Paper11 Syl22 June24 Set1 Sol

INTERMEDIATE EXAMINATION SET 1
MODEL ANSWER TERM – JUNE 2024

PAPER – 11 SYLLABUS-2022
FINANCIAL MANAGEMENT AND BUSINESS DATA ANALYTICS
Time Allowed: 3 Hours Full Marks: 100

The figures in the margin on the right side indicate full marks.
SECTION – A (Compulsory)
1. Choose the correct option: [15 x 2 = 30]
(i) Relationship between annual effective rate of interest and annual nominal rate of
interest is, if frequency of compounding is more than 1:
(a) Effective Rate < Nominal rate
(b) Effective Rate > Nominal rate
(c) Effective Rate = Nominal rate
(d) none of the above
(ii) Which of the following are the benefits of data analytics?

(a) Improves decision making process
(b) Increase in efficiency of operations
(c) Improved service to stakeholders
(d) All of the above
(iii) XBRL is the abbreviated form of:

(a) eXtensible Business Reporting Language
(b) eXtensive Business Reporting Language
(c) eXtended Business Reporting Language
(d) eXtensive Business Reporting Language
(iv) A scatter plot displays several unique data points:

(a) on a single graph.
(b) On two different graphs
(c) On four different graphs
(d) None of the above
(v) If the fixed cost of production is zero, which one of the following is correct?
(a) Operating Leverage is zero
(b) Financial Leverage is zero
(c) Combined Leverage is zero
(d) None of the above
1
Directorate of Studies, The Institute of Cost Accountants of India
(vi) The Degree of Operating Leverage (DOL) and the Degree of Financial Leverage
of Alanta Ltd. are 3 and 1.67 respectively. If the management of the company
targets to increase the EPS by 10%, by how much percentage should sales volume
be increased? (Rounded off your answer to the nearest value.)
(a) 5.00%
(b) 3.40%
(c) 3.00%
(d) 2.00%
(vii) Average collection period is 2 months, cash sales and average receivables are `
5,00,000 and ` 6,50,000 respectively. The sales amount would be-
(a) ` 40,00,000
(b) ` 42,00,000
(c) ` 44,00,000
(d) ` 48,50,000
(viii) Conversion of marketable securities into cash entails a fixed cost of ` 1,000 per
transaction. What will be the optimal conversation size as per Baumol model of
cash management?
(a) ` 315,628
(b) ` 316,228
(c) ` 317,678
(d) ` 318,426
(ix) What is the value of a levered firm L Ltd. if it has the same EBIT as an unlevered
firm U Ltd., (with value of ` 700 lakh), has a debt of ` 200 lakh, tax rate is 35%
under M-M approach?
(a) ` 770 lakh
(b) ` 500 lakh
(c) ` 630 lakh
(d) ` 900 lakh
(x) Initial investment ` 20 Lakh. Expected annual cash flows ` 6 Lakh for 10 years.
Cost of capital @15%.
Profitability Index (PI) is -
[Cumulative discounting factor @ 15% for 10 years = 5.019)
(a) 1.51
(b) 1.71
(c) 2.51
(d) 2.91
2
(xi) Capital Budgeting deals with:

(a) Long-term Decisions
(b) Short-term Decisions
(c) Both (a) and (b)
(d) Neither (a) nor (b).
(xii) Five years ago, KPM Ltd issued 12% irredeemable debentures at ` 105, a ` 5
premium to their par value of ` 100. The current market price of these debentures
is ` 95. If the company pays corporate tax at a rate of 35 % what is its current cost
of debenture capital?
(a) 6.5%
(b) 7.24%
(c) 8.21%
(d) 9.00%
(xiii) In case the firm is all-equity financed, the WACC would be equal to:
(a) Cost of Debt
(b) Cost of Equity
(c) Neither (a) nor (b)
(d) Both (a) and (b).
(xiv) DuPont Analysis deals with:

