Question $1$: $-$ Working Capital Management

Cost sheet of a company provides the following particulars. Raw Materials $40\%,$ Labour $10\%$ and Overheads $30\%.$

The following details are also available.

a$)$ Raw materials remain in store for $6$ weeks

b$)$ Processing time $-4$ weeks

c$)$ Finished goods are in stock for $5$ weeks

d$)$ Period of credit allowed to debtors $10$ weeks

e$)$ Lag in payment of wages $2$ weeks

f$)$ Period of credit allowed by creditors $4$ weeks

g$)$ Selling price $$50$ per unit

h$)$ Production in unit $13,000$ per annum

Add $10\%$ for contingencies

Required to:

a$)$ Prepare a statement of working capital requirements.

b$)$ What would be your strategies for excess working capital and inadequate working capital? Give appropriate examples to justify your strategy.

Question $2$: $-$ Cash Management Techniques

Sun Ltd$.$ Provides the following information about its liquidity.

Annual yield on marketable securities is $9\%$

The fixed cost of effective marketable securities transaction is $$20$

The standard deviation of the change in daily cash balance is $$2,500$

The lowest control limit set to

$$10,000$

Required to:

Find out the targeted cash balance $($return point$)$

Question $3$: $-$ Valuation of Shares & Bonds

A company has just paid a dividend of $$0\mathrm{.}50$ per share and that dividend is expected to grow at a rate of $20\%$ per annum for the next $3$ years, and at a rate of $5\%$ per annum forever after that.

Assuming a required rate of return of $10\%.$