# Additional Solved Sums, Financial Management, Prassanna Chandra

Pages: 438 (81304 words) Published: March 3, 2010
CHAPTER 2

1.As a rule of thumb, real rates of interest are calculated by subtracting the inflation rate from the nominal rate. What is the error from using this rule of thumb for calculating real rates of return in the following cases?

Nominal rate (%)7121822
Inflation rate (%)4 6 810

Solution:

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2.As a rule of thumb, real rates of interest are calculated by subtracting the inflation rate from the nominal rate. What is the error from using this rule of thumb for calculating real rates of return in the following cases?

Nominal rate (%)481119
Inflation rate (%)13 2 4

Solution:

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CHAPTER 3

1.At the end of March, 20X6 the balances in the various accounts of Dhoni & Company are as follows: Rs. in million
Accounts Balance

Equity capital 120
Preference capital 30
Fixed assets (net) 217
Reserves and surplus 200
Cash and bank 35
Debentures (secured) 100
Marketable securities 18
Term loans (secured) 90
Receivables 200
Short-term bank borrowing (unsecured) 70
Inventories210
Provisions 20
Pre-paid expenses 10

Required: Prepare the balance sheet of Dhoni & Company as per the format specified by the Companies Act.

Solution:
Balance Sheet of Dhoni & Company As on March 31, 20 X 6

|Liabilities | |Assets | | |Share capital | |Fixed assets |  | |Equity |120 |Net fixed assets |217 | |Preference |30 | |  | |Reserve & surplus |200 |Investments |  | |  | |Marketable securities |18 | |Secured loans | |Current assets, loans & advances |  | |Debentures |100 | |  | |Term loans |90 | | | |  | |Pre-paid expenses |10 | |Unsecured loans | |Inventories |210 | |Short term bank borrowing |70 |Receivables |200 | |Current liabilities & provisions | |Cash & Bank |35 | |Trade creditors |60 | |  | |Provisions |20 | |  | |  |690 |  |690 |

2.At the end of March, 20X7 the balances in the various accounts of Sania Limited are as follows: Rs. in million
Accounts Balance

Equity capital 250
Preference capital 80
Fixed assets (net)380
Reserves and surplus350
Cash and bank100
Debentures (secured)190
Marketable...