CASE STUDY FINANCIAL MANAGEMENT - KopyKitab

CASE STUDY SoLUTIONSFINANCIAL MANAGEMENT

CASE STUDY SoLUTIONSFINANCIAL MANAGEMENTSECOND EDITIONGr. CAPT. H. KAUSHAL, VSM (RETD)MACMILLAN

Macmillan Publishers India Ltd, 2003, 2010All rights reserved. No part of this publication may be reproduced ortransmitted, in any form or by any means, without permission. Anyperson who does any unauthorised act in relation to this publicationmay be liable to criminal prosecution and civil claims for damages.First published, 2003Reprinted, 2005-2009 (six imvres. ions)Second edition, 2010 Reprinted. 101 1MACMILLAN PUBLISHERS INDIA LTDDelhi Bangalore Chennai Kolkata MumbaiAhmedabad Bhopal Chandigarh Coimbatore CuttackGuwahati Hubli Hyderabad Jaipur Lucknow MaduraiNagpur Patna Pune Thiruvananthapuram VisakhapatnamCompanies and representatives throughout the worldISBN 10: 0230-32944-6ISBN 13: 978-0230-32944-7Published by Amitabh Nagpal for Macmillan Publishers India Ltd,3A, 5th Floor, DLF Corporate Park, Gurgaon 122 002 (Haryana), IndiaTypeset by Arpit Printographersarpitprinto@yahoo.comPrinted at Rashtriya Printers27B/2, Dilshad Garden, Delhi 110 095This book is meant for educational and learning pwposes. The author{s) of the book has/have taken allreasonable care to ensure that the contents of the book do not violate any existing copyright or otherintellectual property rights of any person in any manner whatsoever. In the event the author{s) has/havebeen unable to track any source and if any copyright has been inadvertently infringed, please notify the.publisher in writing for corrective action.

ToMy Wife Neenaherself an author of 18 books who taught me· to accept and love a person as she is. She stood by meduring decades of married life, made tougher by my faults.

I started teaching Management over 25 years ago. It was easyto see that number of management concepts appeared verysimple to the students when taught in the classroom.Application of these very theories often, presented difficultieswhile solving practical corporate world problems. Similarly,management principles were grasped quickly and correctly·when these were linked to incidents from my work life of 50years.Normally, there should be only a small step from suchteaching management principles to solving of case studies.Unfortunately, it is not so. This is because the technique forsolving case studies is usually not taught in business schools.There is also an acute shortage of case studies in financialmanagement, especially with Indian background. Teachingmanagement by solving case studies has, therefore, been acasualty. Some institutions have even scraped teaching casestudies because of this shortage!This book is an attempt at making good this vitaldeficiency. Three chapters in Part I deal with theoreticalbackground of the case studies and general technique ofsolving a case study. The rest of the book contains case studies,divided into five parts. Parts II and III are for self-study. PartII contains case studies, followed by complete suggestedsolutions and a case study for exercise. Part III is to help slowlearners. Complete solutions have been tapered to hints to thesolution. This- part has case studies, hints to the solutions anda case study for exercise. Part IV contains numerical problems,which are important for a student of financial management.

viii PrefacePart V consists of many case studies for classroom teaching.Lastly, Part VI narrates cases needing wider and comprehensivecoverage. These case studies are suitable for tackling bysyndicates. Majority of the case studies have been set in theIndian environment and only some cases have been based onforeign surroundings. This is only to expose the readersappropriately. A serious attempt has been made to cover allfacets of financial management theory through these casestudies. Topics included in the syllabi of some other institutionslike ICWAI, C.A etc have also been covered. A number ofcases have been drawn from the question papers of themanagement and financial institutions, universities etc acrossthe country. This is basically to give confidence to the studentsabout the type of case studies usually included in theexamination papers. It needs to be emphasized that the casestudy solutions are certainly not meant for business schools .alone; practicing managers and those preparing for alliedinstitutions will find the book equally useful. Briefly, brushingup the management principle on which a case study is basedwill help, not only in solving the case study but also inunderstanding the theoretical concepts better.I must place on record the help and encouragement givenby many individuals. The foremost must be a number ofpersons from the publishers, M/ s. Macmillan (India) Ltd. Iam purposely refraining from naming them. The best andmost profound gratitude must be reserved for my students inthe classrooms, colleagues (seniors, juniors and peers) invarious organizations and many teachers from whom I gotrhis knowledge. A number of friends from different cities havesent me examination papers and syllabi of the nearbyuniversities/institutions. I thank them all for the help.I dedicate this book to my wife Neena Kaushal, herselfa renowned author of 18 books. Our married life, spanningover four decades, has been no bed of roses by any stretch ofimagination, but without her besides me, I with tones of faults,would have collapsed. She taught me to love and accept aperson, as she/he is.H. Kaushal

