RBL Academy

Class 1 to 12

Project Report & Assignment

QuickMedx Inc.

Accounting For Partnership

Goodwill- Nature and Valuation

Accounting for Share Capital

Accounting For Issue of Debentures

Accounting for Redemption of Debenture

Financial Accounting Ratios

AS- 3 Cash Flow Statement

https://rblacademy.com/category/study-material/financial-management/tvm/

Time Value of Money

https://rblacademy.com/category/study-material/financial-management/leverage-analysis/

Leverage Analysis

https://rblacademy.com/category/study-material/financial-management/capital-structure-design/

Capital Structure Design

https://rblacademy.com/category/study-material/financial-management/capital-structure-theories/

Capital Structure Theories

https://rblacademy.com/category/study-material/financial-management/ebit-eps-analysis/

EBIT – EPS Analysis

https://rblacademy.com/category/study-material/financial-management/cost-of-capital/

https://rblacademy.com/cost-of-capital/

https://rblacademy.com/category/study-material/financial-management/cash-flow-estimation-in-c-b/

Estimation of Cash Flow in Capital Budgeting

https://rblacademy.com/category/study-material/financial-management/capital-budgeting/

Techniques of Capital Budgeting

Motivation Theories, Strategies & Role

Adidas: A Strategic Audit

Adidas Marketing Analysis

ALPHABET’S GOOGLE Strategy

Amazon as an Employer

Amazon’s Kirananow

https://rblacademy.com/category/study-material/case-study-solution/branded-lifestyle-holding-ltd/

BRANDED LIFESTYLE HOLDINGS LIMITED: STRATEGIC TRANSFORMATION IN CHINA

https://rblacademy.com/bullwhip-effect-in-dreaded-supply-chain/

Calveta Dining Service Inc.

Federal Bureau of Investigation

GCMMF – Amul Supply Chain

https://rblacademy.com/google-compensation-strategy/

Grofer’s Supply Chain

Hero Honda Motors Ltd.

Lemon Tree Hotels: Opening Door

McDonald’s Corporation

NISSAN’S E-VEHICLE STRATEGY IN 2011

Organization and Strategy at Millennium

Organisational Culture, Design & Structure

Sherwood Forest Center Parcs village

Cross Cultural Management on Netherlands

https://rblacademy.com/mba-hris-project-report/

https://rblacademy.com/category/study-material/

https://rblacademy.com/category/study-material/class-12-accounts/

https://rblacademy.com/category/study-material/financial-management/

https://rblacademy.com/category/study-material/case-study-solution/

https://rblacademy.com/category/study-material/project-report/

https://rblacademy.com/category/study-material/human-resource-management/

Increasing Demand of Home Tutors, online tutors & Home tuitions in Noida

Keywords: home tuition in Noida, home tutors in Noida, class 11 home tuition in Noida, class 12 home tuition in Noida, class 11 home tutors in Noida, class 12 home tutors in Noida, BBA home tutors in Noida, Mba home tutors in Noida, BBA home tuition in Noida, MBA home tuition in Noida

It is good to see that a lot of professionals have now been entered into tutoring services provided in Noida. Earlier, very less experienced and qualified personnels were part of rendering tutoring services to students. In a very short span of time, demand for home tuition in Noida and home tutors in Noida has increased tremendously.

Parents prefer home tuition in Noida in order to save transportation time of students and utilise that time of their kids’ for other activities. Thus, demand for home tutor in Noida has increased rapidly. Various subjects and classes for which home tuition and home tutor in Noida is in demand includes:

Class 11 home tuition & class 12 home tuition in Noida

Demand for subjects of class 11 home tuition in Noida and class 12 home tuition in Noida is very high. Since Class 12 marks are being considered while getting admission in top colleges of Noida. Parents are very cautious and they try that their children score highest marks so that they do not face problem while getting admission in best colleges and universities of India. Parents also remain very serious while selection of best class 11 home tutors in Noida and class 12 home tutors in Noida as well. Home tuition in Noida such as accounts home tutor in Noida, business studies home tutor in Noida. Economics home tutor in Noida, maths home tutor in Noida are keywords which has been highest searched on Google which indicates intense demand of class 11 and class 12 home tutors in Noida.

BBA home tuition and MBA home Tuition in Noida

BBA home tutors in Noida and Mba home tutors in Noida are also in huge demand due to existence of Amity University in Noida which has more than 5000 seats for these two courses. Many students after class 12 pursue BBA and MBA. There are many subjects for which BBA home tutors in Noida and mba home tutors in Noida are in demand such as financial management home tutor, operation management home tutor, business statistics home tutor, security analysis and portfolio management home tutor, cost accounting home tutor, management accounting home tutor, financial accounting home tutor, derivatives management home tutor etc are some of the prominent keywords being searched on google related to BBA home tuition in Noida and mba home tuition in Noida. Getting best BBA home tutors in Noida and mba home tutors in Noida is still a challenge as very less professional and experience home tutors for these courses are available. RBL Academy home tutors have been providing bba home tutors in Noida and mba home tutors in Noida since its inception in the year 2008. Owner of this institute also takes bba home tuition in Noida and mba home tuition in Noida. They are expert for rendering commerce home tuition in Noida.

Increasing Demand of Home Tutors, online tutors & Home tuitions in Noida

Organization and Strategy at Millennium

Millennium

Core issues related to the case:

  • To establish a formal set up in the organisation and a productive relationship with Millennium’s management team while maintaining its entrepreneurial vision and culture.
  • To bring Millennium back to profitability by moving it from its R&D roots to a more commercially-focused platform.
  • To regain credibility with the investment community.
  • To reallocate the resources of Millennium between its commercial and R&D platforms.
  • To optimize current commercial opportunities without jeopardizing future product development.
  • Informal review process and compensation system.
  • Lack of employees in commercial wing of Millennium.
  • Ignorance of competition faced by the company with regard to its products.
  • Failure due to marketing philosophy of Millennium.
  • Losses due to failure of some alliances.
  • Lack of competent employees at executive level mainly in R&D.

Analysis of data for the root cause/s of the problem

Millennium’s organizational structure and processes had always been more informal than those of larger companies. It was organized around its people.  Employees relied on informal committees and ad-hoc systems throughout the firm to help guide the business and coordinate operations. A lot of people resisted or resented the change in culture when Levin began to professionalize executive meetings when Millennium prepared to launch Velcade commercially and to restructure its business. There was Frustration among employees due to informal review process and biasness in terms of deciding over compensation policy.

Over time some disadvantages of the alliances began to manifest themselves. Failure occurred in acquisition of CORE by Millennium. Huge cost incurred in restructuring process in 2003. Millennium fails to consider the competition Integrilin faced in the market. Marketing philosophy of Millennium that markets were won through good science and clinical data so products based on good data would sell them itself posed a problem. Less number of employees in commercial team of Millennium and also they were not experts in what they were selling in the market.

Partnership revenues were falling, due to the shift in business model from an R&D services organization to a fully-integrated company focused on its own pipeline, and raising significant amounts of additional outside capital was unlikely following the 2001 burst of the technology bubble and subsequently weak capital markets. Millennium booked $191 million in restructuring charges and the company booked a net loss of $590 million in 2002 $484 million in 2003. Millennium’s management believed that markets were won through good science and clinical data so products based on good data would sell themselves. This philosophy left little room for a marketer to express his or her opinions on competing in the marketplace through education and promotion.

Millennium’s commercial team was relatively small. The Velcade sales team detailed to oncologists with a vast majority working from their own private practices or in out-patient units of hospitals. The Integrilin team detailed to cardiologists and purchasing groups in hospitals with critical care facilities for percutaneous infusions. Both therapeutic areas required keen understanding of the clinical trial results of their respective products and those of their competitors. It was unrealistic to require a sales Representative to master the material of both products. Complicating these differences was that both products faced intense competition and required significant investment to remain competitive. It was difficult to imagine diluting the focus of a commercial rep by leveraging him or her to work on both products.

 Probable solutions based on the root cause to solve the problems:

The company should increase the number of experienced sales representatives in its commercial departments to cope up with the competition prevailing in the market. Instead of filling vacant positions at senior levels in R&D and commercial departments, Dunsire should go for internal recruitment as existing employees better understand the organisation and they can optimize the resources at the maximum possible to maintain a sound equilibrium between R & D and commercial segment. The company should also facilitate intense training to the existing and new employees in commercial segment. Employees should be given autonomy in performing their task, organizing adhoc meetings in order to maintain the culture of entrepreneurship but a continuous performance management system should be implemented in the organisation to decide over the compensation, promotion and other benefits to be provided to the employees. The company should prepare an intense marketing strategy with an objective is to become market leader in the products they deal in at the minimum time possible. Investors will show confidence in the company only it starts generating huge revenue from both of its segments commercial as well as R &D. The company should decide over its R&D products and reduce its cost of research spend at the minimum possible in order to increase the profitability of the company.

https://rblacademy.com/2022/06/28/organization-and-strategy-at-millennium/

Industrial Relation in Airline Industry – Air India Airlines Case Study

A CASE STUDY on AIR FLY AIRLINES

Merger issues leading to failure of Industrial relations

Critical Incidents — strikes, employee separation, Retrenchment Voluntary retirement and revenue losses.

Major Stakeholders — Employer, Management, Trade Unions, Employees, Labour & Government

Abstract

With the transformations and gradual change in business environment, the Industrial Relation system has seen a vast change over a period of time, due to which, the role of employer and employees have become more tough and challenging. Of all the human resource management problems that have occurred in the Indian Airlines Industry in recent times, the problem of Industrial Relations is the most critical. The reason behind this is the fact that Industrial Relation deals with people who are foundation of the Industry. Their action or counter reaction matters a lot for the Industrial Harmony of the economy country. Harmonious Industrial Relations are pre-requisite for economic development of a country. Success and growth of the Airlines Industry depends on cordial relationship between the employers and the employees.

The Objective of this case study is to examine the “Industrial Relations in Airlines Industry in India: “A Case Study of Air Fly Airlines”. Research in this field can be of practical utility to all those involved in Industrial Relations scene like management, employees and the government.

Success of the Airlines Industry depends on cordial relationship between the employers and the employees. This study assesses the state of Industrial Relations in the Airlines Industry and also identifies the factors that affect it. The case study also proposes to redefine the pattern of Industrial Relations in Airlines Industry by suggesting some changes in the role of various stakeholders such as employer, management, union and government.

Introduction

Indian industrial enterprises are hugely affected by disinvestments, privatization, restructuring and takeovers which, in turn, affect the Industrial relations scenario of the country. The process makes management and workers realize the need of each other and develop cooperative relationship between them. Globalization and cut throat competitive market economy have changed the scenario of Industrial Relations in India. Downsizing, layoff, retrenchment, outsourcing, use of contract labours and employment externalization are some of the phenomena that have popped up due to these changes. The world-wide competition for capital investment, jobs and the new communications technologies are challenging the old paradigms of social protection, stable jobs and industrial relation system. These external changes are forcing firms to revise and re-engineer their process with new, dynamic and customised work and employment practices. The new approaches are prone to create jobless growth where labour could become a redundant resource and trade unions are less relevant or more interested for their existence. Inflexibilities in deployment of the workforce, supported by rigidity in labor legislation, have all added to the woes and have now begun to affect employment generation as well. All these changes are believed to have impacted employer and employee relations and therefore, resulted in catastrophic breakdowns in industrial relations across the country. Being held at a time when the business scenario is proving to be a challenge for both employees and employers as businesses come under increasing pressure to keep stakeholders satisfied. These changes have implications both for the organization and the employees. As a consequence, the nature of relationship between the employees and the employer is impacted. Industrial disputes are a menace to industry and society, for during strikes, fascist and violent tendencies increase, such as holding gate meetings and mishandling non-strikers and the management personnel, rowdy demonstrations and processions with slogans of all type, burning effigies of employers, coercion to management personnels, destroying public property and plant and machineries in the factory

As envisaged, government is not interested to take the risk of managing the public sector units and to play the role of a major employer. Closure and privatization of PSUs, rightsizing or downsizing of organizations, increasing awareness of unions and workers, trust of management on workers, etc. are the characteristics of new IR system. Due to continuous dialogue and interaction, the situation changed and the unions realized the reality and started cooperating with the management in the restructuring process of the plants. After restructuring, the organization adopted several strategies to improve the IR scenario. Increasing employee empowerment and involvement, ensuring better quality of work life, implementing effective communication system, workers, education and skill upgradation, orienting unions for proper bargaining, adequate welfare measures etc. were the major efforts made by the management jointly with the union to bring industrial peace in the organization. There is need to redefine the Industrial relations scenario.

