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EBIT total

Financial Management

answered on 02-May-25 15:34

@1:38 we thought that ebit existing 15+ EBIT new 15 Since, assuming no immediate increase in profitability i.e, new also 15 What can I do in exam sir , How I overcome this terminology problem to score good marks in exam sir

latest answer

They said no immediate increase in profitability right? Pls read Q carefully that is the only way

anju B

anju B

CA Inter

21K+

1

36

DOUBLE SHIFT WC REQUIREMENT

Financial Management

answered on 03-May-25 11:02

Sir can you explain clearly why wip units do not change with an example or something

latest answer

thank you sir.. understood now... crystal clear clarity

 Preethi S

Preethi S

CA Inter

2K+

2

60

cost calculation

Financial Management

answered on 01-May-25 18:29

why didnt we deduct the interest expense of debentures from the revenue while calculating the pbt sir? we also know the investment value and proportions

latest answer

If project NPV is computed we are working on project cash flows so these are CF that are available to all financiers

Venkatesh

Venkatesh

CA Inter

0

1

52

Pre tax income

Financial Management

answered on 30-Apr-25 20:16

Terminology pre tax profit means pbt (we thought EBIT -int in exams also sir) that results different answers

latest answer

Pre tax can be pre EBIT or PBT depends on the question

anju B

anju B

CA Inter

21K+

1

52

roce formula

Financial Management

answered on 30-Apr-25 09:28

sir in this sum, while computing roce percentage as 20, can we also use ebit(1-tax), or is roce always on just ebit only?

latest answer

Depends on question if they ask pre or post tax If nothing is mentioned compute both

Venkatesh

Venkatesh

CA Inter

0

1

48

EAESH

Financial Management

answered on 29-Apr-25 14:16

@3.31 EAESH=EBIT-INT tax component is missing Is That results only PBT sir?

latest answer

Q does not have tax rate - why will we assume it when it does not exist?

anju B

anju B

CA Inter

21K+

2

68

Kd

Financial Management

answered on 29-Apr-25 12:18

@12.20 Kd=15- 30% Which it is pre For computation of WACC ... Okay But, for computation of Ke for ii) point Kd =15 % why ?

latest answer

Even in point 11 we multiplied by (1-t) pls share time stamp where it is not

anju B

anju B

CA Inter

21K+

1

52

Deduction of Floatation cost

Financial Management

answered on 28-Apr-25 16:52

sir, in this sum we have deducted floatation cost 4 percent from the issue price/market price of debentures, is floatation cost always calculated on issue price ? because in illustration 22 we calculated floatation cost for debentures on face value whereas issue price/net proceeds was found as 93.75

latest answer

Ill 22 is from ICAI SM Q 5 - here they have considered floatation cost as % of FV - page 55 https://resource.cdn.icai.org/81826bos65985-cp4.pdf Ill 28 is from Nov 2020 RTP - here they have considered it as % of Issue proceeds - https://1fin.link/resource/6b43755e5da04f1db4c0b4f6beea813a Hence we followed the ICAI logic for respective questions In real world one considers issue price only. Please state your assumption clearly in the exam and solve the question if the question is not clear

Venkatesh

Venkatesh

CA Inter

0

1

60

RE

Financial Management

answered on 25-Apr-25 17:11

@2:22 RE have no mv as they are not traded in the market Logically correct But, in the video "what are net preoceeds" For ke preferred issue price - flotation cost For Kre preferred *mv*!! Sir mentioned can you please clarify my doubt (Incase mv not given IP but flotation is not relavant)

latest answer

Kre

anju B

anju B

CA Inter

21K+

1

55

Illustration 18

Financial Management

answered on 25-Apr-25 15:19

In shareholders point of view If they invested else they get 10% But in co. They get only 6.97% on RE which is loss to the shareholders right? In dividend decisions chapter (return onRE)r>ke investment made Here , (which we know it is cost on RE but for shareholders it's return)kre <= ke how's it possible Please sir can you explain it?

latest answer

If they invest also they get only gross at 10% - net is same they get 30% less due to tax and of the amount they invest only 97% goes for projects, 3% is floatation cost If they invested elsewhere too, they will have these issues of floatation cost and taxation That is why we are computing Kre as opportunity cst of investing elsewhere

anju B

anju B

CA Inter

21K+

1

52

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