MS - 04: Accounting and Finance for Managers

School of Management Studies
INDIRA GANDHI NATIONAL OPEN UNIVERSITY
MAIDAN GARHI, NEW DELHI – 110 068
MS-04
ASSIGNMENT
Course Code : MS-04
Course Title : Accounting and Finance for Managers
Assignment Code : MS-04/TMA/SEM-I/2018
Coverage : All Blocks
Note : Attempt all the questions and submit this assignment on or before 30th April, 2018 to the
coordinator of your study center.
1. How is ‘Financial Accounting’ different form ‘Management Accounting’? Discuss the role
and activities of an Accountant.
2. The Balance Sheets of XYZ Ltd as on 31st December, 2016 and 2017 are as given below:

Additional Information:-
(i) Depreciation provided on plant was 8,000 and on building was Rs. 8,000.
(ii) Provision for taxation made during the year is Rs. 38,000.
(iii) Interim dividend paid during the year is Rs. 16,000.
From the above information, you are required to prepare Schedule of changes in Working
Capital and Funds Flow Statement.
3. What do you understand by CVP Analysis. Explain the effect of Price and Volume on the
Net Profit, with the help of a suitable illustration.
4. The Management of ABC Ltd. is considering a proposal to purchase an improved model
of a machine which gives increased output. Its existing machine which has been in
operation for 2 years has current market value of Rs. 1,00,000, its remaining estimated
useful life is 10 years, with no salvage value at the end.

Repairs and Maintenance per
year
9,000 6,000
Working Capital 25,000 40,000
The company follows the straight-line method of depreciation and is subject to 50% tax.
Should the existing machine be replaced? Assume that the company’s required rate of
return is 15% and that the loss on sale of Assets is tax deductible.
5. As a Finance Manager how would you determine the Optimal Cash balance that would be
required by your Organisation? What measures you would take to ensure the smooth and
efficient Management of Cashflows in the Orgnisation?

Course Title : Accounting and Finance for Managers
Assignment Code : MS-04/TMA/SEM-II/2017
Coverage : All Blocks
Note : Attempt all the questions and submit this assignment on or before 31st October, 2017 to the coordinator of your study center.
1. Explain the meaning of Generally Accepted Accounting Principles? Discuss in brief about the Accounting Concepts that are being followed in your organisation. Give your suggestions if any.
2. Discuss the different methods of depreciation and how these methods differ from each other.
3. The sales and profit of ABC Ltd for two successive years is as follows:
Previous Year (Rs in lakhs) Current Year (Rs in lakhs)
Number of units sold 15,000 20,500
Sales 37,500 5,125
Profit/Loss 825 1,178.75
On the basis of the information given above you are required to determine:
(a) The amount of fixed costs incurred by the firm.
(b) The Break Even point for the firm (both in rupees & units).
(c) The amount of sales to earn a profit of Rs 25 crores.
(d) Margin of Safety if actual sales of ABC Ltd is 17.5 crores.
4. XYZ Ltd is a leading manufacturer of decorative and industrial paints in India. The income statement (Exhibit 1) and the balance sheet (Exhibit 2) for the current year are given. Its sales next year are estimated to be 25 per cent higher on account of increase in demand for paints from the housing and commercial real estate sectors. The variable costs as percentage to sale are likely to remain constant. An increase of 12.5 per cent is estimated in fixed costs. XYZ Ltd is planning to launch two new brands of luxury emulsions-Supercoat and Luxurycoat.
The Supercoat paint would generate an additional Rs 600 crore sales and require an extra Rs.400 crore investment involving installation of manufacturing and packaging machinery. Whilethe additional fixed costs requirement would be Rs 150 crore, variable cost to sales ratio would not change. For manufacturing the Luxurycoat paint the additional investment requirement and  sales generated would amount to Rs 600 crore and Rs 800 crore respectively. The variable cost ratio would remain constant but the fixed cost are expected to increase by Rs 240 crore. The XYZ Ltd has four alternative financing plans to choose from (Exhibit 3). Its current debt-equity ration is 5:1.
XYZ Ltd has hired Amar as a financial consultant to carry out the following tasks:
(1) What would its operating, financial and total leverages be next year without the new proposal?
(2) Assuming that the XYZ Ltd finances the projects using financing plan (A), determine the three leverages for the two projects individually. Which new brand is better?
(3) Which financing option should XYZ Ltd choose to if only Supercoat is to be manufactured?
(4) Calculate the financial breakeven points of each plan.

 5. In your organisation or any other organisation of your choice try to find out the factors that are taken into consideration while making the dividend decisions.