(a) Analysis of Current Assets
(b) Analysis of Profit
(c) Capital Budgeting
(d) Analysis of Fixed Assets
(xv) XYZ Ltd. has earned 8% Return on Total Assests of ` 50,00,000 and has a Net
Profit Ratio of 5%. Find out the Sales of the firm.
(a) ` 4,00,000
(b) ` 2,50,000
(c) ` 80,00,000
(d) ` 83,33,333.
Answer:
(i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv)
b d a a d d c b a a a c b b c
3
SECTION – B
(Answer any five questions out of seven questions given. Each question carries 14 Marks.)
[5x14=70]
2. (a) Distinguish between Hedge Funds and Mutual Funds. [7]

(b) Explain various applications of data mining techniques in finance and accounting.
[7]
Answer:
(a) Hedge funds are like mutual funds in two respects: (i) they are pooled investment
vehicles i.e., several investors entrust their money to a manager) and (ii) they invest in
publicly traded securities. But there are important differences between a hedge fund and a
mutual fund. These stem from and are best understood in light of the hedge fund's
charter: investors give hedge funds the freedom to pursue absolute return strategies.
Mutual Funds Seek Relative Returns: Most mutual funds invest in a predefined style, such
as "small cap value", or into a particular sector, such as the Internet sector. To measure
performance, the mutual fund's returns are compared to a style-specific index or benchmark.
For example, if you buy into a "small cap value" fund, the managers of that fund may
try to outperform the Nifty Small Cap Index. Less active managers might construct
the portfolio by following the index and then applying stock-picking skills to increase
(over-weigh) favoured stocks and decrease (under-weigh) less appealing stocks.
A mutual fund's goal is to beat the index or "beat the bogey", even if only modestly. If the
index is down 10% while the mutual fund is down only 7%, the fund's performance would
be called a success. On the passive-active spectrum, on which pure index investing is the
passive extreme, mutual funds lie somewhere in the middle as they semi-actively aim to
generate returns that are favourable compared to a benchmark.
(b) Techniques of data mining

Using various methods and approaches, data mining transforms vast quantities of
data into valuable information. Here are a few of the most prevalent:
(i) Association rules:

An association rule is a rule-based technique for discovering associations
between variables inside a given dataset. These methodologies are commonly
employed for market basket analysis, enabling businesses to better
comprehend the linkages between various items. Understanding client
consumption patterns helps organisations to create more effective cross-
selling tactics and recommendation engines.
4
(ii) Neural Networks:

Primarily utilised for deep learning algorithms, neural networks replicate the
interconnection of the human brain through layers of nodes to process
training data. Every node has inputs, weights, a bias (or threshold), as well
as an output. If the output value exceeds a predetermined threshold, the node
“fires” and passes data to the subsequent network layer. Neural networks
acquire this mapping function by supervised learning and gradient descent,
changing based on the loss function. When the cost function is zero or close
to it, we may have confidence in the model’s ability to produce the correct
answer.
(iii) Decision tree:

Using classification or regression algorithms, this data mining methodology
classifies or predicts likely outcomes based on a collection of decisions. As
its name implies, it employs a tree-like representation to depict the potential
results of these actions.
(iv) K-nearest neighbour:
K-nearest neighbour, often known as the KNN algorithm, classifies data
points depending on their closeness to and correlation with other accessible
data. This technique assumes that comparable data points exist in close
proximity to one another. Consequently, it attempts to measure the distance
between data points, often by Euclidean distance, and then assigns some on
the most common category or average.
3. (a) From the following information, prepare a summarized Statement of Assets and
Liabilities as on 31st March, 2024:
(i) Working Capital `1,20,000
(ii) Reserves & Surplus ` 80,000
(iii) Bank Overdraft ` 20,000
(iv) Proprietary Ratio 0.75
(v) Current Ratio 2.50
(vi) Liquid Ratio 1.50
Your workings should form a part of your answer. [7]
5
(b) From the following Summarised Statement of Assets and Liabilities of XYZ Ltd.,
prepare a Statement of Changes in the Working Capital.
31st March 31st March
Liabilities 2023 (`) 2024 (`) Assets 2023 (`) 2024 (`)
Equity Share 3,00,000 4,00,000 Goodwill 1,15,000 90,000
Capital
8% Preference 1,50,000 1,00,000 Land & 2,00,000 1,70,000
Share Capital Buildings
Profit & Loss 30,000 48,000 Plant & 80,000 2,00,000
Account Machinery
General Reserve 40,000 70,000 Debtors 1,60,000 2,00,000
Proposed 42,000 50,000 Stock 77,000 1,09,000
Dividend
Creditors 55,000 83,000 Bills 20,000 30,000
Receivable
Bills Payable 20,000 16,000 Cash in hand 15,000 10,000
Provision for 40,000 50,000 Cash at Bank 10,000 8,000
Taxation
6,77,000 8,17,000 6,77,000 8,17,000
Following additional information are available:
(i) Depreciation of ` 10,000 and ` 20,000 have been charged on Plant &
Machinery and Land & Buildings respectively in 2024.
(ii) Interim dividend of ` 20,000 has been paid in 2024.
(iii) Income tax of ` 35,000 has been paid in 2024. [7]
Answer:
(a) Working Notes:

