1.Is deprciation a source of funds? How is it treated in
calculatiing fund from operations?
2. What is standard costing? Ple. give its advantages.
3. What do you mean by solvency ratios. List two types of
solvency ratios which are used by variuos firms.
4. What is objectives of Job costing?
5. Explain Brifly two capital budgeting technique using
discounted cash flow criteria.
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Answer / vikrant gawde
No,depreciation is not source of funds. It is non-cash
item. While adjusting it under cash flow from operative
activities it is added in Net profit before tax and
extraordinary items.
One of many ratios used to measure a company's ability to
meet long-term obligations. The solvency ratio measures the
size of a company's after-tax income, excluding non-cash
depreciation expenses, as compared to the firm's total debt
obligations. It provides a measurement of how likely a
company will be to continue meeting its debt obligation
job costing is used to ascertain the cost of non-standard
jobs undertaken against customers specific orders. The main
object of the job is to ascertain the cost of each JOb ,
contract etc. and control its costs during its execution.
Technique of capital Budgeting:
1. Net present Value:
It is the sum of all present value of cash flow that are
expected to occure over the life of the project.Accept the
project if NPV is positive and reject the project if NPV is
Negative
2.Internal Rate of Return:
It is the discount rate of return which makes the NPV equal
to the ZERO.
Accept: if the IRR is greater than cost of capital
Reject: If the IRR is less than cost of capital
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Answer / rajukharade
depreciation is non cash item wich we takes into a/c while
calculating net profit therefore it should be added to net
profit to know the correct funds from operation and vice-
verca in case of loss i .e funds lost in operation
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