B&M Financial Question Examples

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PrintIT Pty ltd has the following cash flow movements within its business for the month of March 2012. It sold $48,000 of goods on credit. Cash sales for the month were $78,000. Wages at the company totalled $15,456. Stock purchases were $88,570 and there were interest charges on loans of $6,455. On top of this the company incurred $6,280 in overheads. It also collected $42,700 for the sales it made on credit for the month of February. The company’s closing balance at the end of February was $14,300.

Calculate the net cash position of the business at the end of March in terms of its opening balance, receipts, cash outflows, net cash for the month and closing bank balance [7]

A company is contemplating funding one of two projects.
Project A will cost $325,000 and is predicted to generate the following net revenues over a life time of 5 years. The project is expected to have a residual value of $75,000 when sold. 1) $65,000

2) $85,000
3) $95,000
4) $138,000
5) $155,000

Project B will cost $148,000 and is predicted to generate the following net revenues over a life time of 3 years. The project is expected to have a residual value of $42,000 when sold. 1) $65,000

2) $90,000
3) $135,000

Inflation is expected to remain at 4% for the next 6 years. Using an investment appraisal method of your choosing, explain which project the company should fund. [8]

Company XYZ Pty Ltd has $35,000 in stock, $28,000 in debtors and $15,000 in cash. It also has $75,000 in fixed assets. In terms of its liabilities XYZ has an overdraft of $4,500, owes trade creditors $7,890 and has a long term loan of $22,000.

Calculate XYZ Pty Ltd’s net assets.
Calculate XYZ Pty Ltd’s current ratio.
Calculate XYZ Pty Ltd’s acid test.
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