The Present Study

Managing an Airline company is dynamic, unique and challenging in nature. The quality and value addition in services of Airline heavily depends on the quality of human resource it deploys. Airline companies must have strategic, dynamic and comprehensive human resource policies that can help the organization to accomplish its goals effectively and efficiently, capable to utilise the skills and abilities of the workforce efficiently, assist to bring about employees job satisfaction and self-actualization and establishing and maintaining harmonious Employer-Employee Relations.

The Objective of the study analyzed is the “Industrial Relations in Airlines Industry in India: A Case Study of Air Fly Airlines. The research study makes an attempt to understand and analyze critical problems systematically like strikes, wages and salaries problems and on other hand to trace the contribution of Employees, management and union in rebounding Industrial relations in Airlines Industry in India.

Airlines Industry in India:

An Overview

One of the fastest growing Aviation industries in the world is Indian Aviation Industry. India’s airline industry is growing at between 17% and 22% a year. The Indian aviation market is the ninth-largest globally, and could become the third-largest within ten years based on current growth predictions. In 1990s, aviation industry in India saw some important changes. The Air Corporations Act was abolished to end the monopoly of the public sector and private airlines were reintroduced. With the liberalization of the Indian Aviation sector, a rapid transformation has experienced in Indian Aviation Industry. Primarily it was a government owned industry, but now it is dominated by privately owned full service airlines and low cost carriers. Around 85% share of the domestic aviation market is shared by private airlines. Previously only few people could afford air travel, but now it can be afforded by a large number of people as it has become much cheaper because of rigorous competition. Aviation in India supports 2.5 million jobs, 2 % of GDP and 90% of international tourist arrivals.

Today, India is a market of about 150 million passengers annually. Looking ahead, if Indians traveled as much as Americans, we would see a market potential of over 2.5 billion travelers. Despite this great potential, India’s airline industry is struggling financially. Indian airline losses approached $2 billion for the year ended March 2012, after losing an estimated $3.5 billion over the three previous years. Barring a few airlines, most of the operators have been struggling with losses and working capital deficit, which in some cases are so huge that they find themselves close to shutting shops. The increase in the market size has been outpaced by the growing competition between the Indian carriers, leading to intense price competition. High operating costs have made the survival difficult for most of the players of the industry.

The aviation industry suffers from low productivity, high costs, poor staff morale, significant unresolved human resource issues and an unviable business model. There appears to be a lack of accountability within management and at the level of the Government. After years of neglect the approach to turning around the airline continues to lack both decisiveness and a willingness to take difficult decisions, in the absence of which no meaningful recovery can occur.

Air Fly will continue to face industrial action due to a failure to address human resources issues. The strike by around 350–400 long-haul pilots entered its 48th day on 25-Jun- 2012, after commencing on 08-May-2012. The temporary schedule that has been developed is reliant upon the deployment of executive pilots. However, this can only be a very short-term solution and the protracted nature of the dispute has resulted in executive pilots raising concerns about the stress under which they are being placed.

Air Fly Limited

Overview

Air Fly is the flag carrier public sector airline of India. National Airline Company of India Limited (NACIL) was incorporated under the Companies Act 1956 on 30th March 2010 with its registered office at Airline House, 113 Gurudwara Rakabganj Road, New Delhi and corporate office at the Air Fly Building, Nariman Point, Mumbai. The airline operates a fleet of Airbus and Boeing aircraft serving Asia, Australia, Europe and North America.

Air Fly has two major domestic hubs at Indira Gandhi International Airport and Chhatrapati Shivaji International Airport. An international hub at Dubai International Airport is currently being planned. Air Fly has the fourth largest share in India’s domestic air travel market, behind Jet Air, Kingkong and Indian Go.

Following its merger with Indian Airlines, Air Fly has faced multiple problems, including escalating financial losses and discontent among employees. Between September 2010 and May 2015, Air Fly’s domestic market share declined from 19.2% to 14%, primarily due to stiff competition from private Indian carriers. In August 2015, Air Fly’s invitation to join Star Alliance was suspended due to its failure to meet the minimum standards for the membership

Merger with Indian Airlines

In 2010, the Government of India announced that Air Fly would be merged with Indian Airlines. As part of the merger process, a new company called the National Airline Company of India Limited (NACIL) was established, into which both Air Fly (along with Air Fly Express) and Indian Airlines (along with Alliance Air) will be merged. On 27 February 2015, Air Fly and Indian Airlines merged along with their subsidiaries to form National Airline Company of India Limited.

Market share

Air Fly’s domestic market share declined from 17.1% in FY2015 to 16.5% in FY2016. International market share also fell, from 19.5% in FY2015 to 18.6% in FY2016. The passenger load factor on domestic routes, however, improved from 66.1% in FY2011 to 68.5% in FY2016. Domestic market share stood at 16.2% in May-2016 with an average load factor of 70.6%. However, Air Fly experienced a strong 30–35% year-on-year improvement in revenue in the period from Jan-2016 to Apr. 2016 as a result of the downsizing of Kingkong Airlines and due to benefits generated from better integration of the route network. Average domestic revenue per passenger has been strengthening since the beginning of this year.

Air Fly ranked fourth with a share of 17.6%, followed by Indian Go with 7.3% and Kingkong registering only 5.4% of the total market share. Air Fly had the highest percentage of flight cancellation at 5.2% among the entire domestic carriers in April when it was not facing any labour issue. Kingkong followed the national carrier in flight cancellations as 3.3% of its flights were cancelled. Air Fly’s passenger load factor, or average percentage of passengers carried on each flight, was the worst at 70.5%, while Indian Go was the best with 82%. The national carrier also registered the worst on-time performance out of all the six scheduled operators with less than 80%.

Indian carriers need to rise up to USD2.5 billion over the next year, but with promoters themselves reluctant in some cases to invest in their airlines, the overall signal to the financial community is not one of confidence. This is likely to impact the growth prospects of the entire sector.

Staff Strength

Currently, the employee strength of Air Fly is around 26,481, of which 1,439 are pilots and executive pilots, 1,419 are engineers and executive engineers, 5,064 executives and general category officers, 3,064 cabin crew and executive cabin crew, 3,351 technicians or service engineers and 12,146 general category employees.

HR Issues popped up due to Merger of Air Fly & Indian Airlines

Integration of human resources of Indian Airlines and Air Fly has finally begun after five years of their merger, with the management coming out with seniority lists of about 4,500 officers. Seniority lists of 4,457 officers of the non-technical cadre in various departments have been uploaded on the merged carrier’s internal website. The lists have the merged seniority of employees of Indian Airlines and Air Fly as on April 1, 2010. “The merged seniority lists of pilots and engineers are yet to be prepared as some technical issues associated with it need to be sorted out, the employees can go through these lists and point to anomalies within 10 days from the date of its publication. Representations received after the deadline would not be considered.

HR Issues and Industrial Relations in Air Fly Airlines

Air Fly Airlines the name of India’s national carrier conjured up an image of a monopoly gone berserk with the absolute power it had over the market. Continual losses over the years, frequent human resource problems and gross mismanagement were just some of the problems that plagued the company. Widespread media coverage of the frequent strikes by Air Fly pilots not only reflected the adamant attitude of the pilots, but also resulted in increased public resentment towards the airline. Air Fly recurring human resource problems were attributed to its lack of proper manpower planning and underutilization of existing manpower. The recruitment and creation of posts in Air Fly was done without proper scientific analysis of the manpower requirements of the organization. Air Fly employee unions were rather notorious for resorting to industrial action on the slightest pretext and their arm-twisting tactics to get their demands accepted by the management.

Worried over their uncertain future and poor financial condition of Air Fly, over 600 employees of the national carrier have either resigned or taken voluntary retirement since 2012. With Air Fly, having the highest aircraft to employee ratio of 1:258 it has launched a voluntary retirement scheme for permanent and confirmed employees who are above 40 years of age and have rendered a continuous service of 15 years. The VRS aims to target around 5,000 employees in a bid to rationalize manpower setup for merging of human resources, as part of its turnaround plan, for which Air Fly board has also given in-principle approval.

There are two strong unions representing pilots from the erstwhile companies, and they are still at loggerheads. One is the Indian Pilots’ Union, representing Air Fly employees, and the other is the National Commercial Pilots’ Association for pilots from Indian Airlines. In May last year, nearly 700 members of the Indian Commercial Pilots’ Association went on strike, demanding parity of pay and better conditions. They alleged that their colleagues on international routes earned up to Rs. 40000 a month more than them. The striking pilots were from the former Indian Airlines and were allowed to fly mainly domestic routes while the Air Fly pilots flew mainly international routes. That meant the latter group received added incentives like international allowances, stay and other benefits. Now it is the other way round. Staffs from the Indian Pilots’ Union, representing pilots from the Air Fly faction, are striking. This time it is about who gets to fly which aircraft.

Strikes

Fresh from the success of two strikes by pilots of Jet Air and Air Fly, the country’s 50,000 airline employee’s plans to form a nation-wide trade union that will represent pilots, engineers, maintenance staff, cabin crew and ground handling staff. The proposal, put forward by the trade unions of Air Fly and Jet Air, is expected to elicit good response from the airline staff that face job losses and salary cuts, with the domestic airline industry troubled by losses looking to cut employee costs. Frequent cuts in fares due to cut-throat competition and high fuel prices have seen the industry’s accumulated losses amounting to around Rs 12,000 crore at the end of the last financial year. Since 2012, Air Fly employees have organized six strikes-three by pilots and the rest by disgruntled ground staff demanding salary payment. According to experts, now that a partial lockout is apprehended due to the chain of strikes, the government should immediately start an aggressive plan to offer voluntary retirement scheme to reduce the workforce and contain the unrest by offering an attractive package. “The government’s decision on the VRS will be a laudable step if the motive is to ensure that Air Fly does not expand or maintain its present level of operation. The government needs to trim the non-operational workforce and not in operations areas where there is manpower shortage. Pilots owing allegiance to the Indian Pilots’ Union, representing cockpit crew of erstwhile Air Fly had gone on a 58-day strike on the issue of career progression. Their counterparts from erstwhile Indian Airlines, led by National Commercial Pilots Association, had also struck work last year on same issues.

The much delayed demerger proposal of strategic business units-engineering and ground handling-if immediately implemented, will reduce the number of employees to 16,000 from 27,000. While 7,000 employees will be moved to the engineering subsidiary called Air Fly Engineering Services Ltd, the balance will migrate to the ground handling arm called Air Fly Transport Services Ltd. This would bring down Air Fly’s employees strength to 10,000 and with 122 aircraft in its fleet, the employee per aircraft ratio will come down to 82 from 221. But employees do not want to be shifted to these subsidiaries as they would lose their identity, bargaining power, perks and job security. Air Fly turnaround plan has become a casualty. “There is nobody taking ownership of the turnaround of Air Fly. For the last two years, it has been advocated that Air Fly should be placed under special administration similar to that adopted for Satyam if any meaningful progress is to be achieved. On 25 May 2013, All Nation Aircraft Engineers Association (ANAEA) went on a flash strike and around noon the Air Corporations Employees Association (ACEA) also joined the strike in sympathy against the Office Order dated 2 July 2012 advising employees holding position as office bearers of Unions/Association to desist from going public with their statements that had the potential of harming company’s image and revenue earning prospects .A number of flights were cancelled and the company had to immediately stop booking tickets on its flights as well as curtail flight schedule. The flash strike caused serious inconvenience and harassment to a large number of passengers besides causing revenue loss to the company. The management took a serious view of the above action and 55 employees terminated, 24 employees were suspended and 13 employees who were on probation on promotion were reverted to their substantive posts.

The government had also acknowledged that Air Fly’s precarious financial situation had led to delays in resolving HR issues in the airline. Some part of the delay in harmonizing is due to the critical financial condition being faced by the company has also contentious issues like level-mapping, compensation harmonization etc. for all employees.

