VIDYA SAGAR

CAREER INSTITUTE LIMITED

WHERE ALL INDIA 1ST RANK IS A TRADITION

CA FOUNDATION

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Phone No. : 7821821250, 7821821251, 9358900497, 9358999359
 (3)
SCP1

PART -I
SECTION-A

Case Scenario : - I itneeds a

To setupthisunit,
unit.
a shoe manufacturing
XYZ Ltd.wants toestablish
loan.
loan.XYZ Ltd.approachesa commercialbank forworkingcapital
forsuch loan.To preparesuch
Bank has askedthe company topresenttheproposal
about the
some information
you and provided
the company has appointed
proposal,
plan.
The want
It marginofsafetyof 10%
wants tomaintain forcontingencies. company

of90,000.
tokeep cash balance
will
marginof25% on COGS. Depreciation
be soldatgrossprofit
The productwill
be partofcostofproduction.
whilefinished
willbe heldat 1.5months ofitsconsumption,
Stock of raw material
goodswill
Finished
atone month'srequirement.
will
goodsinventory be maintained

be cost.
valuedatmanufacturing
sellshoes in domesticas wellas in foreignmarket.Total
The company will
30,00,000.20% salesand
ofthesalesare foreign
estimatedannualsaleswill
be

the salesproceed from debtors.

foreign
be a delayof 1/2 month to realise
therewill
be on credit periodof2months.
and alloweda credit
domesticsales will
All
be 25% ofestimatedsalesand the company
will
will
get
consumed
Raw material
Wage
ofraw material.
creditperiodof2 monthsofconsumptionfrom itssupplier
be paidin1/2 month'slag.
be 20% ofsalesand will
expenses will
overhead expenses at the end ofthe year will be
Outstandingcash manufacturing
Estimated totaladministrativecost (to
?60,000;it willbe paidinone month arrear.

be paid afterone month) willbe 1,80,000.Expectedannual salespromotion

expensesare?90,000,which will be paidquarterlyin advance.The company want

tobank on cash costbasis.
to submitthe proposal
SCP1
 (4)

SCPI
You arerequired question1to 5:
to answerthefollowing

2
1. What will
be thetotalestimated
currentassetson cash costbasis?

(A)R8,31,250

(B) 7,18,750

(C) 7,25,250

(D) 7,10,250

2. What will estimatedcurrentliabilities

be thetotal ? 2

(A) 2,52,500

(B) 1,90,000

(C) 2,17,500

(D) ? 2,25,000

3. What will
be the estimatedworkingcapital
to be submittedby you inthe
2
proposal?

(A) ? 5,33,775

(B) 4,36,725

(C) ? 5,50,275

(D) 4,50,225

SCP1
 (5)
SCPI
What will
be thetotal
manutàcturing
costand costofsaleson cash cost
total
basis? 2

(A) 20,70,000,
R 23,40,000

(B) 24,00,000, 30,00,000

() 22,S0,000, 23,40,000

(D) l6,80,000,
*24,00,000

What will
be the total
estimatedfinished
goodsinventoryand totaldebtorson
2
cashcostbasis?

4,25,000
(A)2,00,000,

(B) 1,72,500, 3,40,000

(C) 1,72,500,3,31,500

(D) 7 3,31,500
1,87,500,

ofT pershare innextyear.Growth rateof

Q Ltd.isplanningtopay dividend 2

per share costis

is31. Flotation
company is&o p.a.Currentmarket price Po

tl pershare.

?
be costofequity
What will

(A) 12.23%
(B) 11.92%
(D) 12.32%
(C) 12.00%

SCPI
 (6)
SCP1
7.
A company has networth of 5,00,000.Its
debttoequityratio
is2.Interest
on
profitof 4,00,000.Tax rate is
debt is10%. The company earnsan operating
30%.

