Research Analyst – Feel Real Exam – 6

Given that the Quick Ratio is 1 and the total current assets are Rs 80,000, we can indeed calculate the approximate value of the inventory.

Quick Ratio = (Current Assets - Inventory) / Current Liabilities

Substituting the values:

1 = (80,000 - Inventory) / Current Liabilities

Since the Quick Ratio formula measures the company's ability to cover its current liabilities with its most liquid assets (excluding inventory), a Quick Ratio of 1 implies that the company has just enough liquid assets to cover its current liabilities.

Therefore, the approximate value of the inventory would be Rs 40,000 (Rs 80,000 - Rs 40,000 = Rs 40,000), assuming the remaining assets besides inventory are sufficient to cover the current liabilities.

Rs 20 lakhs. To calculate the Asset to Equity ratio, we need to find the equity of the company. First, we determine the number of shares using the Earnings Per Share (EPS) formula. Then, we calculate the market price of a share using the Price to Earnings ratio. Finally, we compute the equity by multiplying the book value per share by the number of shares. The Asset to Equity ratio is then calculated by dividing the total assets by the equity. In this case, the equity is Rs 20 lakhs.

The Net Worth of a company can be calculated by multiplying the Book Value per share by the number of outstanding shares.

In this case, the company has 200,000 shares and a Price to Book Value ratio of 7. To calculate the Book Value, we divide the Price to Book Value ratio by the Price to Book Value ratio (1/7) and multiply it by the market price per share. Since the Book Value is given as 5, we can calculate the market price per share as 1/7 * 5 = 5/7.

Now, we can calculate the Net Worth by multiplying the Book Value per share (5/7) by the number of outstanding shares (200,000):

Net Worth = Book Value per share * Number of outstanding shares
= (5/7) * 200,000
= 1,000,000

Therefore, the Net Worth of the company is Rs 1,000,000.

This explanation provides a step-by-step calculation process for finding the Net Worth of a company based on the Book Value per share and the number of outstanding shares.

All of the mentioned factors are advantages of merger and acquisition (M& activities. Diversification can be achieved through acquiring companies in different industries or geographic locations. Synergy refers to the combined efficiency and increased value that can be achieved through M&A. Taxation benefits can arise from utilizing tax shields or taking advantage of favorable tax regulations. Therefore, all of the mentioned factors contribute to the advantage of M&A activity.

The telecom industry also faces a threat of substitutes. Mobile phones have overtaken the once dominant landline phones. In the future, some new technology may make mobile phones obsolete. Some industries like power, healthcare, education, etc., do not have the threat of substitutes at all.

True. Business risk, also known as operating risk, refers to the risk caused by factors that affect the day-to-day operations of a company. It includes risks related to sales volume, production efficiency, competition, technological changes, and other operational factors. Business risk directly impacts the company's profitability and ability to generate sustainable earnings.

Capital Employed can be calculated using the formula: Capital Employed = Total Equity + Total Debt. In this case, the given values are Total Equity = Rs 700,000 and Total Debt = Rs 400,000.

Capital Employed = Total Equity + Total Debt
= Rs 700,000 + Rs 400,000
= Rs 1,100,000

Therefore, the correct calculation for the Capital Employed is indeed Rs 1,100,000. This represents the total funds employed by the company through its equity and debt sources.

The analyst's opinion is likely to be included in all of the mentioned sections of a research report. The valuation section provides the analyst's opinion on the value of the company or its stock. The industry analysis section includes the analyst's opinion on the industry's prospects. The financial forecasting section involves the analyst's opinion on future financial performance. The research report combines various sections that reflect the analyst's opinions and analysis.

Mark to Market (MTM) margin represents the notional loss or gain that an outstanding trade has incurred during a specified period due to price movements. It is used by clearing corporations to manage the risk of default by buyers and sellers in financial markets.