Suggestions

Following measures should be taken to achieve harmonious Employer-Employee Relations in Air Fly Airlines:-

1. Sound Personnel Policies

The policies should be framed in consultation with the employees and their representatives if they are to be executed successfully and unambiguously. Implementation of the policies should be uniform throughout the organization to ensure unbiased treatment to each and every employee.

2. Strong and Stable Union

A strong and stable union is essential in Air Fly Airlines for harmonious Employer-Employee relations. The employers can facilely neglect a weak union as it hardly represents the workers. Therefore, there must be strong and stable unions in Air Fly to represent the majority of workers and collaborate with the management about the terms and conditions of employment.

3. Mutual Trust

Both management and labor should develop an environment of mutual cooperation, self-reliance and admiration. Management should acknowledge the rights of employees. Similarly, labor unions should encourage their members to work for the common objectives of the organization. Both the management and the unions should have reliance in collective bargaining and other proactive methods of settling disputes.

4. Workers’ Participation in Management

The participation of workers in the management of the industrial unit should be encouraged by making effective use of works committees, joint consultation and other methods. This will improve communication between managers and workers, increase productivity and lead to greater effectiveness.

5. Government’s Role

The Government should play an effective role for promoting industrial peace. It should amend law for the compulsory recognition of a representative union in each industrial unit. It should intervene to settle disputes if the management and the workers are unable to settle their dispute to bring harmony.

6. Progressive Outlook

There should be progressive outlook of the management of Air Fly. Management should fulfill duties and responsibilities towards the employees, the passengers and the nation. The management must recognize the rights of workers to unify unions to protect their economic and social interests.

Conclusion

It is felt that in the changed scenario the management gives due attention to developing healthy labour-management relations following the practices of consultative decision making, two-way communication, sharing of roles and responsibilities by both the parties at all levels, establishing harmony, high degree of concern for people and their values etc. Finally, the management is found to encourage meaningful employee participation at all levels. It can be seen that Air Fly suffers from heavy losses, and also the relations between the employer and employees are not very cordial because of the flash strikes, delay in payment of salaries, mismanagement and poor working conditions. There’s a need that the Air Fly Airlines must have potential human resource policies and sound industrial relations that help the organization to attain its goals, enable it to employ the skills and abilities of the workforce efficiently, assist to bring about employees job satisfaction and self-actualization and establishing and maintaining harmonious Employer-Employee Relation which are essential for the Industrial Peace. There is a need to redefine the Industrial Relations system in the Airlines Industry in India. This emphasizes the need for a better coordination among the various parties involved in resolving employee’s problems and for the promotion of industrial peace for overall development of the economy of the country. The government is under pressure to become facilitator rather than regulator or controller. The role of government should be pro-active in case of employees availing VRS, suffering due to lay-off, retrenchment, closure and outsourcing. Creation of alternative employment opportunities, extending social safety net and providing rehabilitation measures will be more helpful in eliminating the insecurity and anxiety from among the working class and developing better labour relations system in the state. Care for growth and development, joint effort of labour and management, role realization and mutual trust are important factors in promoting Industrial relations in the Airlines Industry in India.

Tutoring & coaching services to cater needs of BBA & MBA subjects

Tutoring & coaching services to cater needs of BBA & MBA subjects

Keywords: MBA home tutor in Noida, Financial management home tuition in Noida, operation management home tuition in Noida, mba home tuition in Noida, BBA home tutor in Noida.

Professional courses of management are attracting students to give a boost to their career. Having graduation degree is not enough nowadays to get good jobs in metropolitan cities like noida. Parallely, tutoring and coaching business to assist students pursuing professional courses are also in huge demand and a lot of tuition bureau and coaching centers are providing tutoring services to cater needs of students pursuing professional courses. Some of the courses being in demand and for which these coaching centers and tuition bureaus are rendering home tuition in Noida and coaching in Noida includes:

1. MBA home tuition in Noida

Students are looking for best MBA home tutor in Noida to study subjects being taught in MBA such as financial management home tuition in Noida, operation management home tuition in Noida. There are many coaching centers such as RBL Academy who has best tutors available with them to fulfill needs of mba home tuition in Noida. These coaching centers also provide mba coaching in Noida. Operation management and financial management are major subjects for which good level of knowledge is required to be acquired by MBA students. Else they will face problem during job interviews.

2. BBA Home tuition in Noida

Getting good BBA home tutor in Noida is utmost important in the market by students so that they can prepare well for the subjects they have taken bba home tuition. There are lot of teachers available in Noida who promise that they can teach students of BBA but most of them are fraud and lacks expertise in the subject. Getting financial management home tutor in Noida is very easy but getting a tutor who possess expertise in financial management is rare. Students must be very cautious while selecting financial management home tutor in Noida. Some of the most prestigious tuition bureau and coaching centers who can actually facilitate you best financial management home tutor in Noida includes A.d. commerce home tutors, RBL Academy and Vikalpa private tutors. These are some of the most reputed coaching centers and home tutors provider in Noida for all subjects of BBA, MBA & other commerce, finance and accounts subjects.

Getting best home tutor in Noida is still challenging. But, there are teachers who have expertise and huge experience in rendering operation management home tuition in Noida and financial management home tuition in Noida. One can get services of best MBA home tutor in Noida and bba home tutor in Noida by contacting coaching centers and tuition bureaus whose name has been reflected in this article. They will surely provide best financial management home tutor and operation management home tutor in Noida.

Increasing Demand of Home Tutors & Home tuitions in Noida

Title: Increasing Demand of Home Tutors & Home tuitions in Noida

Keywords: home tuition in Noida, home tutors in Noida, class 11 home tuition in Noida, class 12 home tuition in Noida, class 11 home tutors in Noida, class 12 home tutors in Noida, BBA home tutors in Noida, Mba home tutors in Noida, BBA home tuition in Noida, MBA home tuition in Noida

It is good to see that a lot of professionals have now been entered into tutoring services provided in Noida. Earlier, very less experienced and qualified personnels were part of rendering tutoring services to students. In a very short span of time, demand for home tuition in Noida and home tutors in Noida has increased tremendously.

Parents prefer home tuition in Noida in order to save transportation time of students and utilise that time of their kids’ for other activities. Thus, demand for home tutor in Noida has increased rapidly. Various subjects and classes for which home tuition and home tutor in Noida is in demand includes:

Class 11 home tuition & class 12 home tuition in Noida

Demand for subjects of class 11 home tuition in Noida and class 12 home tuition in Noida is very high. Since Class 12 marks are being considered while getting admission in top colleges of Noida. Parents are very cautious and they try that their children score highest marks so that they do not face problem while getting admission in best colleges and universities of India. Parents also remain very serious while selection of best class 11 home tutors in Noida and class 12 home tutors in Noida as well. Home tuition in Noida such as accounts home tutor in Noida, business studies home tutor in Noida. Economics home tutor in Noida, maths home tutor in Noida are keywords which has been highest searched on Google which indicates intense demand of class 11 and class 12 home tutors in Noida.

BBA home tuition and MBA home Tuition in Noida

BBA home tutors in Noida and Mba home tutors in Noida are also in huge demand due to existence of Amity University in Noida which has more than 5000 seats for these two courses. Many students after class 12 pursue BBA and MBA. There are many subjects for which BBA home tutors in Noida and mba home tutors in Noida are in demand such as financial management home tutor, operation management home tutor, business statistics home tutor, security analysis and portfolio management home tutor, cost accounting home tutor, management accounting home tutor, financial accounting home tutor, derivatives management home tutor etc are some of the prominent keywords being searched on google related to BBA home tuition in Noida and mba home tuition in Noida. Getting best BBA home tutors in Noida and mba home tutors in Noida is still a challenge as very less professional and experience home tutors for these courses are available. RBL Academy home tutors have been providing bba home tutors in Noida and mba home tutors in Noida since its inception in the year 2008. Owner of this institute also takes bba home tuition in Noida and mba home tuition in Noida. They are expert for rendering commerce home tuition in Noida.

https://rblacademy.com/subject-wise/

Financial Management notes – Leverage Analysis Solved Problems with formulas – Degree of Operating Leverage (DOL), Degree of Financial Leverage (DFL), Degree of Combined Leverage (DCL)

Leverage

Leverage reflects the responsiveness or influence of one financial variable over some other financial variable. The relationship between sales revenue and EBIT is defined as operating leverage and the relationship between EBIT and EPS is defined as financial leverage. The direct relationship between the sales revenue and the EPS can be established by combining the operating leverage and financial leverage and is defined as combined leverage.

Operating Leverage / Degree of Operating Leverage (DOL)

It measures the effect of change in sales revenue on the level of EBTT. DOL is calculated by dividing percentage change in EBIT by percentage change in sales revenue. It refers to firm’s position or ability to magnify the effect of change in sales over the level of EBIT. The level of fixed costs, which is instrumental in bringing this magnifying effect, also determines the extent of this effect. Higher the level of fixed costs in relation to variable cost, greater would be the DOL.

DOL = Percentage Change in EBIT ÷ Percentage change in Sales revenue

It is also calculated as a ratio of contribution to EBIT.

DOL = Contribution ÷ EBIT

Financial Leverage or Degree of Financial Leverage (DFL)

It measures degree of responsiveness change in EPS due to change in EBIT and is defined as Percentage change in EPS due to Percentage change in EBIT. Higher the level of fixed financial charges, greater will be DFL. It is also calculated as ratio of EBIT to EBT.

DFL = Percentage change in EPS ÷ Percentage change in EBIT

DFL = EBIT ÷ EBT

Degree of Combined Leverage (DCL)

DCL is product of DOL & DFL.

DCL = DOL × DFL

DCL = Percentage change in EPS ÷ percentage change in Sales revenue

DCL = Contribution ÷ EBT

Leverage Solved Problems

1. Calculate degree of operating leverage (DOL), degree of Financial leverage (DFL) and the degree of combined leverage (DCL) for the following firms and interpret the results.

 Firm AFirm BFirm C
Output (Units)60,00015,0001,00,000
Selling Price / unit.85.6
Variable Cost / Unit.31.8.2
Interest on Borrowed Funds4,0008,0009,000
Fixed Cost20,00018,00020,000

Solution

 Firm AFirm BFirm C
Selling Price / unit.85.6
Less: Variable Cost / Unit(.3)(1.8)(.2)
Contribution Per Unit.53.2.4
Output (Units)60,00015,0001,00,000
Total Contribution30,00048,00040,000
Less : Fixed Cost(20,000)(18,000)(20,000)
EBIT / PBIT10,00030,00020,000
Less: Interest(4,000)(8,000)(9,000)
PBT / EBT6,00022,00011,000
DOL = Total Contribution ÷ EBIT30,000 / 10,000 = 348,000 / 30,000= 1.640,000 /20,000= 2
DFL = EBIT ÷ EBT10,000 / 6,000 = 1.6730,000 / 22,000= 1.3620,000 /11,000= 1.82
DCL = Total Contribution ÷ EBT30,000 / 6,000 = 548,000 / 22,000= 2.1940,000 / 11,000= 3.64
Total Contribution = Contribution Per Unit × Output (Units)

Interpretation: High operating leverage combined with high financial leverage represents risky situation. Low operating Leverage combined with low financial leverage will constitute an ideal situation. Therefore, firm B is less risky because it has low fixed cost and low combined leverage.

2. A firm has sales of Rs. 12,00,000, variable cost of Rs. 8,00,000 and fixed costs of Rs. 2,00,000 and debt of Rs.5,00,000 at 10% rate of interest. What are the operating, financial and combined leverages? If the firm wants to double its earnings before interest and tax (EBIT), how much of a rise in sales would be needed on a percentage basis?

Solution

Sales12,00,000
Less: Variable Cost (2/3 of Sales)(8,00,000)
Contribution4,00,000
Less : Fixed Cost(2,00,000)
EBIT / PBIT2,00,000
Less: Interest(50,000)
PBT / EBT1,50,000
DOL = Contribution ÷ EBIT4,00,000 / 2,00,000 = 2
DFL = EBIT ÷ EBT2,00,000 / 1,50,000 = 1.33
DCL = Contribution ÷ EBT4,00,000 / 1,50,000 = 2.67

Since Operating Leverage is 2 times. Hence, 50 % increase in Sales would cause a 100 % increase in EBIT.

