Assignment on Corporate Finance

Corporate Financial Management

Assignment 1

INSTRUCTIONS TO STUDENTS

This Assignment consist of one Question

Assignment carries Total of 100 Marks

Due Date:

Question (100 Marks)

The Following financial information related to GlobeMau co:

20X7 20X6

$ $

000 000

Sales (all on credit) 37400 26720

Cost of Sales 34408 23781

Operating Profit 2992 2939

Finance costs (interest payments) -355 -274

Profit before Taxation 2637 2665

20X7 20X6

$ $ $ $

000 000 000 000

Non-Current Assets 13632 12750

Current Assets

Inventory 4600 2400

Trade receivables 4600 2200

9200 4600

Current Liabilities

Trade Payables 4750 2000

Overdraft 3225 1600

7975 3600

Net Current Assets 1225 1000

14857 13750

8% Bonds -2425 -2425

12432 11325

Capital and Reserves

Share Capital 6000 6000

Reserves 6432 5325

12432 11325

The average variable overdraft interest rate in each year was 5%. The 8% bonds are

redeemable in ten years’ time.

Required: Use the above financial information to discuss, with supporting calculations, the

financial performance of GlobeMau.