Economic Factors

the Profit and Loss Statement. This financial statement summarizes the revenues earned and costs/expenses incurred by a company over a specific period of time, typically a year. It provides insights into the profitability and financial performance of the business.

calculation for the Equity to Asset Ratio in this case is:

Equity = Total Assets - Total Liabilities
Equity = Rs 20,000 - Rs 8,000
Equity = Rs 12,000

Equity to Asset Ratio = Equity / Assets
Equity to Asset Ratio = Rs 12,000 / Rs 20,000
Equity to Asset Ratio = 0.6

No. To be eligible for a share buyback, a company should not have defaulted on its payment of interest or principal on debentures, fixed deposits, or any other borrowings. Additionally, redeeming debt and equity is considered a negative cash flow in financing activities. A company with defaults may face financial difficulties and should prioritize meeting its obligations rather than repurchasing shares.

The Department of Financial Services is responsible for overseeing and regulating various financial institutions and services, including banks, insurance companies, and financial services provided by both government agencies and private corporations.

All of the above factors affect analysis and decision making. Efficiency of operations impacts the effectiveness of processes and resource utilization. Management ethics influence the ethical considerations in decision making. Revenues and costs provide crucial financial information for analysis. Considering all these factors is essential for informed decision making.

To clarify, the Debt to Equity ratio of 1.5:1 means that for every 1.5 units of debt, there is 1 unit of equity. Given that the total size of the balance sheet is Rs 50 lakhs, we can calculate the equity component using the following steps:

1. Determine the total units in the ratio: 1.5 + 1 = 2.5
2. Divide the total size of the balance sheet by the total units: Rs 50 lakhs / 2.5 = Rs 20 lakhs

Therefore, the equity component of the balance sheet is Rs 20 lakhs.

To calculate the future value of an investment in an easier way, you can follow these steps:

Start with the initial investment amount, which is Rs. 75,000 in this case.
Add the annual interest rate (6% or 0.06) to 1: 1 + 0.06 = 1.06.
Raise the result to the power of the number of years, which is 10: 1.06^10.
Multiply the initial investment amount by the calculated result: Rs. 75,000 × 1.06^10.
By performing the calculation, you can determine the future value:

Rs. 75,000 × 1.06^10 ≈ Rs. 1,34,250.

Yes, he can buy this stock but after 30 days from the preparation of such a report. As per SEBI (Prohibition of Insider Trading) Regulations, 2015: Analysts employed with the organization/firm while preparing research reports of client company(s) shall disclose their shareholdings/interest in such company(s) to the Compliance Officer, and the Analysts who prepare research reports of listed company shall not trade in securities of that company for thirty days from the preparation of such report.

To calculate the Debt component of the company's Balance Sheet, we need to use the given information of the Debt to Equity ratio (2:1) and the total size of the Balance Sheet (Rs 2,700,000).

First, we determine the sum of the ratio's parts (2 + 1 = 3), which represents the total proportion of Debt and Equity in the Balance Sheet.

Next, we divide the total size of the Balance Sheet by this sum to find the value of each part:

Part value = Total size of Balance Sheet / Sum of ratio's parts = Rs 2,700,000 / 3

Finally, we calculate the Debt component by multiplying the part value by the Debt ratio (2/3):

Debt = Part value * Debt ratio = (Rs 2,700,000 / 3) * (2/3) = Rs 1,800,000

Therefore, the Debt of the company is Rs 1,800,000.

This explanation provides a clear and concise calculation method for determining the Debt component based on the Debt to Equity ratio and the total size of the Balance Sheet.

False. Microeconomics focuses on individual households and firms rather than the aggregate aspects of the economy. It analyzes the behavior of consumers and producers, market interactions, and resource allocation at a micro-level. Macroeconomics, on the other hand, examines the overall economy and factors affecting aggregate supply and demand, such as GDP, unemployment, and inflation.

A Depository Participant (DP) is an agent of the depository. Depositories are institutions that hold securities of investors in electronic form. Investors open an account with the depository through a registered Depository Participant. The DP acts as an intermediary between the depository and the investors, providing depository services such as account opening, dematerialization, rematerialization, and other related services.

True. Pricing power is a function of industry dynamics, elasticity of demand, branding, and customer loyalty. Nescafe, being a strong brand with a loyal customer base, has the ability to increase prices without a significant decline in volumes. This demonstrates pricing power in action.