What will
be the Financial
leverageofthe company ?
2
(A) 1.11

(B) 1.33
(C) 143

(D) 1.90

8. T Ltd.is lookingfora capital

project
in orderto replaceitsexisting
old
machine.It
gottwo proposals
to consider;
details
of whichare givenbelow: 2

ProposalX ProposalY
Initial
investment ?6,50,000 7,80,000
Estimated
useful
life 5 Years 3 Years
Annualcash inflows ?1,90,000 7 3,50,000
Costofcapital 10% 10%

Year 1 3 4 5

PVIFo.10,t 0.909 0.826 0.7510.683 0.621

0.909 1.736 2.487
PVIFAo.10,t 3.1703.791
What will
be Equivalent
Annual NPV forProposal
X and ProposalY?
(A) ? 70,290.00, 90,450.00

(B) 18,541.28,7
36,369.12

(C) ?1,90,000.00,3,50,000.00 80

(D) 77,326.73,7 99,504.95

SCP1
 (7)
SCP1
SECTION-B

Case Scenario
-II: (AI),
Intelligence
of professionals
havingexpertise the in areas ofArtificial
team a
formed
Mining(DM)
A

Chain (BC), Cloud Computing (CC) and Data

Block
inthe name and styleof M/s. ABCD I
Ltd.(thecompany).
company itsarea of
in
provider
itself bestservice
aim ofthe company isto position as the
The resources
on its
to itscustomer. Concentrating
with bestuser experience
operations growthin revenue
the wants to target8% year-on-year
and capabilities, Company
plan.
initsbusiness
and 9%year-on-yeargrowthinnetprofit the
the strategy,
selectand implement
In order to identifyright approach to groups,
on strategic
analysis
to conduct indepth strategic
company has decided
operations
and cost ofcompanieshavingsimilar
structure
performance
objectives,

inthe market.
ofthe company thought
it
of March 2025, the Board of Directors
Inthe month relating
services
ofmanufacturingRobotsand providing
propertobe inthe business
and proposed
between existing
knows thatthereisno linkage
thereto.Thecompany
referencetoproductormarketortechnology.
businesswithspecific
willbe
the components of
Robots
majorityof
As per proposed arrangement,
player
established inthisarea.The Robots
(FI),
Inc.
Faisla an
imported from M/s.
foruse athomes and in
restaurants.
specifically
be assembledinIndia
will
cutting-edge
endeavortoprovidethe above productwhileusing
The company will will
be
best The coreintent
oftheservices.
withcustomizedfeaturesand
technology
Inthis thecompany wouldlike
context,
the same tounprecedentedlevel.
toelevate
serviceand
onlinerepair
additional
tooffer
like
facilities better :
customerinterface,

Serviceson toits
site customer.
SCP1
 (8)
SCP1
In addition,
company isof a
11.
considered view that meticulous of its
analysis
willfacilitate
stakeholders to buildand maintainstrong relationship
with each
group.As an acceptedpractice, are inplaceto satisfy
greatestefforts Mr. X, the
ChiefExecutiveOfficerof the company by takinghisadvice and keeping him
withall
informed related
information and developments on a regular
basis.

Basedon above case scenario, optionfor MCQ number 9 to13:

choose the correct

9. intobusinessofmanufacturing
Entering ofRobotscanbestbe describedas:

(A) Backwardvertical
integration

(B) Co-generic
diversification

diversification
(C) Conglomerate

(D) Divestment

better
10. Elevatingcustomer service to unprecedentedlevelby providing
on siteisknown as: 2
onlinerepairserviceand service
customerinterface,

(A) Augmented marketing

marketing
(B) Enlightened

(C) Social
marketing

(D) Synchromarketing

SCP1
 (9)
while SCP1
preparinga
Power
willbe Interest the positionof
matrixof stakeholders, Mr. X

inwhich
categorized
oneofthe following 2
(A) quadrants
Key player

(B) Keep satisfied

(C) Keep
informed

(D) Low priority

12. In orderto position

itself
as the best serviceprovider,
statingyear-on-year
growth,Indicates
whichone ofthecomponents of 2
thestrategic
intent

(A) Goals

(B) Objectives

(C) Mission

(D) Vision

groupsand coststructure canbe termed as,whichtype of

13. ofstrategic
Analysis
2
?
analysis
strategic

analysis
(A) Competitor
analysis
(B)Determinants
analysis
(C) Environmental

(D) Marketanalysis SCP1

 (10)
SCP1

14. M/s. SPG isa multi-product

multi-business Ithas fourprominent
enterprise.