(i) Current Ratio = Current Assets (CA)/Current Liabilities(CL)
= 2.50 i.e., 2.5 :1.0 Working Capital = ` 1,20,000
Current Assets / Current Liabilities = 2.5
CA = 2.5 CL
CA – CL = 1,20,000
2.5 CL – CL = 1,20,000
1.5 CL = 1,20,000
CL = 1,20,000
1.5 = ` 80,000
CA = 2.5 CL
= 2.5 × 80,000
= ` 2,00,000
6
Note:
Bank Overdraft = ` 20,000
Other CL = ` 60,000 (balancing figure)
CL = ` 80,000
(ii) Liquid Ratio = Quick Assets/CL (Excluding Overdraft)

= 1.50 i.e., 1.50:1.00
1.0 - ` 60,000
1.5 - ?
(1.5/1.00) × 60,000 = ` 90,000 (Quick Assets)
Stock = CA - Quick Assets
= 2,00,000 - 90.000 = ` 1,10,000
(iii) Proprietary Ratio = (Fixed Assets/ Proprietary Funds) = 0.75 i.e.,

Working capital/ Proprietary Funds = 0.25
Proprietary Funds = (1/0.25) × 1,20,000 = ` 4,80,000
Less: Reserves & Surplus = ` 80,000
Share Capital = ` 4,00,000
(iv) Fixed Assets = 4,80,000 × 0.75 = ` 3,60,000.
Summarized Statement of Assets and Liabilities as on 31st March, 2024
Liabilities ` Assets `
Share capital 4,00,000 Fixed Assets 3,60,000
Reserves & Surplus 80,000 Current Assets :
Current Liabilities: Stock 1,10,000
Bank Overdraft 20,000 Quick Assets 90,000 2,00,000
Other C.L 60,000 80,000
Total 5,60,000 Total 5,60,000
(b) Calculation of changes in Working Capital:

Current Assets 2023 (`) 2024 (`)
Debtors 1,60,000 2,00,000
Stock 77,000 1,09,000
B/R 20,000 30,000
7
Cash in hand 15,000 10,000

