Business AdministrationCSS

Q. No. 5. The following data relates to Bright Star Company (millions of Rs.)

Cash & equivalents                          Rs 100.00

Fixed Assets                        283.50

Sales                      1000.00

Net Income                         50.00

Current Liabilities                              105.50

Current Ratio                     3.00

Days Sales Outstanding (DSO)                     40.55Days

Return on Equity                              12.00%

The Company has no Preferred Stocks- only Common Equity, Current Liabilities, Long Term

Debt.

(a) Find the Company’s

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(i) Accounts Receivable

(ii) Current Assets

(iii) Total Assets

(iv) Return on Total Assets

(v) Common Equity

(vi) Quick Ratio

(vii) Long term Debt

(b) In part a) you should have found that the Company’s Accounts Receivable (A/R) Rs. 111.1 million. If Bright Star Company reduces its DSO from 40.55 days to 30.4 days, while holding other things constant, how much cash would it generate?

Given Data Recap:

  • Cash & Equivalents: Rs 100 million
  • Fixed Assets: Rs 283.50 million
  • Sales: Rs 1000 million
  • Net Income: Rs 50 million
  • Current Liabilities: Rs 105.50 million
  • Current Ratio: 3.00
  • Days Sales Outstanding (DSO): 40.55 days
  • Return on Equity (ROE): 12.00%

The company has no preferred stocks, only common equity, current liabilities, and long-term debt.

Part (a): Calculations

Let’s calculate each requested item.

Q. no. 5. the following data relates to bright star company (millions of rs.)
Q. no. 5. the following data relates to bright star company (millions of rs.)
Q. no. 5. the following data relates to bright star company (millions of rs.)
Q. no. 5. the following data relates to bright star company (millions of rs.)
Q. no. 5. the following data relates to bright star company (millions of rs.)
Q. no. 5. the following data relates to bright star company (millions of rs.)
Q. no. 5. the following data relates to bright star company (millions of rs.)
Q. no. 5. the following data relates to bright star company (millions of rs.)

Summary:

  • Accounts Receivable = Rs 111.1 million
  • Current Assets = Rs 316.50 million
  • Total Assets = Rs 600.00 million
  • Return on Total Assets (ROA) = 8.33%
  • Common Equity = Rs 416.67 million
  • Quick Ratio = 2.00
  • Long-Term Debt = Rs 77.83 million
  • Cash Generated by Reducing DSO = Rs 27.81 million

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