Each division
divisions. functionsas an independentproductcenterwithits

own set of activities

managed by respectivedivision
head, which is

foritsown performance and profitability.

responsible This organizational
isknown as :
structure 1
(A) Divisional
structure

(B) Multidivisional
structure

(C) Strategic Unit

Business

(D)Network structure

15. Inresponseto a scheme ofsubsidyby the stategovernment,a company started

manufacturing
E-Vehicles.
Some of the customers were not at ease with

battery lifeand time consumed in recharging

the battery.Some of the

customerswere apprehensive of batterycatching

aboutfrequentincidents fire.
All
theseresulted
inhalf-hearted
response from the customersinevolving
EV
market.

Here, the custonmers' response is indicating

towards which one of the

ofstrategic
limitations management ? 2

(A) Environmentishighly
complexand turbulent.

(B)Strategicmanagement isa time-consumingprocess.

(C) Strategic
management isa costly
process.

(D) Itisdifficult
to estimatethe competitive
responsetothe firm's
strategy.

SCP1
 (11)
SCP1
16. M/s. A is providing
mobile phonesand Wi-Fi services inthe country.M/s. B

and M/s. C are othersimilar

serviceproviders
already in operatiOn. n
competitive
landscape,M/s. M/s. decidedto merge witheach other.
B and C

Such merger was an unexDected developmentinthe industry.

M/s.A decided
to cope-upwithsuch eventuality
bv intensereviewofitsstrategy
and to form a
coregroup tohandlethe
situation.

The situation
where intensereview of strategyis needed due to merger

between M/s. B and M/s.C, indicates

towards whichtypeofstrategic
control
for M/s.A? 2

(A) Premisecontrol

(B) Implementation
control

(C) Strategic
surveillance

(D) Special
alert
control

SCP1
 (2)
SCP2

PART -II
SECTION – A

1. (a) The following isavailable

information forS Ltd.forthe yearended 5
31st March,2025:

Raw Material
consumed 20% ofCOGS

Raw Material
Inventory
turnover
ratio 4.00

Finished
Goods Inventory
holdingperiod 0.75 month

Grossprofit
(basedon COGS) 12.50%
Debtorcollection
period(all
sales
are credit
sales) 3months

Proprietary
ratio 0.3125
FixedAssetsturnover
ratio
(basedon sales) 3.00
FixedAssetstoTotal
ASsets
40%
You arerequiredtopreparea BalanceSheetas on
31tMarch,2025 inthe
following
format:

Liabilities Assets
Shareholders' Fund Fixed
ASsets
12,00,000
(assume no Preference
Shares)

Long-termDebt 15,00,000 Stock of Raw Material

CurrentLiabilities
StockofFinished
Goods

Debtors

Cash

Total Total
SCP2
aluated.
On the cover Dage
O nn the desc
wer Sheet iven
inc

(3)
SCP2
Due to highdemand 2+1+2
flavours.
Y Ltd.producesenergy drinksindifferent
(b) =5
the
of itsproduct,the rate of returnon itsearningsis25%. Currently,

company retains60% ofitsearnings

and distributes The current
the rest.

is8 and earningsper share is 10.

P/E ratio

AccordingtoGordon'sModel:

What ratioif
willbe retention the company wants to maintain
its

to 12 incurrentyear,giventhatthe expectedrateofreturn
P/E ratio

is20%?
for aninvestor

be the expectedpriceper share afterone yearif

(ii)What will Y Ltd.
achieves targetedP/E ratio
above-mentioned ?

(ii)
Willtherebe any change inretention if
ratio the company wants to

maintain to 10 incurrent
itsP/E ratio year,giventhatthe expected

rate of return is17.50%?

foran investor

(cFollowinginformation to A Ltd.fortheyearended 31s March, 2+1+

relates
2=5
2025:

Profit
volume ratio 24%

Operating
leverage 2.00

Financial
leverage 1.50

Interest
Expenses 12,000

Tax rate 30%

Number ofEquityShares 1,000

SCP2
P.T.0.
 (4)
SCP2

to
Youare required
: 31s March,
2025.
ended
Statement fortheyear
() PrepareIncome
EPS.
Calculate
(ii)
per share, if
salesincrease
changeinearnings
(1)
Calculate
9C
percentage

by 5%.

are as 1+2+
ended 31stMarch, 2025
of B Ltd.fortheyear
3+2
2. (a) structure
Capital -8
follows:

Particulars Amount ()
14,00,000
(@
Equityshare capital 10 each

(@ 1,000 each 10,00,000

10% Preferenceshare capital

100 each 9,60,000

Debenture @

Bank Loan 6,40,000

rateof returnis14%, Market rate of returnis 19% and

Risk-free

beta ofcompany is1.20.