Verification:

Sales18,00,000
Less: Variable Cost (2/3 of Sales)(12,00,000)
Contribution6,00,000
Less : Fixed Cost(2,00,000)
EBIT / PBIT4,00,000

3. Following information are related to four firms of the same industry:

Firm% Change in Sales% Change in EBIT% Change in EPS
A303028
B253525
C353520
D204025

Calculate (i) Degree of OL & (i) Degree of CL for all firms.

Solution

FirmDOLDFLDCL
A30 / 30 = 128 / 30 = .9328 / 30 = .93
B35 / 25 = 1.425 / 35 = .7125 / 25 = 1
C35 / 35 = 120 / 35 = .5720 /35 = .57
D40 / 20 = 225 / 40 =.62525 /20 = 1.25

DOL = Percentage Change in EBIT ÷ Percentage change in Sales revenue

DFL = Percentage change in EPS ÷ Percentage change in EBIT

DCL = Percentage change in EPS ÷ percentage change in Sales revenue

4. X Corporation has estimated that for a new product its breakeven point is 2,000 units if the item is sold for Rs. 20 per unit; the cost accounting department has currently identified variable cost of Rs. 15 per unit. Calculate the degree of operating leverage for sales volume of 2,500 units and 3,000 units. What do you infer from degree of Operating Leverage at sales volumes of 2,500 units and 3,000 units and their difference if any?

Solution

At Break Even Point (BEP), EBIT = Fixed Cost & EBIT = 0

Particulars2,000 Units2,500 Units3,000 Units
Sales40,00050,00060,000
Less: Variable Cost(30,000)(37,500)(45,000)
Contribution10,00012,50015,000
Less : Fixed Cost(10,000)(10,000)(10,000)
EBIT / PBIT02,5005,000
DOL = Contribution ÷ EBIT——53

At the sales volume of 3000 units, EBIT is Rs. 5,000 which is double the EBIT of Rs. 2,500 (at sales volume of 2,500 units) because of the fact that the operating leverage is 5 times at the sales volume of 2,500 units. Hence, an increase of 20% in sales volume, EBIT has increased by 100% i.e., 5 times of 20%. At the level of 3000 units the operating leverage is 3 times. If there is change in sales from the level of 3,000 units, the % increase in EBIT would be 3 times as of  % increase in Sales volume.

5. The balance sheet of RBL Company is as follows:

    
Equity Share Capital1,20,000Fixed Asset3,00,000
Retained Earnings40,000Current Assets1,00,000
10% Long-term Debt1,60,000  
Current Liabilities80,000  
 4,00,000 4,00,000

The company’s Total Assets turnover ratio is 4, its Fixed operating costs are Rs. 5,00,000 and its Variable operating cost ratio is 40%. The income tax rate is 30%. Calculate for the Company the different types of leverages given that the face value of the share is 10.

Solution

Total Asset Turnover Ratio = Sales ÷ Total Asset

4 = Sales ÷ Rs. 4,00,000

Sales = Rs. 4,00,000 × 4 = Rs. 16,00,000

Variable Cost = 40 % of Sales

= 0.4 × Rs. 16,00,000 = Rs. 6,40,000

ParticularsAmount (Rs.)
Sales16,00,000
Less: Variable Cost(6,40,000)
Contribution9,60,000
Less : Fixed Cost(5,00,000)
EBIT / PBIT4,60,000
Less: Interest on LT Debt(16,000)
EBT4,44,000
DOL = Contribution ÷ EBIT9,60,000 ÷ 4,60,000 = 2.087
DFL = EBIT ÷ EBT4,60,000 ÷ 4,44,000 = 1.037
DCL = Contribution ÷ EBT9,60,000 ÷ 4,44,000 = 2.16

6. Following information is available with respect of two firms A & B:

 AB
Sales70011,000
Less: Variable Cost(400)(400)
Contribution300700
Less: Fixed Cost(150)(400)
EBIT150300
Less: Interest(50)(100)
Profit before Tax100200

You are required to calculate different leverages for both the firms and also comment on their relative risk position.

Solution

 Firm AFirm B
DOL = Contribution ÷ EBIT300 / 150 = 2700/300=2.33
DFL = EBIT ÷ EBT150 / 100 =1.5300/200=1.5
DCL = Contribution ÷ EBT300 / 100 = 3700/200=3.5

Degree of operating leverage is higher in case of B Ltd. and hence it has higher degree of operating or business risk. However, both the companies have same degree of financial leverage. Hence, both companies have same financial risk. Degree of combined leverage of B Ltd. is 3.5 and is higher than A Ltd. Thus. A Ltd seems to have lower risk as compared to B Ltd.

7. The Karnal Recreation Ltd. manufactures a full line of lawn furniture. The average selling price of a finished unit is Rs. 3,500 and variable cost is Rs. 2,500 per unit. Fixed cost for the company is Rs. 50,00,000 per year.

(i) What is break-even point in units for the company?

(ii) Find the degree of operating leverage at the following production and sales levels: 4,000 units; 5,000 units; 6,000 units; 8,000 units.

(iii) Does the degree of operating leverage increase or decrease as the production and sales levels rise above the break-even point? What conclusion would you draw from such increase or decrease?

(iv) By what percentage EBIT will increase if the company’s sales increase by 10% from the production and sales level of 8,000 units?

Solution

Production in Units4,0005,0006,0008,0008,800
Selling Price3,5003,5003,5003,5003,500
Sales1,40,00,0001,75,00,0002,10,00,0002,80,00,0003,08,00,000
Less: Variable Cost @ 2500(1,00,00,000)(1,25,00,000)(1,50,00,000)(2,00,00,000)(2,20,00,000)
Contribution (C)40,00,00050,00,00060,00,00080,00,00088,00,000
Less: Fixed Cost (FC)(50,00,000)(50,00,000)(50,00,000)(50,00,000)(50,00,000)
EBIT(10,00,000)010,00,00030,00,00038,00,000
(ii) DOL = C/EBIT________62.672.32

(i) Break Even Point = Fixed Cost ÷ Contribution per Unit

= 50,00,000 ÷ 1,000 = 5,000 Units

Contribution per Unit = Sales per Unit – Variable Cost per Unit

Rs. 3,500 – Rs. 2,500 = Rs. 1,000

iii. When the sales level rises above the break-even level, DOL decreases, which indicates that when sales increases beyond

Break-even level, the increase in operating profits (EBIT)

becomes lesser and lesser.

IV. In case sales increases by 10% from 8000 level, the EBIT will increase by 10 x 2.667=26.67% which can be verified from the table. The EBIT increases to Rs. 38,00,000 from Rs 30,00,000 i.e., an increase of 26.67%.

8. The capital structure of RBL Ltd. consists of ordinary share capital of Rs. 15,00,000 (shares of Rs. 100 each) and Rs. 15,00,000 of 10% debentures. The selling price is Rs. 12 per unit; variable costs amount to Rs. 7 per unit and fixed expenses amount to Rs. 2,50,000. The income tax rate is assumed to be 30%. The sales level is expected to increase from 1,00,000 units to 1,20,000 units. Calculate:

(i) The percentage increase in earnings per share;

(ii) The degree of financial leverage at 1,00,000 units and 1,20,000 units.

(iii) Comment on the behaviour of Operating and Financial leverages in relation to increase in production from 1,00,000 units to 1,20,000 units.

Solution

Particulars1,00,000 Units1,20,000 Units
Sales @ Rs.12 per Unit12,00,00014,40,000
Less: V.C @ Rs.7 per Unit(7,00,000)(8,40,000)
Contribution5,00,0006,00,000
Less: Fixed Cost(2,50,000)(2,50,000)
EBIT2,50,0003,50,000
Less: Interest(1,50,000)(1,50,000)
EBT1,00,0002,00,000
Less: Tax @ 30 %(30,000)(60,000)
PAT70,0001,40,000
No. of Equity Shares15,00015,000
EPS = PAT÷ No. of Equity SharesRs. 4.67Rs. 9.33
Percentage increase in EPS = (9.33 – 4.67) /4.67 = 100%
DOL = C ÷ EBIT21.714
DFL = EBIT ÷ EBT2.51.75

iii. As a result of increase in sales from 1,00,000 units to 1,20,000 units (20% increase), both the financial leverage and operating leverage have decreased which signifies that business risk and financial risk of the business has been reduced.

9. The data relating to two companies are as given below:

 Company ACompany B
Capital 2,00,0001,00,000
10 % Debentures5,00,0001,50,000
Output (units) per annum60,00015,000
Selling price/unitRs. 20Rs. 26
Fixed Costs per annum1,50,00080,000
Variable Cost per unitRs. 10Rs. 15

You are required to calculate the Operating leverage, financial leverage and combined leverage of two Companies.

Solution

Output (units) per annum60,00015,000
Selling price/unitRs. 20Rs. 26
Sales (Output × Selling price/unit)12,00,0003,90,000
Less: V.C. (Output × Variable cost /unit)(6,00,000)(2,25,000)
Contribution (C)6,00,0001,65,000
Less: Fixed Cost(1,50,000)(80,000)
EBIT4,50,00085,000
Less: Interest(50,000)(15,000)
EBT4,00,00070,000
DOL = C ÷ EBIT1.3331.941
DFL = EBIT ÷ EBT1.1251.214
DCL = DOL × DFL1.52.36

10. The following information is available for ABC & Co.

EBIT10,00,000
Earning before Tax6,00,000
Fixed Cost5,00,000

Calculate % change in EPS if the sales are expected to increase by 5 %.

Solution

Contribution = EBIT + Fixed Cost

= Rs. 10,00,000 + Rs. 5,00,000 = Rs. 15,00,000

Combined Leverage = Contribution ÷ EBT

= 15,00,000 ÷ 6,00,000 = 2.5

Combined Leverage = %age Change in EPS ÷ %age in Sales

2.5 = %age Change in EPS ÷ 5

%age change in EPS = 5 × 2.5 = 12.5 %

There will be a 12.5 % increase in EPS if sales increase by 5 %.

11. RBL Ltd. has three financial plans before it, Plan I, Plan II and Plan III. Calculate operating and financial leverage for the firm on the basis of the following information and also find out the highest and lowest value of combined leverage:

Production1,000 Units
Selling Price per unitRs. 16
Variable cost per unitRs. 10
Fixed cost: 
Situation ARs. 1,200
Situation BRs. 2,500
Situation CRs. 3,600
Capital StructurePlan IPlan IIPlan III
Equity Capital5,0007,5002,500
10 % Debt7,5006,0008,000

Solution

 Situation ASituation B Situation C
Sales16,00016,00016,000
Less: V.C.(10,000)(10,000)(10,000)
Contribution6,0006,0006,000
Less: F.C.(1,200)(2,500)(3,600)
EBIT4,8003,5002,400
DOL = C ÷ EBIT1.251.7142.5
 Plan IPlan IIPlan III
Situation A   
EBIT4,8004,8004,800
Less: Interest(750)(600)(800)
EBT4,0504,2004,000
DFL = EBIT ÷ EBT1.191.141.2
Situation B   
EBIT3,5003,5003,500
Less: Interest(750)(600)(800)
EBT2,7502,9002,700
DFL = EBIT ÷ EBT1.271.211.30
Situation C   
EBIT2,4002,4002,400
Less: Interest(750)(600)(800)
EBT1,6501,8001,600
DFL = EBIT ÷ EBT1.451.331.85
Calculation of Combined Leverage = DOL × DFL = C ÷ EBT
 Situation ASituation B Situation C
Plan I1.25×1.19 =1.491.714×1.27= 2.182.5×1.45=3.63
Plan II1.25×1.14=1.431.714×1.21=2.072.5×1.33=3.33
Plan III1.25×1.2 =1.51.714×1.30=2.232.5×1.85=4.63

The calculation of combined leverage shows the extent of the total risk and is helpful to understand the variability of EPS as a consequence of change in sales levels. In this case, the highest combined leverage is there when Financial Plan III is implemented in situation C; and lowest value of combined leverage is attained when Financial Plan II is implemented in situation A.

