Finance Numericals

Corporate Restructuring: It is a process of changing or redesigning the management style, model or financial structure to achieve the goal of a company. There are various methods to restructure the company like- ·          Merger: It is also known as absorption or amalgamation. The two or more companies are combining to form a new company is called merger. Example: Flipkart-Myntra. ·          Acquisition: If one company purchases more than 50% of shares of target company that is known as acquisition. Example: Barti Airtel acquires Zain Africa in February 2010. ·          Demerger: If a company separated its business unit to operate independently or reverse process of merger is known as demerger. Example: Den network has a demerger of its broadband/ internet service provider arm Skynet Cable Network. ·        ...

Economic Value Added (EVA): It measures the economic profit of a company. It helps to determine the excess money earned after deducting the capital invested in a company. If economic value added is positive it shows increase in shareholders wealth and vice versa. Formula: EVA = Net operating income after tax – (weighted average cost of capital * total capital employed) Weighted average cost of capital = Cost of equity + Cost of debt after tax Market Value Added (MVA): It measures the external value or market value of a company. If MVA is positive more investors are attracted to invest in a company. If market value added is negative the existing investors earns less return and company losses interest of a investors towards company stocks. Formula: MVA = V – K OR MVA = (Outstanding shares*price per share + outstanding preferred share*price per preferred share) – book value Where, V = market value of a company K = capital invested Advantages of Econo...

There are some theories and practical questions of annuity and deferred annuity for practice: Questions: 1)       What is an annuity? 2)       What are the types of annuity? 3)       Give three point of difference between ordinary annuity and annuity due? 4)       What is Deferred Annuity? Explain with example. 5)       What are the types of deferred annuity? 6)       What is immediate annuity and variable annuity? 7)       What are the advantages and disadvantages of annuity? 8)       Suppose Mr. Nikhil has invested Rs. 6, 00,000 to his retirement plan. The insurance company gives interest of 8.2% semi-annually. Find out how much amount he will get after 8 years. 9)       Find out how much amount you will invest now in an annuity to ge...