To calculate the approximate market size of the industry, we can use the information provided:

- Total revenue of the four major companies: Rs. 2100 crores
- Market share controlled by the four major companies: 70%

To find the total market size, we divide the total revenue by the market share percentage:

Market Size = Total Revenue / Market Share
Market Size = Rs. 2100 crores / 0.7
Market Size ≈ Rs. 3000 crores

Therefore, the approximate market size of this industry is Rs. 3000 crores.

To calculate the net profit margin of the company, we need to deduct the corporate tax from the operating profit and then divide it by the sales.

Given:
Sales = Rs 12,400
Operating Profit = Rs 2,400
Corporate Tax Rate = 35%

First, calculate the net profit by deducting the tax from the operating profit:
Net Profit = Operating Profit - (Corporate Tax Rate * Operating Profit)
Net Profit = 2,400 - (0.35 * 2,400)
Net Profit = 2,400 - 840
Net Profit = Rs 1,560

Next, calculate the net profit margin as a percentage of sales:
Net Profit Margin = (Net Profit / Sales) * 100
Net Profit Margin = (1,560 / 12,400) * 100
Net Profit Margin = 0.1258 * 100
Net Profit Margin ≈ 12.58%

Therefore, the net profit margin of the company is approximately 12.58%.

Investors look for businesses with high entry barriers. Such businesses will have pricing power, meaning they can sell their products at a premium without fear of losing customers. This allows them to generate higher profits and potentially deliver better returns for investors. Businesses with low entry barriers may face intense competition, which can lead to lower profits and potentially higher risks.

The objective of all regulators in a financial market is to create a fair and competitive marketplace, ensure that intermediaries maintain high standards of services to market participants, and promote and ensure the orderly growth of financial markets.

When an economy is going through tough times, fewer jobs are created, and so the unemployment rate rises.

Investing money without going through the rigor of understanding and analyzing the investment s, their risk and return features, and appropriate value would be like taking a bet or speculating rather than investing. Such activity has a greater chance of losing rather than making money for the investors. Speculation is typically short-term calls made with leveraged funds, unlike investing money, which is a long-term disciplined activity for creating wealth.

SCP Analysis considers the performance, structure, and conduct of an industry.

he dividend yield is calculated by dividing the dividend received by the amount invested and then multiplying by 100 to express it as a percentage.

In this case:
Dividend received = Rs 5 x 500 = Rs 2,500
Amount invested = Rs 10,000

Dividend Yield = (Dividend received / Amount invested) x 100
Dividend Yield = (Rs 2,500 / Rs 10,000) x 100
Dividend Yield = 0.25 x 100
Dividend Yield = 25%

Therefore, the dividend yield in this case is 25%. It indicates that the investor has received a return of 25% on their investment in the form of dividends.

Management views on opportunities and challenges. While historical data, financial data, and the business model can be obtained through various sources and research methods, management views on opportunities and challenges are often subjective and not easily accessible. These views are typically obtained through personal interactions, such as interviews or meetings with the management team.

The Discounted Cash Flow (DCF) model is indeed used for valuation when the stream of future cash flows, timings of these cash flows, and discount rate are known with certainty. It is a widely used method in financial valuation for estimating the present value of expected future cash flows. Therefore, the statement is true.

Let's assume the Sales = 100. As sales are double (200%) of EBIT, EBIT will be half of sales. So the EBIT is 50 (Half of 100).

Now, to calculate the Net Profit, we need to multiply the EBIT by the Net Profit margin. The Net Profit margin is given as 30%, so the Net Profit will be:

Net Profit = EBIT * Net Profit margin
= 50 * 0.30
= 15

Now, we need to calculate the EBIT as a percentage of Net Profit. This can be done by dividing the EBIT by the Net Profit and multiplying by 100:

EBIT % of Net Profit = (EBIT / Net Profit) * 100
= (50 / 15) * 100
= 333.33%

Therefore, the correct calculation for the EBIT % of Net Profit is 333.33%, not 166.66%.

