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    Principles of Finance

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    Shahriar Zaman Asif
    1. The document contains a midterm assessment for a Principles of Finance course with 4 questions covering key concepts like CSR, time preference theory, present value calculations, and financial ratio analysis. 2. The answers provide examples of CSR activities, explain time preference theory with investments, show the step-by-step work to find the present value of a series of cash flows, and calculate ratios like quick ratio, debt ratio, and net profit ratio for a company. 3. Formulas for present value, financial ratios, and other calculations are provided for reference in solving the problems.

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    Principles of Finance

    Uploaded by

    Shahriar Zaman Asif
    42 views5 pages
    1. The document contains a midterm assessment for a Principles of Finance course with 4 questions covering key concepts like CSR, time preference theory, present value calculations, and financial ratio analysis. 2. The answers provide examples of CSR activities, explain time preference theory with investments, show the step-by-step work to find the present value of a series of cash flows, and calculate ratios like quick ratio, debt ratio, and net profit ratio for a company. 3. Formulas for present value, financial ratios, and other calculations are provided for reference in solving the problems.

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    1. The document contains a midterm assessment for a Principles of Finance course with 4 questions covering key concepts like CSR, time preference theory, present value calculations, and financial ratio analysis. 2. The answers provide examples of CSR activities, explain time preference theory with investments, show the step-by-step work to find the present value of a series of cash flows, and calculate ratios like quick ratio, debt ratio, and net profit ratio for a company. 3. Formulas for present value, financial ratios, and other calculations are provided for reference in solving the problems.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    42 views5 pages

    Principles of Finance

    Uploaded by

    Shahriar Zaman Asif
    1. The document contains a midterm assessment for a Principles of Finance course with 4 questions covering key concepts like CSR, time preference theory, present value calculations, and financial ratio analysis. 2. The answers provide examples of CSR activities, explain time preference theory with investments, show the step-by-step work to find the present value of a series of cash flows, and calculate ratios like quick ratio, debt ratio, and net profit ratio for a company. 3. Formulas for present value, financial ratios, and other calculations are provided for reference in solving the problems.

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    © All Rights Reserved
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    Green University of Bangladesh

    Green Business School


    Mid Term Assessment (Google Form/Doc), Spring Semester-2021 [211]
    Course Code: BUS 104; Course Title: Principles of Finance
    BBA Program
    Section – 2

    Time Allowed: 1 Hour                                                                                 Full Marks: 20


     
    1. Briefly explain the term CSR with example.                            [CO1]                   3
    2. Illustrate time preference theory with examples.                             [CO2]                    5
    3. Find the present value of Tk. 13,000 received at the beginning of year 1, Tk. 14,500
    received at the beginning of year 2 and Tk. 16,000 received at the beginning of year 3,
    assuming an interest rate is 7.75%.                                                    [CO ]      
    3     4

    4.  Financial Statement of A4 Paper Ltd. is as follows:                      [CO ]                        8


    3

    Particulars Amount (in Tk.)

    Sales 350,000

    Less: COGS 170,000

    Gross Profit 180,000 

    Less: Operating 35,000


    Expense

    Operating Profit 145,000

    Less: Interest Expense 25,000

    EBT 120,000 

    Less: Tax 30,000

    EAT 90,000

    Balance Sheet

    Liabilities Tk. Assets Tk.

    Accounts Payable 23,000 Cash 13,000

    Notes Payable 27,000 Marketable Securities 12,000


    Long Term Debt 35,000 Accounts Receivable 20,000

    Common Stock 30,000 Inventories 35,000

    Retained Earnings 25,000 Net Fixed Assets 60,000

    Total 140,000 Total 140,000


    Required:   (a) Quick Ratio
                         (b) Debt Ratio
                         (c) Net Profit Ratio
                         (d) Average Collection Period

    Formula:
             FV = PV(1+r) n

                
    FV = PV(1+r/m) mn

             FV = PV(1+r) + PV(1+r) + PV(1+r) + ………….. + PV(1+r)


    n n-1 n-2 n-n

             FV = PV(1+r) + PV(1+r) + ………….. + PV(1+r)


    n-1 n-2 n-n

               
    PV = FV/(1+r) n

             PV = FV/(1+r/m) mn

             PV = FV/(1+r) + FV/(1+r) + ………….. + FV/(1+r)


    1 2 n

             PV = FV/(1+r) + FV/(1+r) + FV/(1+r) + ………….. + FV/(1+r)


    0 1 2 n

             Current Ratio = TCA/TCL


             Quick Ratio = (TCA-Inventory-Prepaid Exp.)/(TCL-Bank Overdraft)
             Debt Ratio = Total Debt/Total Assets
             Operating Profit Ratio = EBIT/Net Sales
             Inventory T/O Ratio = COGS/Avg. Inventory
             Avg. Collection Period = Accounts Receivable * 360/Credit Sales
             ROE = EAT/Total Equity
             ROA = EAT/Total Assets
             Net Profit Ratio = Net Profit/Net Sales

    Answer:

    Answer to the question no. 1:


    Corporate Social Responsibility ensures that a company’s economic growth is
    beneficial to all its stakeholders, including suppliers, employees, and customers,
    while minimizing its impact on the environment.
    For example: Suppose Unilever Bangladesh provide drinking water tape in
    different area with their company logo. So at a time with this work they can
    ignore tax with free branding.

    Answer to the question no. 2:

    Time preference theory is the insight that we prefer goods (goods available at
    present) to future goods (present expectation of goods becoming available at
    some data in future) and the social rate of time preference. For Example: If i
    invest 20000 Taka today for 5 years I will received the amount after 5 years in
    term of what’s will be its value after 5 years.

    Answer to the question no. 3:

    Given that,
    FV1 = 13000
    FV2 = 14500
    FV3 = 16000
    r = 7.75%
    = .0775
    We know,
    PV1 = [{FV1/(1+r)1} + {FV2/(1+r)2} + {FV3/(1+r)3}]
    = 13000/1.0775 + 14500/ (1.0775)2 + 16000/ (1.0775)3
    = 12064.97 + 12489.17 + 12789.93
    = 37344.07

    ANS: 37344.07

    Answer to the question no. 4:

    a) Quick Ratio= TCL- Inventory/TCL


    =13,000+12,000+20,000+35,000-35,000/23,000+27,000
    =45,000/50,000
    =0.9:1

    b) Debt Ratio
    We know that Debt ratio= Total debt/ total assets*100
    = 85,000/1,40,000*100
    =60.71%

    c) Net Profit ratio= EAT/Net sales *100


    =90,000/3,50,000*100
    =25.71%

    d) Average Collection period = Accounts receivable/ credit sales* 360 days


    =20,000/3,50,000*360
    = 20.57 days
    = 21 days

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