Cash at Bank 10,000 8,000
A: Total Current Asset 2,82,000 3,57,000
Current Liabilities 2023 (`) 2024 (`)
Creditors 55,000 83,000
B/P 20,000 16,000
B: Total Current Liabilities 75,000 99,000
Working capital (A-B) 2,07,000 2,58,000
Increase in working capital = 2,58,000 – 2,07,000 = ` 51,000.
4. (a) From the following balance sheet, prepare a common size statement and comment.
Particulars Amount (`) Amount (`)
31.03.2023 31.03.2024
Shareholders’ Fund:
Equity Share Capital (`10 each) 7,20,000 7,20,000
Reserve & Surplus 2,88,000 5,46,000
Non-current Liabilities:
Long-term debt 5,46,000 5,08,000
Current Liabilities:
Current Liabilities & Provisions 2,40,000 1,75,500
Total 18,00,000 19,50,000
Non-current Assets:
Fixed Assets 12,06,000 11,70,000
Current Assets:
Inventory 2,52,000 3,51,000
Debtors 1,80,000 1,95,000
Bank 1,62,000 2,34,000
Total 18,00,000 19,50,000
[7]
(b) Given below is the Statement of Assets and Liabilities of a company as at 31st
December, 2023:
Liabilities ` Assets `
Equity share capital 4,00,000 Fixed Assets 6,00,000
40000 shares of ` 100 each
Reserve and surplus 2,60,000 Investments 1,00,000
8% debentures 1,70,000 Current assets 2,80,000
Current Liabilities
Short term loans 1,00,000
Trade creditors 50,000
9,80,000 9,80,000
8
Calculate the company’s weighed average cost of capital using balance sheet
valuations. The following additional information are also available:
(i) 8% Debentures were issued at par.
(ii) All interests’ payments are up to date and equity dividend is currently 12%.
(iii) Short term loan carries interest at 18% p.a.
(iv) The shares and debentures of the company are quoted on the Calcutta Stock
Exchange and current Market Prices are as follows:
Equity Shares at ` 14 each and 8% Debentures at ` 98 each.
(v) The rate of tax for the company may be taken at 50%. [7]
Answer:
(a) Common Size Balance Sheet as on 31.03.2023 & 31.03.2024

On On
Particulars 31.03.2023 31.03.2024
% of total % of total
Shareholders’ Fund
 Share Capital  40% 36.92%
Equity Share Capital  100 
 Total Liabilitie s 
 Reserve & Surplus  16% 28%
Reserve & Surplus  100 
Total Shareholders Fund/Owners’ Equity 56% 64.22%
Non-current Liabilities
 Long - Term Debt  30.33% 26.05%
Long-Term Debt  100 
Current Liabilities
 Current Liabilitie s  13.33% 9%
Current Liabilities & Provision  100 
100% 100%
Non-current Assets
 Fixed Assets  67% 60%
Fixed Assets  100 
 Total Assets 
Current Assets
 Inventory  14% 18%
Inventory  100 
 Debtors  10% 10%
Debtors  100 
 Bank  9% 12%
Bank  100 
Total Current Assets 33% 40%
9
Total Assets 100% 100%
Comments:
(i) The proportion of owner’s equity to total liabilities of the company has been
increased from 56% to 64.92% whereas the proportion of long-term debt to
total liabilities has been decreased from 30.33% to 26.05% in the year 2023-
24. So, we can conclude that the dependency on outsiders has been decreased
and degree of financial risk associated with the company has been reduced
during the study period.
(ii) The percentage of current assets to total assets has been increased from 33%
to 40% whereas the percentage of current liabilities to total liabilities
decreased from 13.33% to 9% in the year 2023-24. Therefore, it indicates
that the liquidity position of the company has been significantly improved
during the period under study. But reduction of fixed assets may hamper the
long-term stability and operating efficiency of the company.
(b)
Calculation of the Cost of Equity: `
Equity Share 4,00,000
Reserves and Surplus 2,60,000
Equity (Shareholder’s) Fund 6,60,000
Book Value Per Share = 6,60,000/40,000 = ` 16.50.

Equity Dividend Per Share = 12/100 ×10 = ` 1.20
Therefore, Cost of Equity (%) = 1.20/16.50 × 100 = 7.273%
Computation of Weighted Average Cost of Capital:
Capital Structure or
Type of Amount Before After Weighted Average
Capital (`) Tax Tax Cost %
Equity funds 6,60,000 7.273% 7.273% 48,000
Debentures 1,70,000 8% 4% 6,800
Total 8,30,000 54800
Weighted Average Cost of Capital = 54800/8,30,000 × 100 = 6.602%.