False. While an increase in national income can contribute to improving the standard of living, it is not a guarantee. Factors such as income distribution, population growth, and inflation can affect the actual improvement in the standard of living. Hence, a rise in national income does not necessarily ensure a rise in the standard of living.

The dividend per share can be calculated by multiplying the earnings per share (EPS) by the dividend payout ratio.

Given the information provided:
Market Price = Rs 40.50
PE ratio = 13.50
Dividend payout ratio = 70%

First, let's calculate the EPS:
EPS = Market Price / PE ratio
EPS = 40.50 / 13.50
EPS = 3

Next, we can calculate the dividend per share:
Dividend Per Share = Dividend Payout Ratio * EPS
Dividend Per Share = 70% * 3
Dividend Per Share = Rs 2.10

Therefore, the dividend per share is Rs 2.10.

A Balance Sheet of a company includes both the sources of funds (liabilities and shareholders' equity) and the application of those funds (assets). It provides a snapshot of the company's financial position at a given point in time, listing its assets, liabilities, and shareholders' equity.

False. The certificate of registration granted to a Research Analyst under regulation 9 is valid until it is suspended or canceled by the relevant regulatory authority. The duration of validity may vary depending on the regulations and requirements of the specific jurisdiction or governing body.

True. In a competitive market, businesses have limited control over pricing and have to accept market prices, making them price takers.

True. In stock consolidation, the total number of shares decreases without any economic change in the company's financials. As a result, per share data, including earnings per share, book value per share, and market price per share, immediately improves due to the reduced share count.

Buy-side analysts typically work for asset management firms, hedge funds, or institutional investors. They analyze investment opportunities and make investment decisions on behalf of their firms or clients. They are not directly involved in investment banking, broking, or advisory services.

The audit committee is responsible for reviewing the financial statements of the company and for nominating the auditors. Its role is to ensure the accuracy and reliability of financial reporting and oversee the company's audit process. Therefore,

Acquisition or takeover. In an acquisition or takeover, the acquiring company purchases all or a significant portion of the target company's stock. After the acquisition, both entities usually continue to exist, with the acquiring company gaining control over the operations and assets of the target company. This allows for integration and synergy between the two entities.

Enterprise Value (EV) is a measure of a company's total value, representing the theoretical takeover price. It is calculated by adding the market value of equity (market capitalization) to the market value of debt and then subtracting cash and cash equivalents.

In the given scenario, the market capitalization is Rs 28 lakhs, the total debt is Rs 7 lakhs, and the cash and cash equivalents are Rs 6 lakhs. To calculate the Enterprise Value (EV), we can use the formula:

EV = Market value of equity + Market value of debt - Cash and cash equivalents

EV = Rs 28 lakhs + Rs 7 lakhs - Rs 6 lakhs
= Rs 29 lakhs

Therefore, the Enterprise Value (EV) based on the given information is Rs 29 lakhs.

Number of shares: 14,000,000
Market price per share: Rs 20
Assets: Rs 100,000,000
Liabilities: Rs 30,000,000
Market capitalization = Number of shares × Market price per share
= 14,000,000 × Rs 20
= Rs 280,000,000

Net worth = Assets - Liabilities
= Rs 100,000,000 - Rs 30,000,000
= Rs 70,000,000

Price to Book value ratio = Market capitalization / Net worth
= Rs 280,000,000 / Rs 70,000,000
= 4

Therefore, the Price to Book value ratio is 4.

Both low interest rates and low inflation contribute to economic recovery from a recession. Low interest rates stimulate borrowing and investment, which can boost economic activity. Low inflation allows central banks to implement expansionary monetary policies, making credit more affordable and encouraging spending and investment. These factors combined can help revive economic growth and bring about a recovery from a recession.

In SWOT analysis of a company, 'Threats' are external risks. Among the given s, the pressure on the Government to ban the company's products represents an external threat. The other s are internal weaknesses of the company. Therefore, 4.

Earnings Per Share (EPS) = Net Income / No. of Shares = 400,000 / 0.50 = 800,000 shares.

