DBFI302 MBA FINANCIAL STATEMENT ANALYSIS AND BUSINESS VALUATION

Description

 

SESSION	MARCH 2023
PROGRAM	MASTER OF BUSINESS ADMINISTRATION (MBA)
SEMESTER	III
COURSE CODE & NAME	DBFI302 & FINANCIAL STATEMENT ANALYSIS AND BUSINESS VALUATION
CREDITS	4

 

Assignment Set – 1

 

 

1. Explain the divisions of cash flow statement.

Ans: The cash flow statement is a financial statement that provides information about the cash inflows and outflows of a company during a specific period. It helps assess a company’s ability to generate and manage cash, providing insights into its operating, investing, and financing activities.

 

The cash flow statement is divided into three main sections:

 

Operating Activities: This section reports the cash flows resulting from a company’s core business operations. It includes cash Its Half solved only

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2. Illustrate the current assets items of Balance Sheet.

Ans: Current assets are the assets that are expected to be converted into cash or used up within one year or the operating cycle of a company, whichever is longer. These assets are listed on the balance sheet and provide information about a company’s short-term liquidity and operational efficiency.

 

Here are some common

 

 

3. Explain different types of earning ratios.

Ans: Earnings ratios, also known as profitability ratios, are financial metrics used to evaluate a company’s profitability and its ability to generate earnings in relation to various factors. These ratios provide insights into a company’s financial performance and can help investors, analysts, and

 

 

 

Assignment Set – 2^nd

 

4. Explain the evaluation of P/E ratio

Ans: The price-to-earnings ratio (P/E ratio) is a commonly used valuation metric that compares a company’s stock price to its earnings per share (EPS). It helps investors assess the relative value of a company’s stock and determine if it is overvalued or undervalued in the market.

 

Here’s an explanation of how to evaluate the P/E ratio: 

 

 

5. In the year 2022, an investor purchased 1,000 shares of the fictitious company Pearl co. for $10 per share. The investor sold the shares for $12.50 a year later. During the one-year holding period, the investor received $500 in dividends. The investor paid $125 in trading commissions to buy ($50) and sell ($75) the shares. EBITDA of the company for the year 2021 is $1,050,000. You are requested to evaluate Pearl company for the year 2022.

Ans:To evaluate the Pearl Company for the year 2022, we can analyze various financial metrics and calculate the investor’s return on investment.

 

Let’s go through the calculations step by step:–

 

Calculation of Initial Investment:-

 

Number of shares purchased = 1,

 

 

6. Explain the effect of leverage on operating and finance activities.