NISM Series XV: Solved Book Case Study 2 - Financial Statement Projections

case study 2 nism 15


NISM Book Case Study 2: Financial Statement Projections

⚠️ Dhaval's Exam Disclaimer & Tips:

Listen carefully: NISM is asking this question only. Same name, same formula, just they are changing values sometimes; sometimes values are not even changed. Just by heart these 5 case studies, I am giving guarantee that u will pass!

My Guarantee: This 5 case study is most imp and NISM is asking this only! Focus on the step-by-step calculation logic.

Scenario: You have been given the financial statement of a company for the previous two years. Use the data provided to answer the following predictive and analytical questions.

Q1. Which of the following is closest to the capital expenditure incurred by the company in 2XX7?

Options:
A. Rs. 5.0 lakhs
B. Rs. 6.2 lakhs
C. Rs. 241.2 lakhs
D. Rs. 246.2 lakhs

View Correct Answer & Calculation
Correct Answer: D. Rs. 246.2 lakhs

Explanation:

Capital Expenditure = Ending Fixed Assets – Beginning Fixed Assets + Depreciation and Amortization

Calculation:
Capital Expenditure for the company in Year 2xx7 = 2412 – 2407 + 241.2 = 246.2

Q2. Which of the following is closest to the estimated revenue for 2XX8, if revenue is expected to grow at the same rate at which it grew in 2XX7?

Options:
A. Rs. 9,100 lakhs
B. Rs. 9,558 lakhs
C. Rs. 9,582 lakhs
D. Rs. 9,614 lakhs

View Correct Answer & Calculation
Correct Answer: C. Rs. 9,582 lakhs

Explanation:
Step 1: Calculate Growth Rate for Revenue from 2xx6 to 2xx7
(Sales of 2xx7 / Sales of 2xx6) - 1 = (9100 / 8642) - 1 = 0.0529 = 5.29%

Step 2: Project Sales for Year 2xx8
Expected sales = (Sales in 2xx7) * (1 + growth rate)
Expected sales in 2xx8 = 9100 * (1 + 5.29%) = 9100 * (1.0529) = 9581.39

Thus, expected sales are Rs. 9582 Lakhs.

Q3. The company expects that the revenue of 2XX8 is likely to be Rs. 9,500 lakhs. It further estimates 25 bps decrease in EBITDA margin compared to previous year. Which of the following is closest to the estimated EBITDA for 2XX8 as per the company guidance?

Options:
A. Rs. 2,647 lakhs
B. Rs. 2,860 lakhs
C. Rs. 4,475 lakhs
D. Rs. 4,689 lakhs

View Correct Answer & Calculation
Correct Answer: D. Rs. 4,689 lakhs

Explanation:
Step 1: Calculate the EBITDA margin for Year 2xx7
EBITDA = Net Income + Interest Expense + Taxes + Depreciation and Amortization
EBITDA for Company = 2763.1 + 180.4 + 1330 + 241.2 = 4514.7
EBITDA Margin = EBITDA / Sales = 4514.7 / 9100 = 49.61%

Step 2: Adjust Margin for decrease of 25 bps
New margin = 49.61% - 0.25% = 49.36%

Step 3: Calculate Expected EBITDA
Expected Sales = 9500 Lakhs
Expected EBITDA = 9500 * 0.4936 = 4689.2 Lakhs

Q4. The company also estimates that its networking capital ratio in 2XX8 is likely to remain same compared to previous year. Which of the following is closest to increase / (decrease) in working capital, if the expected revenue of 2XX8 is Rs. 9,500 lakhs?

Options:
A. Rs. 0.0 lakhs
B. Rs. 100.0 lakhs
C. Rs. 275.0 lakhs
D. Rs. 400.0 lakhs

View Correct Answer & Calculation
Correct Answer: B. Rs. 100.0 lakhs

Explanation:
Step 1: Calculate Net Working Capital as a % of Revenue for Year 2xx7
Ratio = 2275 / 9100 = 0.25 = 25%

Step 2: Calculate NWC for 2xx8
Expected Sales = 9500
Networking capital for 2xx8 = 9500 * 0.25 = 2375

Step 3: Calculate Change
Change in working capital = 2375 – 2275 = 100

Q5. The company is expected to repay Rs. 200 lakhs of debt on the first day of financial year 2XX8. Assuming average interest rate remains unchanged, what is the expected finance cost for 2XX8?

Options:
A. Rs. 144 lakhs
B. Rs. 172 lakhs
C. Rs. 180 lakhs
D. Rs. 200 lakhs

View Correct Answer & Calculation
Correct Answer: B. Rs. 172 lakhs

Explanation:
Step 1: Calculate the average interest rate for year 2xx7
Interest Rate = Finance Cost / Total Capital = 180.4 / 4687 = 3.84%

Step 2: Adjust Total Capital for debt repayment
New Total Capital = 4687 – 200 = 4487

Step 3: Calculate Interest
Interest Rate of 3.84% on 4487 = 4487 * 0.0384 = 172.03

Q6. The profit for 2XX8 is estimated to be Rs. 3,200 lakhs and the company is expected to pay total dividends of Rs. 1,900 lakhs. What is the closest estimated book value of equity at end of 2XX8?

Options:
A. Rs. 1,300 lakhs
B. Rs. 4,347 lakhs
C. Rs. 5,347 lakhs
D. Rs. 6,247 lakhs

View Correct Answer & Calculation
Correct Answer: B. Rs. 4,347 lakhs

Explanation:

Ending Book Value of Equity = Beginning Book Value of Equity + Net Income – Dividends Paid

Calculation:
Beginning Equity = 3046.6
Dividends = 900 (Interim) + 1000 (Special) = 1900
Ending Book Value = 3046.6 + 3200 – 1900 = 4346.6 Lakhs (Rounded to 4347).

NISM Book Case Study 2 Complete! Master these calculations to pass your exam.

Dhaval Visariya

AMFI Registered Distributor (ARN-327925) | Software Developer & Finance Enthusiast

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Disclaimer: I am an AMFI Registered Mutual Fund Distributor. Views expressed here are for educational purposes. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
📧 Contact: info.apollofinancialservices@gmail.com

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