Return on Equity (ROE) is the Net Profit as a percentage of Equity. Net Profit is Rs 400,000. So, Equity will be 400,000 / (40 x 100) = 1,000,000.

Book Value = Equity / No. of Shares = 1,000,000 / 800,000 = 1.25.

Price to Book Value (P/BV) is a ratio that compares the current market price of a company's share to its book value. So, the Current Market Price = P/BV x Book Value = 6 x 1.25 = Rs 7.50.

Therefore, the Market Price of the company's share, based on the given data, is Rs 7.50.

Excel- To calculate the compounded annual rate of return (CAGR) using Excel, follow these steps:

1. Open Microsoft Excel and create a new spreadsheet.
2. Enter the following values in separate cells:
- Begin Price: 11 (cell A1)
- End Price: 12.50 (cell B1)
- Holding Period (in years): 1.0958 (cell C1)
3. In cell D1, enter the formula: =((B1/A1)^(1/C1))-1
4. Press Enter to calculate the result.
5. The cell D1 will display the CAGR, which is approximately 0.1236 or 12.36%.

By using Excel, you can easily perform the calculation and obtain the CAGR of approximately 12.36% for Mr. Singh's investment.

Solve with Calculation-

To calculate the compounded annual rate of return (CAGR) for Mr. Singh's investment, you can use the formula: [(End NAV / Begin NAV)^(1/n)] - 1.

In this case, the Begin NAV is Rs 11, the End NAV is Rs 12.50, and the holding period is 400 days, which is approximately 1.0958 years.

Using this information, we can calculate the CAGR as follows:

CAGR = [(End NAV / Begin NAV)^(1/n)] - 1

= [(12.50 / 11)^(1/1.0958)] - 1

≈ 0.1236 or 12.36%

Therefore, Mr. Singh's compounded annual rate of return is approximately 12.36%.

When a foreign investor invests in the existing financial instruments of a country, it is known as Foreign Portfolio Investment (FPI). Foreign Portfolio Investment refers to the passive investment in existing financial instruments, such as equity or bonds, without any management participation. Therefore,

Return on Capital Employed (ROCE) can be calculated by dividing Earnings Before Interest and Tax (EBIT) by the Total Capital Employed. The Total Capital Employed is typically calculated as the Net Worth plus Debt of the company. Therefore, the correct is "EBIT / Total Capital Employed (Where Capital Employed = Net Worth + Debt)".

According to SEBI (Securities and Exchange Board of Indi standards of corporate governance, independent directors should constitute at least 50% of the board if the chairman is an executive director. In all other cases, it requires 1/3rd of the board to be comprised of independent directors. Therefore,

The Department of Revenue is responsible for handling matters related to all direct and indirect taxes through statutory boards such as the Central Board of Direct Taxes (CBDT) and the Central Board of Excise and Customs (CBEC).

A research analyst's work can be hampered by various factors, including the presence of lots of unnecessary and irrelevant information, contradiction of data from multiple sources, and inaccessibility of data. All of these factors can make the research process time-consuming, unproductive, and hinder the analyst from obtaining the correct information. Therefore, 4.

The Registrar of Companies (ROC) is the authority appointed under the Companies Act to register companies and ensure their compliance with the provisions of the law. SEBI, on the other hand, is responsible for regulating the securities market in India. Therefore, the statement is false.

According to SEBI (Research Analyst) Regulation 18: Limitations on publication of research report, public appearance and conduct of business, etc., a research analyst or research entity should not issue a research report that is not consistent with the views of the individuals employed as research analysts regarding a subject company. Therefore,

All of the above s are considered economic factors in PESTLE analysis. Monetary policies of the RBI, country's dependence on other nations for essential natural resources, and forex reserves are key economic aspects that influence the business environment and have an impact on organizations' operations, growth, and sustainability.

In SCP analysis, industry structure refers to all of the mentioned factors. It includes the market size, the growth rate of the industry, and the relationships among the players in the industry. SCP analysis aims to understand the competitive dynamics and market structure within an industry to analyze its performance and behavior.

The P/E ratio (Price-to-Earnings ratio) is calculated by dividing the market price of the share by the earnings per share (EPS).