Question is wrong (40000 shares of ` 100 each).
Either, students can take 40,000 @ 10 each
OR 4,000 @ 100 each.
5. (a) ZZZ Co. has four potential projects all with an initial cost of ` 15,00,000. The
capital budget for the year will only allow the company to take up only one of the
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three projects. Given the discount rates and the future cash flows of each project,
evaluate which project should they accept.
Project Annual Net Cash Flows per Discount Rates
year for five years (`)
A 3,50,000 4%
B 4,00,000 8%
C 5,00,000 10%
[7]
(b) Anurag Mills Ltd. has number of machines that were used to make a product that
the firm has phased out of its operations. An existing machine was originally
purchased six years ago for ` 5,00,000 and is being depreciated by the straight line
method; its remaining useful life is 4 years. No salvage value is expected at the end
of the useful life. It can currently be sold for `1,50,000. The machine can also be
modified to produce another product at a cost of `2,00,000. The modifications
would not affect the useful life, or salvage value, and would be depreciated using
the straight line method.
If the firm does not modify the existing machine, it will have to buy a new machine
at a cost of ` 4,40,000, (no salvage value) and the new machine would be
depreciated over 4 years. The engineers estimate that the cash operating costs with
the new machine would be ` 25,000 per year less than with the existing machine.
Cost of capital is 15 per cent and corporate tax rate is 35 per cent.
Advise the company whether the new machine should be bought, or the old
equipment modified. Assume straight line method of depreciation for tax purposes
and loss on sale of existing machine can be claimed as short-term capital loss in
the current year itself.
[Given: PVIFA (15% 4 years) = 2.855] [7]
Answer:
(a) Project A
PV of Annuity of ` 3,50,000 for 5 years at 4% rate of discount - 3,50,000 × 4,452
= ` 15,58,200
NPV = ` 15,58, 200 – ` 15,00,000 = ` 58,200
Project B
PV of Annuity of ` 4,00,000 for 5 years at 8% rate of discount- 4,00,000 × 3.993
= 15,97,200
NPV = ` 15,97,200 – ` 15,00,000 = ` 97,200
Project C
PV of Annuity of ` 5,00,000 for 5 years at 10% rate of discount- 5,00,000 × 3.791
- 18,95,500
11
NPV = `18,95,500 - ` 15,00,000 = ` 3,95,500

Accept Project C
6. (a) The management of Camellia Ltd. has called for a statement showing the working
capital needed to finance a level of activity of 3,00,000 units of output for the year
ended March 31, 2024. The cost structure for the company's product, for the above
mentioned activity level, is detailed below:
Cost per unit (`)
Raw materials 20
Direct labour 5
Overheads 15
Total cost 40
Profit 10
Selling price 50
Past trends indicate that the raw materials are held in stock, on an average, for two
months. Work-in-process (50 per cent complete) will approximate to ½ month's
production. Finished goods remain in warehouse, on an average, for 1 month.
Suppliers of materials extend 1 month's credit. Two months’ credit is normally
allowed to debtors. A minimum cash balance of ` 25,000 is expected to be
maintained. The production pattern is assumed to be even during the year (12
months).
12
Required:
Prepare a statement of Working Capital determination. [7]
(b) The annual demand for an item is 3,200 units. The unit cost is `6 and inventory
carrying charges is 25% p.a. If the cost of one procurement is `150, determine:
(A) E.O.Q (B) No. of orders per year (C) Time between two consecutive orders. [7]
Answer:
(a) Statement of Determine Net working Capital of Camellia Ltd.
(A) Current Assets ` `
(i) Raw materials (25,000 units × 2 × ` 20) 10,00,000
(ii) Work in process
Raw Materials (12,500 units × ` 10) 1,25,000
Direct Labour (12,500 units × ` 2.5) 31,250
Overhead (12,500 units × ` 7.5) 93,750 2,50,000
(iii) Finished Goods (25,000 units × ` 40) 10,00,000
(iv) Debtors (3,00,000 × ` 40 × 2)/12 20,00,000
(v) Minimum Cash Balance 25,000
Total 42,75,000
(B) Current Liabilities
(i) Creditors for 1 month (3,00,000 × ` 20 × 1)/12 5,00,000
(C) Net Working Capital (NWC) (A-B) 37,75,000
Alternatively, in work-in-process [Item A(iii) above] Raw Materials may be valued
at 12,500 units x ` 20 = ` 2,50,000. Debtors [item A(iv) above] may also be valued
at [3,00,000 x ` 50 (selling price) x 2] / 12 = ` 25,00,000.
Calculation of Net Working Capital will change accordingly.
2AO
(b) (A) Economic Ordering Quantity =
C
2  3,200  `1.50
EOQ =
` 6  25%
9,60,000
EOQ = 2AO
1.5
EOQ = 800 units
(B) No. of orders per year = A / EOQ = 3200 / 800 = 4 orders
(C) Time between two consecutive orders = No. of months in years / No. of orders
13
= 12/4 = 3 Months
7. (a) From the following data, compute the value of each firm and value of each equity
share as per the Modigliani-Miller approach:
X (` ) Y (` ) Z (` )
EBIT (`) 13,00,000 13,00,000 13,00,000
No. of shares 3,00,000 2,50,000 2,00,000
12% debentures (`) 9,00,000 10,00,000
Every firm expect 12% return on investment. [7]
(b) The operating income of Hypothetical Ltd amounts to ` 1,86,000. It pays 35%
tax on its income. Its capital structure consists of the following: (`)
14% Debentures 5,00,000
15% Preference shares 1,00,000
Equity shares (` 100 each) 4,00,000
Determine:
(i) the firm’s EPS;
(ii) the percentage change in EPS associated with 30% change (both increase and
decrease) in EBIT;
(iii) the degree of financial leverage at the current level of EBIT;
(iv) the additional data do you need to compute operating as well as combined
leverage. [7]
Answer:
(a) Calculation of value of each firm under Modigliani–Miller Approach:

