Thapar Institute of Engineering & Technology, Patiala

Department of Computer Science and Engineering

END SEMESTER EXAMINATION
B. E. (Third Year): Semester-VI Course Code: UCS539
Course Name: Finance Accounting and Valuation Name of Faculty: Harpreet, Nitesh
Date: 01-02-2021 (1430 hrs) Time: 2 Hours, M. Marks: 50
Note: (1) Attempt any 5 questions with proper justification and working
(2) Assume missing data, if any, suitably.
(3) Answers of descriptive questions should be in less than 200 words.

Q1 Make a statement that reflects accounting equation for all of the following transactions. (2*5)
Show that the accounting equation balances. Show your working and state your
assumptions, if any, clearly.
(i). Shelly starts a new business by the name of ShellFire Pvt. Ltd. with Rs. 35,00,000
transferred from her personal bank account to the bank account of the business. She
also receives Rs. 12,00,000 in the same bank account from her brother, Ravish, as a
loan.
(ii). ShellFire buys a machinery from HardWorks Enterprises for Rs. 16,00,000. 50%
payment is made through cheque.
(iii). ShellFire buys raw material for Rs. 7,32,000 from TooRaw Pvt. Ltd. One third of
the payment is made through a bank NEFT transfer and rest amount is on a three-
month's credit.
(iv). Within one month, the workers of ShellFire convert all of the raw material into
finished product in the factory and are paid total salaries of Rs. 1,09,000 through
direct transfers in their salary accounts. Shelly withdraws Rs. 67,000 for her
personal use.
(v). ShellFire sells all of the finished product for Rs. 12,16,000 to multiple customers.
Most of the payment is received through cheque except Rs. 10,500 from one
customer who agrees to pay after few months.
Q2(a) Elaborate three differences in different ownership types. (3)

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Q2(b) Elaborate the three types of accounts and their features? (2*3)
Q2(c) Write the expanded accounting equation. (1)
Q3(a) Name the three crucial summary financial statements for any business and write their (2*3)
main features.
Q3(b) If profit before interest and tax for AirDry Enterprises = Rs. 25,739; interest expense = (2*2)
Rs. 1,036; depreciation = Rs. 4,729; net debt = Rs. 22,900; number of outstanding shares
= 900 and current market price = Rs. 42.33 per share, calculate (i) interest coverage ratio
and (ii) EV/EBITDA ratio.
Q4(a) With the the help of a diagram each, explain the following: - (3*2)
(i) Traditional form (or traditional model) of finance
(ii) Modem form (or modem model) of finance
Q4(b) Identify the mistakes in the following Excel functions and then rewrite the correct (2*2)
function.
(i) =AVERAGEIF("India",$A$1:$A$50,$B$1:$B$50)
(ii) =VLOOKUP("India",$A$1:$B$50,3,3)
Q5(a) Elaborate the three financial decisions. Explain the connection between each decision (2*3)
and a corresponding financial statement.
Q5(b) Answer the following: - (2*2)
(i) Elaborate the DuPont Identity and its significance with an example.
(ii) Elaborate effective annual interest rate with an example.
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 Q6
Answer these questions based on the following balance sheet. Clearly show your (2*5)
working and state your assumptions, if any, for each question.
(i) Calculate current ratio for the year 2020.
(ii) Calculate percentage change in net debt from 2019 to 2020.
;iii) Calculate debt-equity ratio for the year 2020.
:iv) Calculate percentage change in shareholder's equity from 2019 to 2020.
(v) Calculate return on equity for the year 2020 if net profit for the year 2020 is Rs.
15,372 crore.
ABC Company
Balance Sheet (in crore rupees)
Liabilities 2020 2019 Assets
Accounts payable 2020 2019
10,936 9,384 Cash and bank 7,458 5,493
Othe current 12,537 8,495 balance
liabilities 13,256 9,675
7,849 1,209 Cash equivalents
Long-term debt 6,543 2,389
12,340 10,236 Accounts 1,045
Non-current 773
9,576 8,376 receivable 8,403
liabilities 8,209
48,346 45,346 Inventories 2,647 2,747
Common stock 1,416 954 Other current assets 9,830 7,293
Retained earnings Long-term 48,062 42,062
General reserve investment 5,756 5,359
103,000 84,000 Property and plant 103,000 84,000
Net intangible
assets
Other assets
Q7 Calculate the following. Show your working clearly .
(i) (2*5)
Find present value of 275,000 to be received 7 years from now if the applicable
discount rate is 3.5% per annum.
(ii)
A wealthy donor wants to set up an endowment in a school that will pay 260,000 in
scholarship forever. If the school can invest the endowment @4% per annum, what
amount will support the scholarship?
(iii)
An insurance policy has two variants. Variant one will pay you 212,000 per month
for 5 years. Variant two will pay 240,000 lump sum in one go. If you can reinvest
money @10% per annum, which variant should you chose? Assume same
insurance premium for both the variants.
(iv)
Consider a 7-year bond with a coupon rate of 10% per annum (paid semi-annually)
and a 210,000 face value. If yield to maturity of this bond is 6% per annum, then
the find the price of this bond.
( v)
An investor expects a company to pay dividends of ZS per share and trade for 2120
per share at the end of the year. Alternative investments with risk equal to
investment in this company have an expected return of 9% per annum. Find the fair
price per share using the dividend discount model.

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