Given the information provided:
Net Profit = Rs 300 crores
Number of Outstanding Equity Shares = 4,72,60,223
Market Price = Rs 718

First, let's calculate the EPS:
EPS = Net Profit / Number of Shares
EPS = Rs 300 crores / 4,72,60,223
EPS = Rs 63.478

Next, we can calculate the P/E ratio:
P/E ratio = Market Price / EPS
P/E ratio = Rs 718 / Rs 63.478
P/E ratio ≈ 11.31

Therefore, the P/E ratio of the share is approximately 11.31.

All of the Above. Fundamental analysis involves evaluating various factors to determine the intrinsic value of a security or business. It includes analyzing economic factors, such as market conditions and monetary policies, industry-specific factors, such as competition and market trends, and company-specific factors, such as financial statements and management performance. Considering all these factors together provides a comprehensive understanding of the investment opportunity.

In the balance of payment statement, the current account records the transactions related to imports and exports of goods and services. If imports are more than exports, it indicates a current account deficit, while if exports are more than imports, it indicates a current account surplus. Therefore,

Once a draft of the research report is ready, it should be rechecked for financial figures, spell-checks, and grammatical errors. However, validation of the conclusion is not a part of the editing process.

Credit risk or default risk refers to the possibility of a bond issuer being unable to make expected interest rate payments and/or principal repayment. Equity shares do not have default risk as the issuer is not obligated to repay the amount. Therefore,

A fundamental research analyst focuses on studying macroeconomic fundamentals. This includes analyzing factors such as economic indicators, government policies, inflation rates, interest rates, GDP growth, and other macro-level factors that can impact the overall economy. Studying historical price movements, trends, and volume is typically part of technical analysis, which is a different approach used by technical research analysts.

Correct and detailed management views can be obtained only through personal interactions. These views are generally not available elsewhere.

Foreign Direct Investment (FDI) has multiple benefits in addition to bringing in capital to the country. It can lead to job creation, introduction of new technologies, new managerial skills, and the development of new products and services. Therefore, FDI does not necessarily lead to job destruction in the economy.

SEBI (Securities and Exchange Board of Indi primarily regulates the securities market in India. The promotion and orderly growth of pension markets are overseen by the Pension Fund Regulatory and Development Authority (PFRD. Therefore, the statement is false.

Business risk, also known as operating risk, is an unsystematic risk specific to an individual company or industry. It can be diversified away by including other assets in the portfolio. Therefore, the statement is true.

Inventory Turnover ratio gives the number of times inventory is rolled over by a company. The Current ratio measures the ability of the company to meet its short-term liabilities.

The Central Board of Direct Taxes (CBDT) and the Central Board of Excise and Customs (CBEC) are both controlled by the Department of Revenue, which operates under the Ministry of Finance. The Department of Revenue handles matters related to direct and indirect taxes.

The bias described here is known as "Herd Mentality." In this bias, investors tend to look for evidence of other investors buying specific securities. They believe that others may have better information, which leads to a herd-like behavior of following the investment choices made by others. This behavior can often be driven by uncertainty and a desire to conform to perceived market trends.

A warrant is a financial instrument that provides the holder with the to buy long-term common stock at a specified exercise price over a specified period of time.

To calculate the Price-to-Earnings (P/E) ratio, we need to divide the current stock price by the Earnings per Share (EPS).

Given:
Current stock price (Market Price) = Rs 1200
Profit After Tax (PAT) = Rs 68,00,000
Number of outstanding shares = 100,000

First, calculate the Earnings per Share (EPS) by dividing the Profit After Tax by the number of outstanding shares:
EPS = PAT / Number of outstanding shares
EPS = 68,00,000 / 100,000
EPS = Rs 680

Next, calculate the P/E ratio by dividing the current stock price by the EPS:
P/E Ratio = Market Price per share / EPS
P/E Ratio = 1200 / 680
P/E Ratio ≈ 1.7647

Therefore, the P/E ratio of ABC Software Ltd is approximately 1.7647.