Value of firm = EBIT / ko
Firm X (`) Y (`) Z (`)
1. EBIT (`) 13,00,000 13,00,000 13,00,000
2. ROI = ko 12% 12% 12%
3. Value of Firm; (1/2) (`) 1,08,33,333 1,08,33,333 1,08,33,333
Calculation of value of each equity share for each firm

Firm X (`) Y (`) Z (`)
1. Value of Firm (`) 1,08,33,333 1,08,33,333 1,08,33,333
2. Debt (`) - 9,00,000 10,00,000
3. Value of equity(1-2) (`) 1,08,33,333 99,33,333 98,33,333
4. No. of equity shares 3,00,000 2,50,000 2,00,000
14
5. Market price; (3/4) (`) 36.11 39.73 49.17
(b) (i) Determination of EPS

Particulars Amount (`)
EBIT 1,86,000
Less interest (0.14 × ` 5,00,000) 70,000
EBT 1,16,000
Less taxes (0.35) 40,600
EAT 75,400
Less: Dividend on preference shares 15,000
Earnings available for equity holders 60,400
EPS (` 60,400 ÷ 4,000) 15.1
(ii) Change in EPS

Particulars Change in EBIT (`)
(+30%) (–30%)
EBIT 2,41,800 1,30,200
Less interest 70,000 70,000
EBT 1,71,800 60,200
Less taxes (0.35) 60,130 21,070
EAT 1,11,670 39,130
Less: Dividends payable on preference 15,000 15,000
shares
Earnings available for equity holders 96,670 24,130
EPS 24.17 6.03
Change in EPS (Δ EPS ÷ EPS) (+60.05%) (–60.05%)
(iii) DFL = EBIT / EBIT – I – [Dp/(1 – t)]

