Amounts due from Customers when Goods are Sold on Credit - Finance Assignment Help

Assignment Task:

Part A: Attempt all the following                     
In _______________ approach, the capital structure decision is relevant to the valuation of the firm.
a) Net income
b) Net operating income
c) Traditional
d) Miller and Modigliani
2. When __________ is greater than zero the project should be accepted.
a) Internal rate of return
b) Profitability index
c) Net present value
d) Modified internal rate of return
3.  ____________ is defined as the length of time required to recover the initial cash out-lay.
a) Payback-period
b) Inventory conversion period
c) Discounted payback-period
d) Budget period
4.  _______________ refers to the amount invested in various components of current assets.
a) Temporary working capital
b) Net working capital
c) Gross working capital
d) Permanent working capital
5. ____________ is the length of time between the firm’s actual cash expenditure and its own cash receipt.
a) Net operating cycle
b) Cash conversion cycle
c) Working capital cycle
d) Gross operating cycle
6.  _______________ refers to a firm holding some cash to meet its routine expenses that are incurred in the ordinary course of business.
a) Speculative motive
b) Transaction motive
c) Precautionary motive
d) Compensating motive
7.  _______________ refers to the length of time allowed by a firm for its customers to make payment for their purchases.
a) Holding period
b) Pay-back period
c) Average collection period
d) Credit period
8. Amounts due from customers when goods are sold on credit are called _____________.
a) Trade balance
b) Trade debits
c) Trade discount
d) Trade off
9. ____________________ and __________________________ are the two versions of goals of the financial management of the firm.
a) Profit maximisation, Wealth maximization
b) Production maximisation, Sales maximisation
c) Sales maximisation, Profit maximization
d) Value maximisation, Wealth maximisation
10. Consider the below mentioned statements: 
1. A company is considered to be overcapitalized when its actual capitalisation is lower than the proper capitalisation as warranted by the earning capacity 
2. Both over-capitalisation and under-capitalisation are detrimental to the interests of the society. State True or False:
a) 1-True, 2-True
b) 1-False, 2-True
c) 1-False, 2-False
d) 1-True, 2-False

Part B: Attempt five of the following                            
Distinguish between operating leverage and financial leverage.
What are gross and net working capital?
What is meant by financial management? Explain its role.
Describe the factors that determine the capital structure of a company.
Are the shareholders of a company likely to gain with the debt component in the capital employed? Explain with the help of an example.
“Wealth maximization is an important objective of financial management.” Explain briefly.

Part C: Case Study                                    
Rajan textiles is considering two investments each of which requires an initial investment of Rs. 18,00,000. The total cash inflow, that is profits after taxes and depreciation charges, for each project are :
Year         1             2        3          4                  5         6       7
Project X    30,000           50,000      60,000          65,000       40,000          30,000          16,000   
Project Y            60,000         1,00,000    65,000          45,000
Rajan’s cost of capital is 8% Rank these investments by their excess present value. Which is the most profitable?

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