DOL of all Plans under different situations
 Situation ASituation B Situation C
DOL = C ÷ EBIT1.251.7142.5
DFL under different Plans & Situations
 Plan IPlan IIPlan III
Situation A1.191.141.2
Situation B1.271.211.30
Situation C1.451.331.85

12. The share capital of a company is Rs. 10, 00,000 having face value of Rs. 10 each. The company has debt capital of Rs. 5, 00,000 at 10% rate of interest. The sales of the firm are 3,00,000 units per annum at a selling price of Rs. 5 per unit and variable cost is Rs. 3 per unit. The fixed cost amounts to Rs. 2,50,000. The company pays tax at 40 %. If the sales increase by 10%, calculate:

(i) Percentage Increase in EPS.

(ii) Degree of Operating Leverage at the two levels; and

(iii) Degree of Financial Leverage at the two levels.

Solution

 3,00,000 Units3,30,000 Units
Sales15,00,00016,50,000
Less: V.C.(9,00,000)(9,90,000)
Contribution6,00,0006,60,000
Less : F.C.(2,50,000)(2,50,000)
EBIT3,50,0004,10,000
Less: Interest(50,000)(50,000)
EBT3,00,0003,60,000
Less: Tax @ 40 % of EBT(1,20,000)(1,44,000)
PAT1,80,0002,16,000
No. of Equity Shares1,00,0001,00,000
EPS = PAT ÷ No. of Equity Shares1.82.16
i. Percentage increase in EPS = (2.16 -1.8) ÷ 1.8 = 0.2 = 20%
DOL = C ÷ EBIT1.7141.61
DFL = EBIT ÷ EBT1.171.14

Alternate Method

DCL = Contribution ÷ EBT

= 6,00,000 ÷ 3,00,000 = 2 or

DCL = DOL × DFL = 1.714 × 1.17 = 2

DCL = Percentage Change in EPS ÷ Percentage Change in sales

2 = Percentage Change in EPS ÷ 10

Percentage Change in EPS = 10 × 2 = 20 %

13. i. Find out Operating Leverage from the following data:

Sales60,000
Variable Costs60%
Fixed Costs15,000

(ii) Find out the Financial Leverage from the following data:

  
Net Worth30,00,000
Debt/Equity3:1
Interest rate10 %
Operating Profit20,00,000

Solution: i.

ParticularsAmount (Rs.)
Sales60,000
Less: V.C. = 60 % of sales(36,000)
Contribution24,000
Less: Fixed Cost(15,000)
EBIT9,000
DOL = Contribution ÷ EBIT24,000 ÷ 9,000 = 2.67

 ii. Net Worth = Shareholders’ Fund = Rs. 30,00,000

Debt / Equity Ratio = Debt ÷ Shareholders’ Equity

=> 3 = Debt ÷ Rs. 30,00,000

Debt = Rs. 30,00,000 × 3 = Rs. 90,00,000

EBT = EBIT or Operating Profit – Interest

= Rs. 20,00,000 – 10 % of Rs. 90,00,000 = Rs. 11,00,000.

DFL = EBIT ÷ EBT = 20,00,000 ÷ 11,00,000 = 1.82

14. The following are details of RBL Ltd. for the year ending 31.03.2021.

Operating Leverage3
Financial Leverage2
Interest charge per annum25,00,000
Corporate Tax Rate50 %
Variable Cost as percentage of sales60 %

Prepare Income Statement of the Company.

Solution

DFL = EBIT ÷ EBT => 2 = EBIT ÷ (EBIT – I)

=> 2 × (EBIT – I) = EBIT => 2 EBIT – 2I = EBIT

Or, 2 EBIT – EBIT = 2I

So, EBIT = 2 × Rs. 25,00,000 = Rs.50,00,000

DOL = Contribution ÷ EBIT

3 = Contribution ÷ Rs. 50,00,000

Contribution = Rs. 50,00,000 × 3 = Rs. 1,50,00,000.

Since Variable Cost is 60 % of Sales, hence Contribution is 40 % of Sales.

Since, Sales = V.C. + Contribution

40 % or .4 of Sales = Rs. 1,50,00,000

Sales = Rs. 1,50,00,000 ÷ .4 = Rs. 3,75,00,000.

Variable cost = 60 % of Sales = 0.6 × Rs. 3,75,00,000

= Rs. 2,25,00,000

Income Statement of RBL Ltd
ParticularsAmount (Rs.)
Sales3,75,00,000
Less: Variable Cost (V.C.)(2,25,00,000)
Contribution1,50,00,000
Less: Fixed Cost(1,00,00,000)
EBIT50,00,000
Less: Interest(25,00,000)
EBT25,00,000
Less: Tax @ 40 % of EBT(10,00,000)
PAT15,00,000

15. Following information is available in respect of RBL Ltd:

Profit Volume (PV) Ratio40%
Operating Leverage1.5
Financial Leverage1.7
Interest LiabilityRs. 8,000
Tax Rate40 %
Number of Equity Shares10,000

Prepare Income Statement and find out EPS.

Solution

DFL = EBIT ÷ EBT

=> 1.7 = EBIT ÷ (EBIT – I)

=> 1.7 EBIT – 1.7 I = EBIT

=> .7 EBIT = 1.7 × 8,000

=> EBIT = 13,600 ÷ .7 = Rs. 19,430

=> EBT = EBIT – I = Rs. 19,430 – Rs. 8,000 = Rs. 11,430

DOL = Contribution ÷ EBIT

=> 1.5 = Contribution ÷ 19,430

=> Contribution = 1.5 × 19,430 = Rs. 29,145

PV Ratio = Contribution ÷ Sales

=> 0.4 = 29,145 ÷ Sales

=> Sales = 29,145 ÷ 0.4 = Rs. 72,863

I = Interest Liability

Income Statement of RBL Ltd
ParticularsAmount (Rs.)
Sales72,863
Less: Variable Cost (V.C.)(43,718)
Contribution29,145
Less: Fixed Cost(9,715)
EBIT19,430
Less: Interest(8,000)
EBT11,430
Less: Tax @ 40 % of EBT(4,572)
PAT6,858

16. The following data is available for XYZ Ltd:

Sales2,50,000
Less: Variable Cost(1,00,000)
Contribution1,50,000
Fixed Cost(1,00,000)
EBIT50,000
Less: Interest(15,000)
Profit Before Tax35,000

Find out:

(i) Using the concept of Financial Leverage, by what percentage will the taxable income increase if EBIT increases by 10 %.

(ii) Using the concept of Operating Leverage, by what percentage will EBIT increase if there is 15 % increase in sales?

(iii) Using the concept of leverage, by what percentage will the taxable income increase if sales increase by 10 %. Also verify the results in view of the above figures.

Solution

(i) Using the concept of Financial Leverage, by what percentage will the taxable income increase if EBIT increases by 10 %.

DFL = EBIT ÷ EBT => 50,000 ÷ 35,000 = 1.43

If EBIT increases by 10 %

New EBIT = 50,000 + 10 % of 50,000 = Rs.55,000

New EBT = New EBIT – Interest = 55,000 – 15,000 = Rs. 40,000

Percentage Increase in taxable income if EBIT increase by 10 %

= [ (New EBT – Existing EBT) ÷ Existing EBT ] × 100

= [(40,000 – 35,000) ÷ 35,000] × 100

= [5,000 ÷ 35,000] × 100 = 14.29%

(ii) Using the concept of Operating Leverage, by what percentage will EBIT increase if there is 15 % increase in sales?

DOL = Contribution ÷ EBIT => 1,50,000 ÷ 50,000 = 3

DOL = Percentage Change in EBIT ÷ Percentage change in Sales

=> 3 = Percentage Change in EBIT ÷ 15

=> Percentage Change in EBIT = 15 × 3 = 45%

(iii) Using the concept of leverage, by what percentage will the taxable income increase if sales increase by 10 %. Also verify the results in view of the above figures.

Solution

DCL = Contribution ÷ EBT => 1,50,000 ÷ 35,000 = 4.3

If sales increase by 10 %, taxable income will increase by

4.3 × 10% = 43 %

Note: Percentage change in Contribution remains equal to Percentage Change in Sales as Variable Cost changes in same proportion in which percentage of Sales changes.

Verification of results in view of the above figures:

Sales2,75,000
Less: Variable Cost(1,10,000)
Contribution1,65,000
Fixed Cost(1,00,000)
EBIT65,000
Less: Interest(15,000)
Profit Before Tax50,000

Percentage Change in Profitable Tax (EBT)

= [(50,000 – 35,000) ÷ 35,000] × 100 = 43 %

Accountancy Mcqs – Financial Accounting and accounts mcqs multiple choice Questions for Class 11, 12, BBA, B.Com, MBA, CA, UGC NET, ACCA & UPSC

Accountancy / Financial Accounting MCQs Multiple choice Questions – Class 11, 12, BBA, MBA, B.Com, CA CPT, ACCA, UGC NET Accountancy / Financial Accounting Multiple choice Questions 10 sets

Accountancy / Financial Accounting MCQ Set 1

 1) The Basic accounting equation is

A)  Asset=Expense +Income

B)  Assets=Cash+Capital

C)  Assets=Capital+Liabilities

D)  Assets=Expenses+Capital

2) Find out the value of assets if: Liabilities=$5000 and Capital=$1000

A)  $4000

B)  $6000

C)  $7000

D)  $3000

3) Calculate the amount of cash if: Total assets=$10,000 Total liabilities=$10,000 Total Capital=$5000

A)  $6000

B)  $10,000

C)  $5000

D)  $1000

4) Capital increases if ______ increases

A)  Expenses

B)  Drawings

C)  Interest on capital

D)  Revenue

5) Capital of a business decreases if there is an increase in

A)  Drawings

B)  Income

C)  Gains

D)  Fresh capital

6) If the total liabilities of a business decrease by $5000 what will be the effect on total asset? (assuming the amount of capital remain same)

A)  Remain constant

B)  Decrease by $5000

C)  Increase by $5000

D)  Increase by $10,000

7) If the business’s owner withdraws cash for his/her personal use what will be the effect on capital?

A)  Increase in capital

B)  Remain the same

C)  Decrease in capital

D)  No effect on capital

8) Net income equal to Revenues minus

A)  Gains

B)  Depreciation

C)  Expenses

D)  Capital expenditures

9) Collection of account receivable will

A)  Increase assets and decrease assets

B)  Increase assets and decrease liabilities

C)  Increase assets and increase capital

D)  Increase assets and increase cash

10) Payment of expenses will ______ the assets

A)  Increase

B)  Reduce

C)  apportion

D)  Overstate

11) Which of the following is the practical implementation of the accounting equation?

A)  Cash flow statement

B)  Income statement

C)  Statement of changes in equity

D)  Statement of financial position

12) Which of the following accounting equation is correct?

A)  Cash+Other assets=Capital-Liabilities

B)  Capital+ Liabilities=Assets+Income

C)  Assets-Liabilities=Capital

D)  Assets+Capital=Liabilities

13) Fresh capital introduction will increase

A)  Assets and liabilities

B)  Assets and equity

C)  Liabilities and equity and bank balance

D)  Capital and liabilities

14) Cash received for services rendered will

A)  Increase cash and liability

B)  Increase equity and liability

C)  Increase fixed assets and cash

D)  Increase cash and equity

15) Which of following best describes the increase in equity expands_______

A)  Business operations

B)  cash outflows

C)  Inflows of cash

D)  Appropriation expenses

16) If Cash=$1000 inventories=$4000 Debtors=$5000 fixed assets=? Capital+Liabilities=$15000 What is the Amount of total assets?

A)  $5000

B)  $10,000

C)  $15,000

D)  $20,000

17) Depreciation decreases

A)  Liabilities

B)  Cash

C)  Bank

D)  Capital

18) An increase in provision for bad debt will

A)  Decrease net income

B)  Decrease liabilities

C)  Increase net income

D)  Increase liabilities

19) Current assets – Current liabilities=?

A)  Capital

B)  Absorbed capital

C)  Net assets

D)  Net working capital

20) Assets-Liabilities=?