If a government changes its expansionary fiscal policy to a contractionary fiscal policy, the equity markets are likely to go down. A contractionary fiscal policy involves reducing government spending and increasing taxes, which can lead to decreased economic activity. This can negatively impact corporate profits and investor sentiment, causing a decline in equity markets. Therefore, a shift from an expansionary to a contractionary fiscal policy is generally associated with a downward trend in equity markets.

The trades executed on the exchange are settled through the Clearing Corporation, which acts as a counterparty and guarantees the settlement of the trades to both buyers and sellers. The clearing corporation gives a settlement guarantee of trades to the counterparties (all buyers and sellers).

A key parameter while analyzing this sector is Average Revenue Per Unit (ARPU). It is calculated by total revenue divided by the number of subscribers, and the higher it is, the better for the company. It must be noted that India has among the lowest ARPUs in the world.

When the RBI announces a hike in interest rates, bond prices generally fall. This is because the existing bonds will be paying a lower interest rate compared to newly issued bonds with higher rates. As a result, investors demand higher yields from existing bonds, causing their prices to decrease.

we have a scenario where the sales of Jupiter Trading Co Ltd. are Rs 750,000. We are provided with certain expenses and tax rates, and we need to calculate the net profit.

Here's a step-by-step breakdown of the calculations:

Sales: The total sales of the company are given as Rs 750,000.

Cost of Goods Sold: The cost of goods sold is calculated as 25% of the sales. Therefore, 25% of Rs 750,000 is Rs 187,500.

Operating Expenses and Depreciation: The operating expenses and depreciation are given as Rs 233,000.

Interest Expenses: The interest expenses are given as Rs 140,000.

Income Before Tax: To calculate the income before tax, we subtract the cost of goods sold, operating expenses and depreciation, and interest expenses from the sales.

Income Before Tax = Sales - Cost of Goods Sold - Operating Expenses and Depreciation - Interest Expenses
= Rs 750,000 - Rs 187,500 - Rs 233,000 - Rs 140,000
= Rs 189,500

Tax: The tax rate is given as 25% of the income before tax. Therefore, 25% of Rs 189,500 is Rs 47,375.

Net Profit: Finally, we calculate the net profit by subtracting the tax from the income before tax.

Net Profit = Income Before Tax - Tax
= Rs 189,500 - Rs 47,375
= Rs 142,125

Hence, the net profit of the company is Rs 142,125.

Financing Cash Flows. This section of the Cash Flow statement provides information about the funds a company borrowed during the preceding year. It includes cash inflows from borrowing and cash outflows from repaying debt or issuing equity. This section gives insights into the company's financing activities and its sources of external funding.

To calculate the Net Profit of the company, we start with the given EBIT (Earnings Before Interest and Taxes) of Rs 400,000, which represents 40% of the business sales. We can determine the total sales amount by dividing the EBIT by the percentage equivalent of 40%, which is 0.4 (40% converted to decimal form).

Sales = EBIT / 0.4 = Rs 400,000 / 0.4 = Rs 1,000,000

Now, we need to calculate the Net Profit margin, which is given as 10% of the sales. To find the Net Profit, we multiply the sales amount by the Net Profit margin percentage, converted to decimal form.

Net Profit = Sales * Net Profit Margin = Rs 1,000,000 * 0.1 = Rs 100,000

Therefore, the Net Profit of the company is Rs 100,000.

This explanation provides a step-by-step calculation process, clarifying how the sales amount and net profit are derived based on the given information.

Corporate actions like Bonus Issue, Stock Split, and Share Consolidation can lead to changes in per share data. For example, in the case of a Bonus Issue or Stock Split, the total number of shares increases without any economic change in the company's financials. This can result in a dilution of per share metrics such as earnings per share (EPS) and book value per share. Conversely, in a Share Consolidation, the total number of shares decreases, which can lead to an improvement in per share data. Therefore, "True."

True. Disclosing the allocation of money raised from investors in an Initial Public Offering (IPO) or Follow-on Public Offering (FPO) is one of the responsibilities of the Compliance Officer. The Compliance Officer ensures that the company complies with relevant regulations and guidelines, including disclosing financial information and maintaining transparency in the allocation of funds.

