[All Rights Reserved] SLIATE SRI LANKA INSTITUTE OF ADVANCED TECHNOLOGICAL EDUCATION (Established in the Ministry of Higher Education, vide in Act No. 29 of 1995) Higher National Diploma in Business Finance Second Year, Second Semester Examination 2014 HNDBF 2223 - Financial Modelling Instructions for Candidates: Answer 05questions including 1,2,3 and 4 No. of questions : 06 No. of pages : 08 Time : Three (03) Hours Instructions for Candidates: Applications to be used-ms-excel Do not create a folder to save your file. Backup file should be saved on your computer Desktop or Server. Backup file should be named by using your examination Index Number. (Ex-9AD1SDW001.xlsx) This paper date mention DD/MM/YY format its mean Date, Month and Year Return the question paper to the examiner before leaving the examination hall. Index No- Start time-... End Time- Question Numbers Answered Cage1 To be completed by candidate Marks obtained Total Cage2 To be completed by Examiner
01. The following trial balances have been extracted from the books of accounts of Keells Limited as at 31 st March 2014 & 31 st March 2013. 31/03/2014 31/03/2013 Rs. Rs. Land & Buildings (W.D.V.) 2,800,000 2,800,000 Furniture and Equipment (W.D.V.) 1,050,000 1,050,000 Motor Vehicles (W.D.V.) 2,050,000 2,050,000 Insurance Expenses 56,000 55,000 Opening Inventory 54,500 68,790 Accounts Receivable 375,600 252,000 Bank Balance 425,500 325,500 Bank Loan 1,500,000 1,500,000 Accounts Payable 274,000 284,000 Stated Capital 1,800,000 1,500,000 Sales 4,034,075 3,645,170 Sales Returns 10,850 11,650 Discount Allowed 14,600 14,800 Purchases 525,600 436,900 Purchases Returns 18,300 15,000 Discount Received 41,250 26,150 Carriage Inward 49,400 32,200 Salaries Expenses 478,990 235,300 Advertising Expenses 155,000 165,800 Carriage Outward 24,750 22,650 Rent and rate 64,385 54,880 Telephone Expenses 84,000 70,150 Electricity Expenses 165,500 145,500 Retained profit at the beginning of year 370,000 423,500 Bad debts 24,500 18,250 Income Tax Expense 325,000 295,500 Debentures 1,000,000 1,000,000 Financial Expenses 187,000 172,500 Closing Inventory 56,890 48,900 Depreciation-Motor Vehicle 84,500 84,500 Depreciation-Furniture and Equipment 31,950 31,950 HNDBF II Financial Modelling, 2014 Page 2
You are required to create a suitable spreadsheet model; 1) The Statements of Comprehensive Income for the year ended 31 st March 2014 and 31 st March 2013. 2) The Statement of Financial Position as at 31 st March 2014 and 31 st March2013. (Use the maximum number of formulas and proper financial statements structures) (30 Marks) 02. Trial Balance of Pizza Hut PLC as at 31 st March 2014 given to you as follows. Rs' 000 Rs' 000 Ordinary Share Capital 8000 Preference Share Capital 2000 Retained earnings 500 General Reserves 400 Revaluation Reserves 200 Debentures 500 Loan term loan 300 Land and Building 8500 Furniture and Fittings 1000 Computer Equipment 500 Motor Vehicles 4000 Accumulated Depreciation on 1st April 2013 Land and Building 75 Furniture and Fittings 65 Computer Equipment 50 Motor Vehicles 30 Quoted Investment 1000 Account Receivable 280 Account Payables 105 Cash and cash equivalents 160 Administration expenses 220 Selling and distribution 100 Financial Expenses 51 Other Income 19 Sales 3815 Sales Return 15 Purchase 80 Purchase Return 8 Provision for doubtful debt on 1st April 2013 14 Ordinary Dividend Paid 50 Preference Dividend Paid 80 Opening stock on 1st April 2013 45 16081 16081 HNDBF II Financial Modelling, 2014 Page 3
Additional information I. Closing stock on 31 st March 2014 at cost Rs 70,000 and its Net realizable Value was estimated to Rs 65,000 at the close of the financial year. II. Depreciation should be provided at following rate on straight line basis Building 05% Computer Equipment 25% Furniture and fittings 10% Motor vehicles 20% III. Insurance and building rent were pre-paid respectively by amount of of Rs 12,000 and Rs 18,000. IV. Following bills were accrued Electricity Rs 8,000 Water Rs 10,000 Telephone Rs 5,000 V. Doubtful debt provision should be maintain at 10% over closing trade receivables. As Accountant of Pizza Hut PLC Company, create a ten column worksheet, which shows the financial statements of Pizza Hut PLC after adjustment for the year ended 31/03/2014. (18 Marks) 03. Design the following worksheet, applying appropriate formula for the given cash flow forecast statement, for the next 5 month, using information given below. (use suitable formula & cell references to find the forecast values) CASH FLOW FORECAST STATEMENT-2015 JAN FEB MAR APR MAY JUN TOTAL CASH INFLOWS Cash Sales 450,000 Interest Income 125,000 Rent Received 75,500 Total Inflows (A) CASH OUT FLOWS Wages and Salaries 172,000 Electricity Expenses 75,000 Insurance Expenses 45,500 Rent & Rate 35,000 Postage and Stationery 30,000 Traveling Expanses 45,500 Miscellaneous expenses 40,000 HNDBF II Financial Modelling, 2014 Page 4