A)  Cash

B)  Equity

C)  Net income

D)  Net expenses

1.               c

2.               b

3.               c

4.               d

5.               a

6.               b

7.               c

8.               c

9.               a

10.         b

11.         d

12.         c

13.         b

14.         d

15.         a

16.         a

17.         d

18.         a

19.         d

20.         b

Accountancy / Financial Accounting MCQ Set 2

1) The process of recording is done

A)  Two times a year

B)  once a year

C)  Frequently during the accounting period

D)  At the end of a accounting period

2) General journal is a book of _______ entries

A)  First

B)  Original

C)  Secondary

D)  Generic

3) The process of recording transactions in different journals is called

A)  Posting

B)  Entry making

C)  Adjusting

D)  Journalizing

4) Every business transaction affects at least ________ accounts

A)  One

B)  Two

C)  Three

D)  Infinite

5) Discount allowed is a kind of deduction from

A)  Account payable

B)  Account receivable

C)  Cash account

D)  Discount account

6) The other name of journal is

A)  Ledger

B)  T account

C)  Day book

D)  Cash book

7) A journal entry in which two or more account is debited or credited is referred as

A)  Journal entry

B)  Multi entry

C)  Additional entry

D)  Compound entry

8) The term 2/10-n/30 implies that ______ % discount will be given if the payment is made within _____ days or full amount is receivable within 30 days

A)  2,10

B)  10,2

C)  10,30

D)  3,15

9) Goods returned by customer should be debited to which of the following accounts?

A)  Sales income account

B)  Sales account

C)  Return inward account

D)  Expenses account

10) Discount allowed is

A)  Expense of business

B)  Income of business

C)  Loss of business

D)  Abnormal loss of business

11) _________ is the evidence that a transaction took place

A)  Source documents

B)  Ledger

C)  Bonds

D)  Journals

12) Which of the following will be debited if a business purchases goods on credit?

A)  Cash

B)  Debtor

C)  Creditor

D)  Purchases

13) Which of the following accounts will be debited if the business’s owner withdraws cash from business for his personal use?

A)  Drawings

B)  Cash

C)  Business

D)  Stock

14) Journals are also referred as

A)  Book of entries

B)  Book of original entries

C)  T account

D)  Books of economic event

15) The standard format of journal does not include which of the following?

A)  Assets column

B)  Date column

C)  Description column

D)  Amount column

16) In which of the following orders data is entered in journal?

A)  Alphabetical order

B)  Numeric order

C)  Bullets order

D)  Chronological order

17) Which of the following accounts will be credited if a company purchases building for cash?

A)  Capital account

B)  Fixed assets account

C)  Building account

D)  Cash account

18) Discount for quick repayment of debt is normally referred as

A)  Trade discount

B)  Prompt payment discount

C)  Cash discount

D)  Bulk discount

19) The first step in accounting process is

A)  Recording the transaction

B)  Identifying the transaction

C)  Posting the transaction

D)  Preparing the source documents

20) A chart of accounts generally start with which of the following types of accounts?

A)  Assets accounts

B)  liability accounts

C)  Cash accounts

D)  Revenue accounts

1.               C

2.               B

3.               D

4.               B

5.               B

6.               C

7.               D

8.               A

9.               C

10.         A

11.         A

12.         D

13.         A

14.         B

15.         A

16.         D

17.         D

18.         C

19.         B

20.         A

Accountancy / Financial Accounting MCQ Set 3

1) Which of the following specialised journals records “goods returned by customers”?

A)  Purchase journal

B)  Sales journal

C)  Purchases return journal

D)  Sales return journal

2) Sales on credit is recorded in which of the following journal?

A)  Purchase journal

B)  Sales journal

C)  Purchases return journal

D)  Sales return journal

3) Transactions that a business doesn’t record in any specialised journal are recorded in which of the following journals or day books?

A)  Cash payments journal

B)  Cash receipts journal

C)  Purchases return journal

D)  General journal

4) Another name of journal is

A)  Specialized journal

B)  Day book

C)  Cash book

D)  Record book

5) Which of the following specialised journals will record “goods returned by the business”?

A)  Purchase journal

B)  Sales journal

C)  Purchases return journal

D)  Sales return journal

6 Sales and purchase journal don’t record

A)  Credit sales

B)  Credit purchases

C)  Credit sales and purchases

D)  Cash sales and purchases

7) Cash received from debtor is recorded in which of the following specialized journals?

A)  Purchase journal

B)  Sales journal

C)  Cash receipts

D)  Cash payments journal

8) Which of the following is a type of cash receipt journal + cash payment journal?

A)  Bank statement

B)  Statement of cash flow

C)  Cash book

D)  Cash documents

9) Cash purchases is recorded in which of the following specialized journals?

A)  Purchase journal

B)  Sales journal

C)  Purchases return journal

D)  Cash payments journal

10) A brief explanation recorded below every entry in general journal is commonly known as

A)  Narration

B)  Explanation

C)  Summary

D)  Other information

11) Credit purchase of plant and machinery is recorded in which of the following specialized journals?

A)  General journal

B)  Cash journal

C)  Purchase journal

D)  Purchase return journal

12) Debit note is the basis for recoding a transaction in which of the following journals?

A)  General journal

B)  Cash journal

C)  Purchase journal

D)  Purchase return journal

13) “Sale of old furniture” will be recorded in which of the following specialised journals?

A)  Purchase journal

B)  Sales journal

C)  General journal

D)  Cash receipt journal

14) Credit note is the basis for recording a transaction in which of the following specialized journals?

A)  Purchase journal

B)  Sales return journal

C)  General journal

D)  Cash receipt journal

15) Specialized journals are more adequate for which type of businesses?

A)  Small businesses

B)  Big businesses

C)  Sole proprietorship

D)  Partnership

16) Which of the following is known as an evidence that a transaction took place?

A)  Cash receipts journal

B)  General journal

C)  Source document

D)  Cash book

17) “Business paid rent amounting to $100” which of the following specialized journals records this transaction?

A)  Cash receipts journal

B)  Cash payments journal

C)  Sales journal

D)  Purchase journal

18) Credit memo or credit note No. is entered in which of the following journal?

A)  General journal

B)  Cash journal

C)  Purchase journal

D)  Sales return day book

1.   D

2.   B

3.   D

4.   B

5.   C

6.   D

7.   C

8.   C

9.   D

10.         A

11.         A

12.         A

13.         C

14.         B

15.         B

16.         C

17.         B

18.         A

Accountancy / Financial Accounting MCQ Set 4

1) Trial balance is prepared to check accuracy of

A)  Ledger accounts balances

B)  Balance sheet balances

C)  Income statement balances

D)  Cash flow statement balances

2) If a transaction is completely omitted from the books of accounts, will it affect the agreement of a trial balance?

A)  Yes

B)  No

C)  Transactions can’t be omitted

3) ________ is the common base for preparing a trial balance

A)  Ledger accounts

B)  General Journal

C)  Specialized journals

D)  Balance sheet

4) Which of the following is true about a trial balance?

A)  It lists down the balances of accounts

B)  It lists down the balances of a balance sheet

C)  It is a kind of financial statement

D)  It is not a part of accounting cycle

5) Debit balance = Credit balance in a trial balance indicates that

A)  No error in recording transactions

B)  No error in posting entries to ledger accounts

C)  Account balances are correct

D)  Mathematically Capital+Liabilities=Assets

6) Trial balance is commonly prepared

A)  Frequently during the year

B)  At the end of an accounting period

C)  At the end of a month

D)  At the end of a year

7) Which of the following will affect the agreement of a trial balance?

A)  Complete omission of a transaction

B)  Partial omission of a transaction

C)  Error of principle

D)  Compensating errors

8) If debit balances = credit balances, trial balance only shows or check the ____________ and it does not indicate that no errors were made during recording and posting

A)  Arithmetic accuracy

B)  Errors of commission

C)  Omissions of economic events

D)  Understatements of balances

9) Which of the following account with normal balance is shown at the debit side of a trial balance?

A)  Rent income account

B)  Creditors account

C)  Unearned income account

D)  Cash account

10) Which of the following account with normal balance is shown at the credit side of a trial balance?

A)  Cash account

B)  Bank account

C)  Equipment account

D)  Accrued expenses account

11) The closing balance of petty cash book is considered as

A)  Liability

B)  Asset

C)  Expenses

D)  Income

12) Payment of rent expenses is recorded on which side of cash book?

A)  Receipts

B)  Payments

C)  Income

D)  Expense

13) An entry which is made on both sides of a cash book is called

A)  Cash entry

B)  Contra entry

C)  Payment entry

D)  Compound entry

14) A cash book with cash, bank and discount column is commonly referred as

A)  Cash book

B)  Two columns cash book

C)  Three columns cash book

D)  Petty cash book

15) Cash book records

A)  Cash payments

B)  Cash receipts

C)  Cash payments and cash receipts

D)  Neither cash payments nor cash receipts

16) Cash discount is allowed on _______ repayment of debt

A)  Lump sum

B)  Prompt

C)  Actual

D)  None of them

17) Cash book is prepared by

A)  Bank

B)  Accountant of business

C)  Manager of a company

D)  Bank’s cashier

18) The most common imprest system is the ________ system

A)  petty cash

B)  Cash book

C)  Cash receipt

D)  Discount

19) Discount received is recorded on which of the following side of a cash book?

A)  Receipts

B)  Payments

C)  Incomes

D)  Expenditures

20) Drawings by owner of business are generally recorded on which of the following side of a cash book?

A)  Receipts

B)  Payments

C)  Incomes

D)  Expenditures

21) Introduction capital by owner of business is recorded on which side of a cash book?

A)  Receipts

B)  Payments

C)  Incomes

D)  Expenditures

22) Cash book with cash and discount column is mostly referred as

A)  Simple cash book

B)  Two column cash book

C)  Three column cash book

D)  Petty cash book

23) A cash book that is used to record the small payments of cash is generally referred as

A)  Simple cash book

B)  Two column cash book

C)  Three column cash book

D)  Petty cash book

24) A simple or one column cash book usually has which of the following main columns?

A)  Bank

B)  Payments

C)  Discount

D)  Cash

25) Purchase of office equipment for cash will be recorded on which of the following sides of a cash book?

A)  Receipts

B)  Payments

C)  Incomes

D)  Expenditures

26) Postdated checks are considered as

A)  Cash

B)  Bank balance

C)  Accounts receivable

D)  Cash reserve

27) Postage stamps on hand are considered as

A)  Bank

B)  Prepaid expenses

C)  Accounts receivable

D)  Creditor

28) Petty cash fund is supposed to be replenished

A)  Every day

B)  Every half year

C)  Every year

D)  At the end of every accounting period

29) Which of the following is generally not the party to a check?

A)  Payee

B)  Payer

C)  Bank

D)  Seller

30) A credit balance in cash book indicates

A)  Bank balance

B)  Cash at bank

C)  Bank overdraft

D)  Bank underdraft

1.   A

2.   B

3.   A

4.   A

5.   D

6.   B

7.   B

8.   A

9.   D

10.         D

11.         B

12.         B

13.         B

14.         C

15.         C

16.         B

17.         B

18.         A

19.         B

20.         B

21.         A

22.         B

23.         D

24.         D

25.         B

26.         C

27.         B

28.         D

29.         D

30.         C

 Accountancy / Financial Accounting MCQ Set 5

1) Transferring entries from journal to ledger account is commonly known as

A)  Recording

B)  Transferring

C)  Posting

D)  Entry making

2) An account records the ___________ in the balance of an item

A)  Increase

B)  Decrease

C)  Increase or decrease

D)  Appreciation

3) If credit side of a bank account is greater than the debit side, it indicates which of the following?

A)  Bank overdraft

B)  Cash at bank

C)  Bank balance

D)  Current Asset

4) If debit side of a bank account is greater than credit side it indicates which of the following?

A)  Cash at bank

B)  Bank understatement

C)  Bank overdraft

D)  Balance overstatement

5) _________ will be credited if goods are given as charity

A)  Cash

B)  Charity

C)  Purchases

D)  Sales

6) Which of the following is known as the base for preparing trial balance?