10% Preferencesharesare redeemable at 1,065.40after

3 years.

on bank loanis1.30timesofinterest
Interest on debentures.

cost
Debenturesare redeemable at par after5 years.Floatation is 4

perdebenture.

Taxrateis30%.

Costofcapital
is14%.

SCP2
 kat.
nvigilator

(5)
SCP2

You are required the following

tocalculate :

() Cost ofEquity.

Costofpreferenceshare usingYTM
(ii) method.

method.
Post-taxcostofdebentureusingapproximation
(iii)

rateofbank loan.
(iv)Interest

PV factors@ 10% and 14%

Year 2 3 4

0.751 0.683
t 0.909
PVIFo.10, 0.826

0.769 0.675 0.592

PVIFo.14,t0.877

details
Following toH Ltd.:
are related

EPS 73.00

Returnon investment 20%

Cost ofequity 15%

Model,what would be the maximum and minimum price

As per Walter's

of share?

P.T.0.
SCP2
 hoic

(6)
SCP2

3. (a) Following
dataare givenfora capital
project
: 1+1+1+
1+2=6

Annualinterim
cashinflows
forfirst
two years ? 1,00,000

Annualinterim
cash inflows
fornexttwo years 7 80,000

Usefullife 4 Years

Salvagevalueatend oftheproject
50,000

Internal
rateofreturn
12%

Costofcapital
10%

You arerequired
tocalculate
thefollowing:

(i) Initial
investment

(ii)
Net presentvalue

(iii)
Profitability
Index

(iv)Discountedpaybackperiod

(V) MIRR

SCP2
comprisesraa
thatvOu

(7)
SCP2

4
Year 3

0.842 0.772 0.708

PVIFo.09,t 0.917

0.826 0.751 0.683

PVlFo.10,t 0.909

0.812 0.731 0.659

pVlFo.11,t0.901

PVIFo.12,t 0.893 0.797 0.712 0.636

FVIFo.10,t 1.100 1.210 1.331 1.464

t
FVIFo,.12, 1.120 1.254 1.405 1.574

company.Itwantstorepurchase
(b) Z Ltd.isan unlevered itsequityshares 4

of 300 lakhsby issueof 12% debentures

of same amount. Current

marketvalue of Z Ltd.is 1,400 lakhs.Itscost of capital

is18%. The

company will
maintain ofEBIT infutureyears.Dividendpay
same level

outratio
is100%. Company paystaxata rateof30%.

and Millerapproach,due to such change incapital

As per Modigliani

what will
structure, be impacton thefollowing
?

(i) MarketValueofZ Ltd.

(ii)Overall
costofcapital

(i)
Costofequity

SCP2 P.T.0.
 (8)
SCP2
4. (a) What is agency cost and what are itstypes ? How can a company 4

minimize
agency costand align
theinterest
ofmanagerand shareholder
?

(b) What arekey features

ofbridgefinancing
? 4

(c) What ishierarchy

of financing
under Pecking Order theory,and why 2
does it ?
exist

OR

(c) The total

riskofany businessisthecombination
ofdegree ofoperating
and financial Inthe light
risk". ofthe above statement,
you are required
to considerthe first
two columns of the given table
and giveyour
comments inthe3rd column.

Your comments shoulddepictthe totalriskprofile

by usingthemost
appropriate
amongstthefollowing
threewords only:

Lower,Higherand Moderate.

Alsoselectthebestcombination
ofDOL and DFL fromthegiventable.

