Financial, Treasury and Forex Management - cs notes

373: 4 :5. (a) A Portfolio Manager has three stocks in his portfolio. Following information is availablein respect of his portfolio :(b)Company Investment β(` )X Ltd. 6,00,000 1.3Y Ltd. 3,00,000 1.4Z Ltd. 1,00,000 0.9Expected return on the market portfolio is 15% and the risk free rate of interest is 6%.On the basis of Capital Asset Pricing Model (CAPM), compute the following :(i) Expected return of the portfolio; and(ii) Expected β of the portfolio.(8 marks)The following data is related to X Ltd., Y Ltd. and Z Ltd. for the current financialyear :X Ltd. Y Ltd. Z Ltd.Variable cost as a % of sales 70 75 50Interest expense (` ) 20,000 30,000 1,00,000Degree of operating leverage 5:1 6:1 2:1Degree of financial leverage 3:1 4:1 2:1Corporate tax rate 30% 30% 30%You are required to prepare their income statements.(12 marks)6. Unichem Ltd. sells its products on a gross profit margin of 20% on sales. The followingfigures and ratios are extracted from its annual accounts for the year ended 31 st March, 2010 :Sales for the year (all credit)`40,00,000Fixed assets turnover (Cost of goods sold basis) 1.6Stock turnover (Cost of goods sold basis) 8Liquid ratio 1 : 1Current ratio 1.8 : 1Debtors collection period1 MonthReserves and surplus to share capital 0.6 : 1Capital gearing ratio 0.5Fixed assets to net worth 1.25 : 12/2011/FTFM Contd ........