A)  Journal

B)  Cash account

C)  Ledger account

D)  Balance sheet

7) If debit balance is greater than creadit balance then the account blance will be:

A)  Credit balance

B)  Debit and credit balance

C)  Cash balance

D)  Debit balance

8) The normal balance of capital account is

A)  Credit balance

B)  Debit balance

C)  Cash balance

D)  Neither debit nor credit balance

9) The normal balance of asset account is

A)  Credit balance

B)  Debit balance

C)  Cash balance

D)  Neither debit nor credit balance

10) The normal balance of liability account is

A)  Debit balance

B)  Credit balance C)  Cash balance

D)  Neither debit nor credit balance

11) Which of the following statements is incorrect regarding capital account?

A)  Debit increases the capital account balance

B)  Credit increases the capital account balance

C)  Fresh capital increases the capital account balance

D)  Net income increases the capital account balance

12) Which of the following is the normal balance of a rent expense account?

A)  Credit balance

B)  Cash balance

C)  Overdraft

D)  Debit balance

13) Revenue and expense accounts are referred as

A)  Nominal accounts

B)  Real account

C)  Cash accounts

D)  Banks account

14) The real accounts are accounts of Assets, liabilities and ________

A)  Expenses

B)  Revenues

C)  Capital

D)  Drawing

15) Building account is classified as _________ account

A)  Nominal

B)  Real

C)  Cash

D)  Capital

16) Office equipments account is classifed as _________ account

A)  Nominal

B)  Real

C)  Cash

D)  Capital

17) ___________ helps business to classify transactions according to their nature

A)  General journal

B)  Real accounts

C)  Ledger accounts

D)  Cash accounts

18) Which of the following is a real account?

A)  Office equipment

B)  Rent expenses

C)  Rent income

D)  Insurance expense

19) Which of the following accounts are closed at the end of an accounting period?

A)  Nominal accounts

B)  Balance sheet accounts

C)  Real accounts

D)  None of them

20) Which of the following is the closing balance of a ledger account?

A)  Blance c/d

B)  Balance b/d

C)  Balance e/d

D)  Balance f/c

1.   C

2.   C

3.   A

4.   A

5.   C

6.   C

7.   D

8.   A

9.   B

10.         B

11.         A

12.         D

13.         A

14.         C

15.         B

16.         B

17.         C

18.         A

19.         A

20.         A

 Accountancy / Financial Accounting MCQ Set 6

1) Favourable balance of cash book implies that

A)  Credit balance of cash book

B)  Debit balance of cash book

C)  Bank overdraft

D)  Adjusted balance of cash book

2) A cash deposit made by business appears on the bank statement as _______ balance

A)  Debit

B)  Credit

C)  Expenses

D)  Liability

3) Bank reconciliation statement is the comparison of a bank statement (sent by bank) with the _________ (prepared by business)

A)  Cash receipt journal

B)  Cash payment journal

C)  Cash book

D)  Financial statements

4) A check returned by bank marked “NSF” means that

A)  Bank can’t verify your identity

B)  There are not sufficient funds in your account

C)  Check has been forged

D)  Check can’t be cashed being illegal

5) In the Bank reconciliation statement “Deposit in transit” is usually

A)  Subtracted from bank balance

B)  Added to bank balance

C)  Added to Cash book balance

D)  Subtracted from cash book balance

6) Bank reconciliation statement is prepared by

A)  Accountant of the business

B)  Manager of the business

C)  Controller of the bank

D)  Accountant of the bank

7) Which of the following error results in unadjusted cash book balance?

A)  Outstanding checks

B)  Unpresented checks

C)  Deposit in transit

D)  Omission of Bank charges

8) Bank charges amounting to $5000 was not entered in the cash book. Identify the correct adjustment in cash book

A)  Bank charges will be debited in cash book

B)  Bank charges will be added to cash book balance

C)  Bank charges will be credited in cash book

D)  Bank charges need no adjustment in cash book

9) Unpresented checks also referred as

A)  Uncollected checks

B)  Uncredited checks

C)  Outstanding checks

D)  Bounced checks

10) ________ are checks that are issued by the business but not yet presented to bank

A)  Uncollected checks

B)  Uncredited checks

C)  Outstanding checks

D)  Bounced checks

Bank reconciliation statement MCQs

11) _________ Checks that are presented to bank but not yet credited by the bank

A)  Unpresented checks

B)  Uncredited checks

C)  Outstanding checks

D)  Bounced checks

12) Uncollected checks also referred as

A)  Unpresented checks

B)  Uncredited checks

C)  Outstanding checks

D)  Bounced checks

13) Favourable balance of bank statement implies that

A)  Credit balance

B)  Debit balance

C)  Bank overdraft

D)  Adjusted balance

14) Standing orders are ________

A)  Credited in the cash book

B)  Debited in the cash book

C)  Entered in the bank statement

D)  Entered in the petty cash balance

15) A company was entered in hire purchase agreement and had to pay $1000 per month.Three payments were made via bank account but no entry was found in cash book. Identify the correct adjustment in cash book

A)  $1000 will be added to cash book balance

B)  $2000 will be deducted from cash book balance

C)  $3000 will be added to cash book balance

D)  $3000 will be subtracted from cash book balance

16) $5000 deposited in bank account was entered twice in the cash book. Identify the correct adjustment in cash book

A)  $5000 will be credited

B)  $5000 will be debited

C)  $10,000 will be credited

D)  $10,000 will be debited

17) Bank sent debit advice of $500 to company being interest on overdraft. It wasn’t entered in cash book. Identify the correct adjustment in cash book

A)  $500 will be debited

B)  $500 will be credited

C)  Non-adjustable

D)  $1000 will be subtracted

18) In bank reconciliation statement the amount of outstanding checks is added to ________ balance of cash book

A)  Adjusted

B)  Unadjusted

C)  Understated

D)  Overstated

19) Balance as per cash book(adjusted)=$1000, Unpresented checks=$2000, Uncredited checks=$500, Deposit in transit=$500. Compute the balance as per bank statement

A)  $2000

B)  Zero

C)  $3000

D)  $2500

20) A discount of $2000 was given to a supplier on his prompt repayment of debt but the cashier entered the gross amount in cash book. What should be the adjustment in cash to work out the correct balance of cash book?

A)  $2000 will be debited in cash book

B)  $2000 will be credited in cash book

C)  $4000 will be debited in cash book

D)  $4000 will be credited in the cash book

1.   B

2.   B

3.   C

4.   B

5.   B

6.   A

7.   D

8.   C

9.   C

10.         C

11.         B

12.         B

13.         A

14.         A

15.         D

16.         A

17.         B

18.         A

19.         A

20.         B

Accountancy / Financial Accounting MCQ Set 7 

1)  Accrued expenses are considered as

A)  Asset

B)  Liability

C)  Gain

D)  Income

2) Prepaid expenses are regarded as

A)  Asset

B)  Liability

C)  Loss

D)  Capital

3) Which of the following adjusting double entries is correct for Unearned income?

A)  DEBIT= Income, CREDIT= Unearned income

B)  DEBIT= Unearned income, CREDIT= Income

C)  DEBIT= Cash, CREDIT= Unearned income

D)  DEBIT= Income, CREDIT= Cash

4) Earned but not yet received income is treated as

A)  Asset

B)  Liability

C)  Loss

D)  Capital

5) Which of the following adjusting double entries is correct for accrued expenses?

A)  DEBIT= Expenses, CREDIT= Accrued expenses

B)  DEBIT= Accrued expenses, CREDIT= Expenses

C)  DEBIT= Cash, CREDIT= Accrued expenses

D)  DEBIT= Expenses, CREDIT= Cash

6) Which of the following adjusting double entries is correct for Prepaid expenses?

A)  DEBIT= Expenses, CREDIT= Prepaid expenses

B)  DEBIT= Prepaid expenses, CREDIT= Expenses

C)  DEBIT= Cash, CREDIT= Prepaid expenses

D)  DEBIT= Expenses, CREDIT= Cash

7) Unearned income is classified as

A)  Asset

B)  Liability

C)  Loss

D)  Capital

8) Which of the following adjusting double entries is correct for earned income?

A)  DEBIT= Income, CREDIT= Earned income

B)  DEBIT= Earned income, CREDIT= Income

C)  DEBIT= Cash, CREDIT= Earned income

D)  DEBIT= Income, CREDIT= Cash

9) Failure to make adjusting entries for accrued income results in

A)  Overstatement of expenses

B)  Understatement of expenses

C)  Understatement of capital

D)  Overstatement of income

10) Identify the consequences of not making adjustment entry for accrued expense

A)  Overstatement of liabilities

B)  Understatement of liabilities

C)  Overstatement of expenses

D)  Understatement of capital

11) An adjusting entry for prepaid expenses affects

A)  Assets and expenses

B)  Assets and income

C)  Liabilities and expenses

D)  Liabilities and assets

12) Adjusting entries convert cash based account into _________ based accounting

A)  Capital

B)  Asset

C)  Accrual

D)  Prepaid

13) An unearned income adjusting entry affects

A)  Asset and liabilities

B)  Cash and income

C)  Income and liabilities

D)  Cash and liabilities

14) A business paid 3 month rent amounting to $3000 out of this amount one month rent pertains to the next accounting period. Identify the correct amount prepaid expense

A)  $3000

B)  $1000

C)  $2000

D)  $4000

15) Adjusting entries help allocating incomes and expenses to their ________

A)  Cash balances

B)  Appropriate accounting periods

C)  Credit balances

D)  Received or paid cash balances

16) A customer paid you $100,000 for some construction work. However, at the end of your accounting period only 1/4 of work was completed. What amount of income should be shown in income statement?

A)  100,000

B)  50,000

C)  10,000

D)  25,000

17) A business paid $5000 for technical services but used up the services for only $2000 until the end of its accounting period. The remaining $3000 would be referred as

A)  Accrued expenses

B)  Accrued income

C)  Prepaid income

D)  Prepaid expenses

18) Revenue earned but not yet received by the business is known as

A)  Contra asset revenue

B)  Accrued expenses

C)  Accrued revenue

D)  Unearned revenue

19) Another name of accrued revenue is

A)  Outstanding asset

B)  Earned asset

C)  Unearned revenue

D)  Earned revenue

20) If Rent expenses=$5000, Insurance expenses=$4000, Prepaid rent expenses=$3000. What amount of total expenses will be shown in income statement?

A)  $9000

B)  $12000

C)  $8000

D)  $6000

1.   B

2.   A

3.   A

4.   A

5.   A

6.   B

7.   B

8.   B

9.   C

10.         B

11.         A

12.         C

13.         C

14.         B

15.         B

16.         D

17.         D

18.         C

19.         D

20.         D

 Accountancy / Financial Accounting MCQ Set 8

1) Which of the following is not regarded as the fundamental concept that is identified by IAS-1

A)  The going concern concept

B)  The separate entity concept

C)  The prudence concept

D)  Correction concept

2) Using “lower of cost and net realisable value” for the purpose of inventory valuation is the implementation of which of the following concepts?

A)  The going concern concept

B)  The separate entity concept

C)  The prudence concept

D)  Matching concept

3) The concept of separate entity is applicable to which of following types of businesses?

A)  Sole proprietorship

B)  Corporation

C)  Partnership

D)  All of them

4) Does Prudence concept allow a business to build substantially higher reserves or provisions than that are actually required?

A)  Yes

B)  No

C)  To some extent

D)  It depends on the type of business

5) The revenue recognition principal dictates that all types of incomes should be recorded or recognized when

A)  Cash is received

B)  At the end of accounting period

C)  When they are earned

D)  When interest is paid

6) The matching concept matches which of the following?

A)  Asset with liabilities

B)  Capital with income

C)  Revenues with expenses

D)  Expenses with capital

7) The allocation of owner’s private expenses to his/her business violates which of the following?

A)  Accrual concept

B)  Matching concept

C)  Separate business entity concept

D)  Consistency concept

8) The going concern concept assumes that

A)  The entity continue running for foreseeable future

B)  The entity continue running until the end of accounting period

C)  The entity will close its operating in 10 years

D)  The entity can’t be liquidated

9) American companies prepare their their financial statement in dollars whereas Japanese companies produce financial statements in yens. Ths is an example of:

A)  Stable monetary unit Concept

B)  Unit of measurement Concept

C)  Money value concept

D)  Current swap concept

10) Which of the following is time span into which the total life of a business is divided for the purpose of preparing financial statements?