DOL DFL Comments

Low High

High Low

High High

SCP2
 (9)
SCP2
SECTION B -
(a) SemiCon Pvt.Ltd.(SPL)isengaged inmanufacturingof semiconductors
1+1+
1+2=5
from the year2024. Company wantstostart pathto be followed
a strategic

infutureso as to buildbestquality designwith

semiconductorand display

innovativeecosystem to enable India's

emergence as a global
hub for

in a more structuredmanner. Placingcore

manufacturing
electronics

priority,
valuesas its itwould like
to clearly itsaspirations
articulate to the

stakeholders beacon tokeepinspiring

witha guiding its
workforce.

and explain
ldentify one of thecomponets ofstrategic whichwill
intent help on
Why such componentisimportánt
towardsabove statedintentions.
indicate

fora successful ofsuchcomponent.

? Alsostatetheessentials
organization

(b) In additionto new market opportunities

and change in customer 1+4
=5
isalsochangingvery fast,
as a known fact,technology
preferences, In
View ofthe same,Twaran',
havinga smalland mid-sized
business
wants

digital
touse latest forimprovedproceduresand products.
technologies

The primaryaim ofthe firmistohave a competitive

edge intheevolving
businesslandscapeby digital The entitywould liketo
transformation.

deal with regular changes firmly,

along with transformingits

management techniques.

the strategyrequiredfordigital
Laentify Also statethe
transformation.

most preferred
practices
to be followedby theentity.

SCP2 P.T.0.
 5

(10)
SCP2
(c) MaAi is a prominentgroup of companies.
Currentlyithas businesse

named Alpha,Bravo,
Charlie In
and Delta. year 2020, thecompany had

acquireda businessdealingin produc Nota'.

Inevaluatingthe
contribution
to itsportfolio,
itwas observedthatproductNota,
isnot
as itwas expectedrathercausinga
contributing
financial
duress.
After
identifying
apparentproblemarea,inthe yeár2023,an emphasiswas
placed on change in management
and improvement in internal
efficiency.
However, on furtherevaluation
inthe year 2024, itwas
observedthateven afterdue
emphasis,
positive
outcome isnotthereand
in-turn
thecompany decidedto get
rid-of
the business
related
to product
Nota.

Identify
theretrenchmentstrategies
followed by the company for
product
'Nota'(i)inthe year 2023 (i1)in the year 2024.
Alsostatevarious
reasonsto adoptthe strategy
by any organization, intheyear
as followed

2024 forproductNota'.

6. (a) Explain
the importanceofvalues,
as one ofthe components ofstrategic
3+

intentfora company.What are the common

examplesofvalues? How

valuesare different
from intent
?

SCP2
 (11)
SCP2

(b) competitive 5
In order to get better performance and sustainable

advantages,a company has to focuson the characteristics

ofitsresources

Inview of this,explain
and capabilities. the majorcharacteristics
of

resourcesand capabilities.

(a) What do you mean by valuechainanalysis

? Delineatethe support 1+4
=5

invaluechainanalysis,
activities by MichaelPorter.
as stated

(b) Explaindifferentiation
strategyas one of the genericstrategies
by 1+2+
2=5

MichaelPorter.
What arethemajorbasesofdifferentiation
? Alsooutline

whichcan helpachievethedifferentiation
the strategies strategy.

(a) What do you mean by Key Success Factors (KSF)? Structurethe 1+2+
2=5
auestions,
answer to which can helpidentify
KSFs ofa company. Also

state,as to how the understanding

can help ascertainsustainable,

competitive
advantages.

(b) Explain
inbrief
the expansion
strategy
as one ofthecorporatestrategy.
1+4
-5
Alsostatethecharacteristics
ofexpansion strategy.

OR

SCP2 P.T.O.
 exa Dage 1fyin

(12)
SCP2

(b) “A manager as a strategic many.leadershiproles,

eader has to play- 1+4
=5
whileexplaining
the statementinbrief, theleadershiproles
delineate

whicha manager hastoplayinpushingfora go0d execution.

strategy

Tnvetoy

|425. \3,50,ooo

Deloton fore 4eom.320,90

Dome eee-
2250o

o,o00

S E. 5-0o

Ha H S

15
Phone No. : 7821821250, 9358900497, 9358999359