the changes in profit happens
because of changes in sales volume and cost. Discuss such CVP
techniques you will use to satisfy the management. (10 marks)
Answer: The finance manager of any firm is a task of responsibility and AB Ltd requires proper CVP
analysis for their business to get profit forecasts of the cost and sales value changes. This is a task
that requiresefficiency.Itisalwaysnecessarytounderstandthe CPV techniques before proceeding
any further so that the CVP analysis accuracy
Question. 3. a) Given the following as cash flow from a project,
calculate the NPV. The required rate of return is 9 %
year Cash flow
0 -150000
1 25000
2 35000
3 45000
4 45000
5 55000
Whether the company should accept the project or not ? (5 Marks)
Answer

3. b) Given the following financial statement data, calculate the net
operating cycle.
Credit sales 250000
Cost of goods sold 200000
Accounts receivable 25000
Inventory closing balance 23000
Inventory opening balance 20000
Accounts payable 17000
Answer:
Days Sales Outstanding (DSO): 35.0
Days Payable Outstanding (DPO): 33.8
Cash
Dear students get fully solved assignments
Send your semester & Specialization name to our mail id :
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