Sometimes, bottom-up analysts focus primarily on analyzing the dynamics of specific businesses and industries without giving significant consideration to broader economic factors. Their focus is on identifying and investing in fundamentally strong businesses that are expected to perform well regardless of economic cycles.

The Equity to Asset Ratio is calculated by dividing Equity by Assets. In this case, Equity = Total Assets - Total Liabilities = Rs 124,000 - Rs 79,000 = Rs 45,000. Therefore, the Equity to Asset Ratio is Rs 45,000 / Rs 124,000 = 0.36.

It requires the combination of knowledge, experience, and professional judgment to arrive at a fair valuation of any asset.

While quantitative analysis plays a crucial role in fundamental analysis, it has limitations. One such limitation is the impact of changes in accounting standards, business structures, and regulations, which can affect the accuracy and effectiveness of quantitative analysis in predicting future outcomes.

The Dividend Payout Ratio is calculated by dividing the company's dividend per share by its earnings per share. This ratio indicates the portion of earnings that a company distributes to its shareholders in the form of dividends.

The growth rate is calculated as the product (multiplication) of the retention rate and the return on equity, not by adding them. Therefore, the statement is false.

The Reserve Bank of India (RBI) regulates the money market segment of the securities market and is also the manager of the Indian Government's borrowing program. RBI is the central bank of India and has the responsibility of administering the monetary policy, regulating the money markets, and managing the Government's borrowing programs. Therefore,

As per Regulation 17 of the Code of Conduct for research analysts, the bonus payable to a research analyst can be determined based on the overall revenue of the brokerage division, regardless of the sector or stocks covered. This means that the bonus is not tied to specific transactions or recommendations. This approach ensures fairness and avoids potential conflicts of interest.

Share swap means exchanging one set of shares with another set of shares. It is often used during a merger or acquisition when the acquiring company uses its own stock as cash to purchase the business. In a share swap, each shareholder of the acquired company receives a pre-determined amount of shares from the acquiring company.

Liquidity Risk refers to the risk of not being able to sell an investment at the desired price or time, leading to potential losses or high transaction costs.

Indian Depository Receipts are issued in India and are listed on an Indian Stock Exchange with foreign stocks as underlying shares.

In the Pioneering Stage of a business life cycle, the business concept is still being proven or has just been proven. This stage involves testing and validating the viability of the business idea and establishing its initial market presence. Therefore,

Macroeconomics focuses on studying the overall state of the economy, including factors such as domestic production, domestic consumption, general price levels, economic growth, and the overall quality of life. Therefore, it helps in understanding the general state of the economy.

The Price to Earnings Ratio (PEG) is a valuation ratio that relates a company's price-to-earnings (PE) ratio to its growth rate. It is used to assess the relative value of a stock considering both its earnings and expected growth.

To calculate the PEG ratio, we divide the PE ratio by the growth rate. In this case, the given PE ratio is 25 and the potential growth rate of the company is 20% for the next few years.

PEG ratio = PE ratio / Growth rate
= 25 / 20
= 1.25

Therefore, the PEG ratio for the company is 1.25. This indicates that the company's stock price is relatively valued considering its earnings and growth rate.

False. The correct formula for WACC is WACC = (We * Ke) + (Wd * Kd * (1 - Tx)).

To calculate the earnings yield of a company, you can use the formula: Earnings Yield = (Net Profit / Market Capitalization) * 100.

In this case, the Net Profit is Rs 12,00,000 and the Market Capitalization is Rs 60,00,000.

Using these values, we can calculate the earnings yield as follows:

Earnings Yield = (12,00,000 / 60,00,000) * 100

= 0.2 * 100

= 20%

Therefore, the earnings yield of the company is 20%.

Investors who own property can indeed earn rental income from the property and also earn returns on the capital invested. This is because they receive rental income in addition to any capital appreciation or dividends received from their investment. Therefore, the statement is true.

Stock split does not lead to any increase/decrease in the wealth of shareholders. The increase/decrease depends on the stock price.

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