= ` 1,86,000 / (` 1,86,000 – ` 70,000 – [ ` 15,000 ÷ (0.65)]
= 2 (times).
(iv) The additional data required to compute the operating and combined leverage
relate to sales and variable cost.
8. (a) Describe Quantitative Financial Data and Qualitative Financial Data. Explain
Nominal Scale and Ratio Scale in the context of types of data. [7]
(b) Summarise the benefits of data analytics. [7]
15
Answer:
(a) Quantitative financial data: By the term ‘quantitative data’, we mean the data
expressed in numbers. The quantitative data availability in finance is significant.
The stock price data, financial statements etc. are examples of quantitative data. As
most of the financial records are maintained in the form of organised numerical
data.
Qualitative financial data: However, some data in financial studies may appear
in a qualitative format e.g. text, videos, audio etc. These types of data may be very
useful for financial analysis. For example, the ‘management discussion and
analysis’ presented as part of annual report of a company is mostly presented in the
form of text. This information is useful for getting an insight into the performance
of the business. Similarly, key executives often appear for an interview in business
channels. These interactions are often goldmines for data and information.
Nominal Scale: Nominal scale is being used for categorising data. Under this scale,
observations are classified based on certain characteristics. The category labels
may contain numbers but have no numerical value. Examples could be, classifying
equities into small-cap, mid-cap, and large-cap categories or classifying funds as
equity funds, debt funds, and balanced funds etc.
Ratio scale: The ratio scale possesses all characteristics of the nominal, ordinal,
and interval scales. The acquired data can not only be classified and rated on a ratio
scale, but also have equal intervals. A ratio scale has a true zero, meaning that zero
has a significant value. The genuine zero value on a ratio scale allows for the
magnitude to be described. For example, length, time, mass, money, age, etc. are
typical examples of ratio scales. For data analysis, a ratio scale may be utilised to
measure sales, pricing, market share, and client count.
(b) Benefits of data analytics

Following are the benefits of data analytics:
(i) Improves decision making process
Companies can use the information gained from data analytics to base their
decisions, resulting in enhanced outcomes. Using data analytics significantly
reduces the amount of guesswork involved in preparing marketing plans,
deciding what materials to produce, and more. Using advanced data analytics
16
technologies, you can continuously collect and analyse new data to gain a
deeper understanding of changing circumstances.
(ii) Increase in efficiency of operations

Data analytics assists firms in streamlining their processes, conserving
resources, and increasing their profitability. When firms have a better
understanding of their audience’s demands, they spend less time creating
advertising that do not fulfil those needs.
(iii) Improved service to stakeholders

Data analytics gives organisations with a more in-depth understanding of
their customers, employees and other stake holders. This enables the
company to tailor stakeholders’ experiences to their needs, provide more
personalization, and build stronger relationships with them.
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Paper11 Syl22 June24 Set1 Sol

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INTERMEDIATE EXAMINATION SET 1

MODEL ANSWER TERM – JUNE 2024

Time Allowed: 3 Hours Full Marks: 100

1. Choose the correct option: [15 x 2 = 30]

(ii) Which of the following are the benefits of data analytics?

(iii) XBRL is the abbreviated form of:

(iv) A scatter plot displays several unique data points:

(xi) Capital Budgeting deals with:

(xiv) DuPont Analysis deals with:

2. (a) Distinguish between Hedge Funds and Mutual Funds. [7]

(b) Techniques of data mining

(i) Association rules:

(ii) Neural Networks:

(iii) Decision tree:

(a) Working Notes:

(ii) Liquid Ratio = Quick Assets/CL (Excluding Overdraft)

(iii) Proprietary Ratio = (Fixed Assets/ Proprietary Funds) = 0.75 i.e.,

(iv) Fixed Assets = 4,80,000 × 0.75 = ` 3,60,000.

Summarized Statement of Assets and Liabilities as on 31st March, 2024

(b) Calculation of changes in Working Capital:

Cash in hand 15,000 10,000

(a) Common Size Balance Sheet as on 31.03.2023 & 31.03.2024

Total Assets 100% 100%

Book Value Per Share = 6,60,000/40,000 = ` 16.50.

Weighted Average Cost of Capital = 54800/8,30,000 × 100 = 6.602%.

NPV = `18,95,500 - ` 15,00,000 = ` 3,95,500

(B) No. of orders per year = A / EOQ = 3200 / 800 = 4 orders

(a) Calculation of value of each firm under Modigliani–Miller Approach:

Calculation of value of each equity share for each firm

5. Market price; (3/4) (`) 36.11 39.73 49.17

(b) (i) Determination of EPS

(ii) Change in EPS

(iii) DFL = EBIT / EBIT – I – [Dp/(1 – t)]

(b) Summarise the benefits of data analytics. [7]

(b) Benefits of data analytics

(ii) Increase in efficiency of operations

(iii) Improved service to stakeholders

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