Financial management has got its rightful place in the hierarchyof management specializations since about three decades.Earlier finances were expected to be handled by CharteredAccountants or people having a commerce background. Manyprofessionals, from areas like engineering, computers, etc. havejoined the financial management cadre. These individuals haveoften learnt one aspect of financial management and continuedto operate in that limited field for many years. It is necessaryfor these people to broaden their understanding and learnabout other aspects of financial management, as they becomesenior. This book will help them obtain an all round practicalknowledge, by solving the case studies, especially those meantfor self-study.Similarly, managers rising to senior positions in thecompany from various streams like production, marketing,HRD, etc. are at a disadvantage because their exposure tofinancial management is rather limited. It is unfortunate, buttrue, that many good, small and medium companies havehad to see evil days because the owners did not have adequateknowledge about finance. These units were often too small toafford a finance manager and the owners were not confidentabout understanding the intricacies of financial management.This book could prove useful for such people by showingthem a large number of real life situations, learning to analyzethese problems and finding optimum solutions.Further, the requirements of management studentsspecializing in financial management or students preparingfor allied examinations like Chartered Accountancy, ICWA,

xFinancial Management in Indiacommerce, etc. need to be met. These budding financiers mustclear their ideas about theoretical concepts taught in the classand learn to apply these principles-under zero risk conditions.This will prepare them to meet the demands expected out ofthem in their future.The aim of this book would be fulfilled if the readers feelmore confident about analyzing problems and findingsolutions to them, after reading this book.

PrefaceFinancial Management in IndiaviiixPart I - Theory and Technique for Solving Case Studies, ·General Case Studies and Discussions about the Solutionand an Exercise to Understand the Technique1.2.3.4.IntroductionCase Study MethodSteps for Solving a Case Study3817 ·Case No. 1 - General Problem - To Learn the Method ofSolving a Case Study25Interview at MumbaiS. Case No. 1 - Interview at MumbaiDiscussions about the Solution6. Case No. 2 - Case Study for ExerciseCould Happen in Real Life!2733Part II - Case Studies, Discussions about the Solutionand Case Studies as Exercise for Self-study7. Case No. 3 - Cash FlowRanade's Dilemma8. Case No. 3 -Cash Flow- Rlmade's DilemmaDiscussions about the Solution9. Case No. 4- Case Study for Exercise- Fund FlowNeena's Nest394247

xiiContents10. Case No.5- Budgetary Controls50The Resignation11. Case No.5- The ResignationDiscussions about the Solution12. Case No. 6 - Case Study for Exercise - Capital BudgetingMalhotra Wind Power Ltd.5513. Case No. 7- Allocation of Costs6360The Awadh Meal14. Case No. 7 -Allocation of Cost - The Awadh MealDiscussions about the Solution15. Case No. 8 --Case Study for Exercise- Cost AllocationMachine Hour Cost16. Case No.9- InventJry Management.The Wine Maker17. Case No. 9 - Inventory Management - The Wine MakerDiscussions About the Solution18. Case No. 10- Case Study for Exercise- Inventory CarryingHML, Bhatinda19. Case No. 11 -Merger of CompaniesDetergent Market in India20. Case No. 11 -Merger of Companies -:Detergent Market inIndia68727477828589Discussions about the Solution21. Case No. 12- Case Study for Exercise- Mergers93AHL, Bangalore22. Case No. 13- Indirect Taxes: Excercise95Jayant's Troubles23. Case No. 13- Indirect Taxes: Excise- Jayant's Troubles97Discussions about the Solution24. Case No. 14- Case Study for Exercise- Income Tax100Different Facets of Income Tax25. Case No. 15 -Indirect Taxes: Custom Duty103Export: That Never Was26. Case No. 15 -Indirect Taxes: Export Duty - Export: ThatNever Was104Discussions about the Solution

Contents xiii27. Case No. 16- Case Study for Exercise: (MOD VAT)M/S Fairlady Ltd.28. Case No. 17- AuditDifferent Aspects of Audit - I29. Case No. 17- Different Aspects of Audit- IDiscussions about the Solution30. Case No. 18- Case Study for Exercise- AuditingDifferent Aspects of Audit - II107108110114Part III - Case Studies, Hints to the Solution and CaseStudies for Exercise/ for Self-study31.32.33.34.35.36.37.38.39.Case No. 19- Ratios-based Financial Analysis119The Fortune TellerCase No. 19- Ratio-based Financial Analysis- The FortuneTeller123Hints to the SolutionCase No. 20- Case Study for Exercise- Ratio-based FinancialAnalysis126Friends and CompetitorsCase No. 21 - International Financial Management128Investment StrategyCase No. 21 - Internal Financial Management - Investment ·Strategy131Hints to the SolutionCase No. 22 - Case Study for Exercise- Capital InvestmentAnalysis in Foreign Exchange134Haryana Cooperative Farm, SirsaCase No. 23 - Receivable Management136Kunti's Game PlanCase No. 23- Bills Receivables- Kunti's Game Plan140Hints to the SolutionCase No. 24 - Case Study for Exercise - Bills Receivables/Factoring142Massive India Ltd.

Case Study Solutions FinancialManagement40%OFFPublisher : Laxmi PublicationsISBN : 9780230329447Author : H KaushalType the URL : http://www.kopykitab.com/product/9805Get this eBook

solving case studies is usually not taught in business schools. There is also an acute shortage of case studies in financial management, especially with Indian background. Teaching management by solving case studies has, therefore, been a casualty. Some institutions have even scraped teaching case studies because of this shortage! This book is an attempt at making good this vital deficiency .