BRIEF GUIDELINES

FNE 3000 – Finance

ASSIGNMENT 1

Week 2

INSTRUCTIONS TO STUDENTS

This Assignment carries 30% of your final grade. Please read carefully and answer ALL four questions
which carry the marks indicated at the end of each question.

Expected Level of Student work

Students' assignments at undergraduate level are evaluated and graded according to the following six
scoring categories at five different levels of competence:

a. Structure Presentation

b. Content

c. Critical Analysis and Evaluation

d. Language. Grammar and Punctuation

e. Level of Competency (Undergraduate)

f. Referencing (Text citation Reference list)

Marking Criteria

General Presentation / Structure and Cohesion 20%

Citation and References Style 20%

Content Quality/Critical Analysis / Rational 50%

Academic Writing - Grammar 'Spelling 10%

Total Weight 100%

1
Exercise 1

The following Trading and Profit and Loss Account of ABC Ltd for the year ended 31‐12‐2019 is given
below:

Particular Rs. Particular Rs.

Opening Stock 76,250 Sales 5,00,000

Purchases 3,15,250 Closing stock 98,500

Carriage and 2,000

Freight

Wages 5,000

Gross Profit 2,00,000 Gross Profit 2,00,000

Non‐operating incomes:

To Administration 1,01,000 Interest on Securities 1,500

expenses

Selling and Dist. 12,000 Dividend on shares 3,750

expenses

Non‐operating 2,000 Profit on sale of shares 750

expenses

Financial Expenses 7,000

Net Profit 84,000

From the above, compute:

1. Gross Profit Ratio 2. Expenses Ratio 3. Operating Ratio 4.Net Profit Ratio 5. Operating (Net) Profit
Ratio

(25 marks)

2
Exercise 2

The Balance Sheet of ABC Auto Limited as on 31‐12‐2002 was as follows:

Particular Rs. Particular Rs.

Equity Share Capital 40,000 Plant and Machinery 24,000

Capital Reserve 8,000 Land and Buildings 40,000

8% Loan on Mortgage 32,000 Furniture & Fixtures 16,000

Creditors 16,000 Stock 12,000

Bank overdraft 4,000 Debtors 12,000

Taxation: Investments (Short‐term) 4,000

Current 4,000 Cash in hand 12,000

Future 4,000

Profit and Loss A/c 12,000

1,200,000 1,200,000

From the above, compute:

(1) the Current Ratio, (2) Quick Ratio, (3) Debt‐Equity Ratio, and (4) Proprietary (Equity) Ratio.

(25 marks)

Exercise 3

Explain what finance is and how it affects individuals’ and corporations’ life. Then explain the financial services
and managerial finance areas of finance.

(25 marks)

Exercise 4

Discuss the two key activities of the financial manager as related to the firm’s balance sheet and explain the
major differences between accounting and finance with respect to emphasis on cash flows and decision
making.

(25 marks)