r4Ai{AGET/IENT ADVISORY SERVICES

Final Preboard Examinations (October ZOLT Batch)

17 September 2OL7 o 8:00 AM to 11:O0 AM
Page 7
'ln lz rna-process val-ue analysis, an exarople of non*value adding activity is
tl Einlshing
b. Shipping
c. Re-engineering
d. Research
33. Bacardi Company turns out 200 portablg fans a at a cost of- p 25A
fr per fan for mater:ia-ls and variable conversiondaycost. rt takes the
firm L8 days to corrver:t raw material-s int-o calculator, Bacardi,
usual- credit terms extencied to its custcmers is 30 days, and the firms
generally pays its suppiies in 20 crays. assuming the
cycles are constant, what amount of working capitif mustforegoing
Bacardi
finance ?
a. P 900, 000
b. P 1,40Q,000
c. P 1.800,000
d. P 2,4AA,AA0
Dr ,n. ?fhich
a,
group of ratir:s prj_marily measures risks?
\ Iiquidity, activity and debt
b. Activity, debt and profitabiliLy
c. tiquidity, profitabiliry and dei:t
d. Activity, ligr:idity and common eguity
\r35 - Rloody company i s attempt-ing to ser,ect the best group of
.Maryprojects
' independent competrng for the firm's fixed capital budget of
P10, 00o, 000 - Any unused portion of t-his budget will
ea.rn l-ess than
its 2oz cost of capital. A summary cf k.y data about the proposed
projects foliows:
Proiect In!tial :.nvestment rRR PV of inflows at 20?
A P 3, 000, 000 ZIL P 3,050,000
B P g, 000,000 aco
Z J7; P g,32A,AOA
c P 1, 000,000 24? P 1,060,000
D P 7,000,000 11q P 7,350,000
Whichprojects should the firm implement?
a. projects B and C
b. Projects C and I)
c. Projects A and D
d. Projects A, Bt C and D
r-l 35.Tonic company has annual sales of p 2f500,000 (bad debts
are 3B of
sales) ' The credit and coflection manager is considering institutlnq
a stri-cter collection policy.where bad Jebts woul-d be reduced
of Lhe totar sales, anci the average collection to 1.5t
period (i.e.,
sales outstanding) woulcl fal1 f::om 45 day.s to io <iays. However, days
saLes would also fali by an estimat.ed p 300,000 annually. var1able
costs are 75t of sales anC the cost' of carrying, receivabfes is 10,a.
Assuming that tire tax race is 4 0%, what wou-l-d be' the decrease
investment in receivabres if the change were made? in
a. p 9,688
b. P 72,988
c. P 96,815
d. P 1,29,915
,l
t 37. Taxes are of LEAST importance for:
-lv
i
a. Capital budgeting
b. Times f nteresr- Earnecl raLio
c. Degree of financial ieveraue
d' cost of debt for weighted average cost of capital