TOTAL OUT FLOWS(B) NET CASH FLOW (A-B) Start of the month 45,000 End of the month Additional Information; 1. Insurance Expenses will be the same for the remaining months. 2. Rent & Rate expenses will remain constant for the first two months and thereafter expected to increase by 10% each month, to the amount of proceeding month. 3. Wages and Salary will increased by 15% in each month over the value of January. 4. Electricity Expenses will remain the same for the first two months and thereafter will increase by 5% each month over the value of proceeding month. 5. Rent Received will remain constant for the first three months and thereafter expected to increase by 10% each month, to the amount of proceeding month. 6. Postage and Stationery will be increased by 5%, 10%, 15% and so on for the remaining months, over the figure of January. 7. Traveling Expenses will be increased by 5% in every two months. 8. Miscellaneous expenses will be decreased by 1%, 2%, 3% and so on for the remaining months, over the figure of January. 9. Interest income will remain the same for the first six months. 10. Cash Sales will be increased by 2%, 4%, 6% and so on for the remaining months, over the figure of January. (16 Marks) 04. The comparative financial statements of Araliya Company are as follows, Araliya Company Comparative Income Statements For the years ended March 31st - 2014,2013,2012 & 2011 2014 2013 2012 2011 Net Sales 5,120,810 6,000,000 4,516,075 4,300,330 Cost of Sales 2,543,000 2,935,000 2,920,000 2,650,000 Gross Profit 2,577,810 3,065,000 1,596,075 1,650,330 Selling Expenses 348,900 450,000 400,000 350,000 General Expenses 431,000 325,000 275,000 138,000 Total Operating Expenses 779,900 775,000 675,000 488,000 Operating Income 1,797,910 2,290,000 921,075 1,162,330 Finance Expenses 260,000 355,000 236,000 199,500 Income Before Tax 1,537,910 1,935,000 685,075 962,830 Income Tax 775,300 960,000 164,000 223,150 Net Income 762,610 975,000 521,075 739,680 HNDBF II Financial Modelling, 2014 Page 5
You are required to prepare, I. Vertical analysis report for the income statement form 2011 to 2014 II. Horizontal analysis report for the income statement for 2014/13,2013/12,and 2012/11 III. Prepare line graphs to show the Trend Analysis of Net Sales, Cost of Sales and Gross Profit. Assume based year 2011 (18 Marks) 05. I Prepare a loan amortization table for 5 years mortgage loan of Rs.2,500,000 obtained at an annual interest rate of 12.5% assuming that loan is repaid in equal installment at the end of each month. Amortization table should be included, 1. Beginning loan balance 2. Monthly installment 3. Monthly interest payment 4. Monthly capital deduction 5. The ending loan balance for each month till the end of the mortgage period. 6. II The following information is for Dinapala Enterprise for the month ended October31, 2014. Addition Employee Basic Budget Traveling Over Number Employee Name Salary Allowance Allowance Time 1000 S.W. Perera 38900 5500 6000 2500 1002 Subashini Gamage 32000 5500 5500 0 1004 H.M. Manel 32000 5500 4000 5000 1006 A.D. Surangika 45000 5500 3500 0 1007 K.P. Jayasrini 42000 5500 4500 0 1008 E.D.Kumuduni 29700 5500 6500 3000 1009 H.A. Hasantha 35000 5500 5500 4750 1012 B. Hettigoda 25300 5500 4600 3750 Total Addition Gross Salary HNDBF II Financial Modelling, 2014 Page 6
Loan Recovery Deduction Salary Advance Stamp Duty 4500 5000 25 3000 5000 25 2000 5000 25 0 5000 25 5500 2000 25 4500 9000 25 0 9000 25 0 8000 25 EPF 10% Total Deduction Net Salary Company Contribution EPF 15% Company Contribution ETF 3% a) Use suitable formula to find the following values and put them into the blank cells. b) Create a Vlookup worksheet model for suitable Salary pay slip of employee, the month of October 2014. (18 Marks) 06. I Maga Contactors, a company engaged in supplying machinery for housing projects, is presently evaluating two different projects. However, finance is available to invest only in one of them. Following information is available for the two projects. Project A Project B Rs. (000) Rs. (000) Initial cost of machinery 750000 750000 Net Cash flow - Year 1 18500 14000 2 19000 19000 3 25000 38000 4 40000 42000 5 50000 66000 By using excel function or creating a model calculate for both projects the. 1. Net Present Values (NPV), assuming that the cost of capital is 15% per annum. 2. Internal Rate of Returns (IRR). 3. Select the most viable project HNDBF II Financial Modelling, 2014 Page 7
II ABC company have acquired a machine at a cost of Rs.975,000 with an estimated useful life period of 5 years and a salvage value of Rs.50,000. Using the above information create a models to calculate the annual Depreciation Expense and Accumulated Depreciation of the machine for the useful life time based on the following method, a) Straight-line. b) Sum of the years digit. c) Double decline balance method. Prepare a line chart to show the depreciation expenses for above 3 methods. (18 Marks) HNDBF II Financial Modelling, 2014 Page 8