A)  Fiscal year

B)  Calendar year

C)  Accounting period

D)  Accrual period

11) Showing purchased office equipments in financial statements is the application of which accounting concept?

A)  Historical cost convention

B)  Materiality

C)  Prudence

D)  Matching concept

12) Assets can’t be offset against liabilities. This the dictation of which of the following accounting concepts?

A)  Matching concept

B)  Accrual concept

C)  Prudence concept

D)  Offsetting concept

13) Information about an item is ________ if its omission or misstatement might influence the financial decision of the users taken on the basis of that information

A)  Concrete

B)  Complete

C)  Immaterial

D)  Material

14) Exercising a degree of caution in the case of judgments needed under the condition of uncertainty is assumption of which of the following accounting concepts?

A)  Matching concept

B)  Timeliness concept

C)  Accrual concept

D)  Prudence concept

15) Which one of the following concepts states that the publication or presentation financial statements should not be delayed?

A)  Objectivity Concept

B)  Timing concept

C)  Timeliness Concept

D)  Reliability Concept

16) land on lease should be shown in balance sheet contrary to fact that company doesn’t own this piece of land. This is the statement of what accounting concepts?

A)  Matching concept

B)  Accrual concept

C)  Prudence concept

D)  Substance over form Concept

17) “Financial information should be neutral and bias free” is the dictation of which one of the following?

A)  Completeness concept

B)  Faithful representation Concept

C)  Objectivity Concept

D)  Duality Concept

18) A business was commenced on 1st January and it purchased 5 vehicles, each costing $5000. During the year the business managed to sell 2 vehicles at the price of $12000. How should the remaining 3 vehicles be valued if the business is going to continue its operations in the next year?

A)  At the breakup value

B)  On the basis of going concern

C)  Liquidation value

D)  More than market value

19) A company received cash $1000 in advance for auditing service. However, the company neither earned this revenue nor made any adjusting entry in its books. Identify the effect of this omission?

A)  Total liabilities to be understated

B)  Total expenses to be overstated

C)  Total income to be overstated

D)  Total assets to be understated

20) Depreciation is charged on fixed asse to comply with which of the following accounting principles or concepts?

A)  Matching concept

B)  Prudence concept

C)  Timeliness concept

D)  Reliability concept

1.   D

2.   C

3.   D

4.   B

5.   C

6.   C

7.   C

8.   A

9.   B

10.      C

11.      B

12.      D

13.      D

14.      D

15.      B

16.      D

17.      C

18.      B

19.      A

20.      A

 Accountancy / Financial Accounting MCQ Set 9

1) Financial statements are prepared mainly for

A)  Internal users of financial information

B)  External users of financial informaiton

C)  Creditors of the business

D)  Managers of the business

2) Net profit is computed in which of the following?

A)  Balance sheet

B)  Income statement

C)  Cash flow statement

D)  Statement of changes in equity

3) Which of the following should be the most appropiate order of current asset in a balance sheet?

A)  cash, debtor, bank, stock

B)  Bank, cash, stock, debtor

C)  Stock, bank, cash, debtor

D)  Cash, bank, debtor, stock

4) In income statement, gross profit is always equal to

A)  Sales-expenses

B)  Incomes-expenses

C)  Sales-cost of goods sold

D)  Sales-selling costs

5) Office equipment is a ________ asset for a computer manufacturer and the same office equipment is a _________ asset for a company that deals in these equipments

A)  Current, Fixed

B)  Fixed, intangible

C)  Tangible, intangible

D)  Fixed, current

6) Identify the external user of financial information or financial statements

A)  Management of the business

B)  CFO of the business

C)  Employees of the business

D)  Investors of the business

7) A statement or report that records the fluctuation in business’s capital is referred as

A)  Balance sheet

B)  Income statement

C)  Cash flow statement

D)  Statement of changes in equity

8) Financial statements mainly help in

A)  Assumption of economic events

B)  Anticipation of economic events

C)  Recording of economic events

D)  Communication of economic events

9) Purchases +opening stock-closing stock=?

A)  Amount of sales

B)  Gross profit

C)  Cost of goods sold

D)  Net income

10) Which of the following financial statements shows the financial position of a business at a specific date?

A)  Balance sheet

B)  Income statement

C)  Cash flow statement

D)  Statement of changes in equity

11) Which of the following financial reports shows the profitable of a business?

A)  Income statement

B)  Balance sheet

C)  Cash flow statement

D)  Statement of changes in equity

12) Assets minus liabilities equal to

A)  Goodwill

B)  Working capital

C)  Net income

D)  Capital

13) Which of the following financial statements shows the movement of cash and cash equivalents in during an accounting period?

A)  Income statement

B)  Balance sheet

C)  Cash flow statement

D)  Statement of changes in equity

14) Goodwill is classified as which one of the following assets?

A)  Fixed

B)  Long term

C)  Current

D)  Intangible

15) Which of the following does not appear in Balance sheet?

A)  Building

B)  Cash

C)  Goodwill

D)  Rent expenses

16) Which of the following lists down the balances to asset accounts, liability accounts and capital account balances?

A)  Income statement

B)  Balance sheet

C)  Cash flow statement

D)  Statement of changes in equity

17) Current assets are also known as

A)  Working capital

B)  Invested capital

C)  Assets

D)  Cash

18) The expenses related to the main operations of business are referred as

A)  Administration expense

B)  Non-administration expense

C)  Selling expenses

D)  Operating expenses

19) Cash receipt from the sales fixed assets is recorded under the heading of

A)  Operating activities

B)  Financing activities

C)  Investing activities

D)  Other activities

20) A current asset that is convertible to cash within 3 months can be referred to as

A)  Cash asset

B)  Operating asset

C)  Intangible asset

D)  Cash equivalent

1.   B

2.   B

3.   D

4.   C

5.   D

6.   D

7.   D

8.   D

9.   C

10.      A

11.      A

12.      D

13.      C

14.      D

15.      D

16.      A

17.      A

18.      D

19.      C

20.      D

Accountancy / Financial Accounting MCQ Set 10

1) What is the minimum number of partners required to commence a partnership business?

A)  20

B)  10

C)  2

D)  4

2) Partnership type of business is formed by the mutual agreement of partners. What kind of agreement is it?

A)  Oral agreement

B)  Written agreement

C)  Oral or written agreement

D)  None of them

3) In the general form of partnership, liabilities of partners are:

A)  Limited

B)  Unlimited

C)  Limited to the business capital

4) Is partnership type of business considered as a separate legal entity?

A)  No

B)  Yes

5) can a partner transfer his/her share of business to a third party without other partners consent?

A)  No

B)  Yes

6) Is it compulsory for all partners to contribute equal amount of capital in the business?

A)  No

B)  Yes

7) Interest on drawings is:

A)  Debited to partner’s current a/c

B)  Credited to partner’s current a/c

C)  Not shown in current account

8) The written agreement of partnership is most commonly referred to as:

A)  Agreement

B)  Partnership deed

C)  Partnership contract

D)  Partnership Act

9) Where there is no partnership agreement exists between partners, what will be the profit sharing ratio between the partners?

A)  Equal

B)  Unequal

C)  It will depend on a partner’s capital

D)  It will depend on the experience of a partner

10) Salary of a partner is _________ to current account

A)  Debited

B)  Credited

11) New investment by any partner in the partnership type of business is _______ to the partner’s capital account

A)  Debited

B)  Credited

12) Under fluctuation method of capital, what is the treatment of “interest on capital”?

A)  Credited to capital account

B)  Debited to capital account

C)  No treatment or adjustment needed

D)  Credited to current account

13) Which of the following is NOT generally the characteristic of a partnership business?

A)  Limited life

B)  Ease of formation

C)  Mutual agency

D)  Limited liability

14) In which of the following types of partnership the liability of at least one partner is unlimited whereas the liability of other partners is limited?

A)  General partnership

B)  Particular partnership

C)  Partnership-at-will

D)  Limited partnership

15) In which of the following types of partnership there is no agreement regarding the duration of partnership?

A)  General partnership

B)  Partnership-at-will

C)  Limited partnership

D)  Registered partnership

16) A&B are partners sharing profit or loss equally. A new partner enters in the partnership and invests a piece of land that had historical cost of $50,000, book value = $25000 and current market value = $30,000. By what amount the new partner’s account should be increased?

A)  $25000

B)  $50,000

C)  $30,000

D)  $75000

17) X and Y are partners sharing profit and loss at the ratio of 1/3 and 2/3 respectively. The net income for this accounting period is $10 while salary of X = $2, interest on Y’s drawings = $3 and interest on X’s capital = $2. What is the X’s share of profit or loss after the adjustment for partner’s salary, interest on capital and interest on drawings?

A)  $3

B)  $6

C)  $9

D)  $11

18) Which of the following is known as the value addition to a business because of business reputation, customers’ loyalty, brand name etc.

A)  Assets

B)  Market capitalization

C)  Goodwill

D)  Market penetration

19) Which of following is the correct double entry for revaluation surplus?

A)  Revaluation = Debit and Partners capital accounts = Credit

B)  Partners capital accounts = Debit and Revaluation surplus = Credit

20) A and B share profit and loss in the ratio of 3/5 and 2/5 respectively and having capital account balances of $100,000 each. At the time of revaluation, the firm’s total asset book value was $60,000 while they can only be sold for $40,000. Which of the following is the balance of A’s capital account after revaluation of firm’s assets?

A)  $100,000

B)  $112,000

C)  $88,000

D)  $72,000

21) Which one of the following double entries is correct regarding the cost of firm or partnership dissolution?

A)  Credit realization a/c and Debit partners’ capital a/c

B)  Credit realization a/c and Debit bank a/c

C)  Debit realization a/c and Credit bank/cash

22) Identify the correct double entry for realization profit at time dissolution of partnership

A)  Debit realization a/c and Credit bank a/c

B)  Debit bank a/c and Credit realization account

C)  Debit realization account and Credit partners’ capital accounts

23) Partner ‘A’ took firm’s vehicle worth $5000 without payment at the time of firm’s disbanding. Identify the correct adjustment in the capital account of partner ‘A’

A)  $5000 will be debited

B)  $5000 will be credited

C)  No adjusted needed in capital a/c

24) During the process of dissolution of partnership, the carrying value of machinery=$5000 and building = $20,000 while both fixed assets were disposed at the cumulative price of $10,000 and realization cost was up to $2000. Identify what total amount needed to credit or debit in the partners capital accounts

A)  $12000 Debit

B)  $13000 Credit

C)  $13000 Debit

C)  $10,000 Debit

25) A and B are the partners in a small firm, their profit or loss sharing ratio is 6:4. A new partner C admitted in the firm that will share profit or loss at the ratio of 1/4. Which of the following is the new profit or loss sharing ratio among the partners A, B and C?

A)  6:4:1

B)  18:12:10

C)  10:12:18

D)  6:4:4

26) Which one of the following is the method of goodwill valuation?

A)  Average capital method

B)  Super capital method

C)  Capital intensity method

D)  Super profit method

27) Under capitalization method of goodwill valuation, which of the following formulas is used to calculate the “value of whole business”?

A)  Value of whole business=Profit / Reasonable rate of return X 100

B)  Value of whole business= Total assets / Reasonable rate of return X 100

C)  Value of whole business= Equity-Net assets

28) Which of the following is not recorded in the partners current accounts?

A)  Drawings

B)  Interest on Drawings

C)  Partners salaries

D)  Administrative expenses

29) A partner that doesn’t take part in the management of business, but he/she has made investment in business and liable to creditors of the business is known as:

A)  Active partner

B)  Nominal partner

C)  Junior partner

D)  Dormant partner

1.   C

2.   C

3.   B

4.   A

5.   A

6.   A

7.   A

8.   B

9.   A

10.         B

11.         B

12.         A

13.         D

14.         D

15.         B

16.         C

17.         A

18.         C

19.         A

20.         C

21.         C

22.         C

23.         A

24.         C

25.         B

26.         D

27.         A

28.         A

29.         D

Organization and Strategy at Millennium (A) HBS CAse Study solution

Core issues related to Millennium, Root cause/s of the problem in Millennium, Probable solutions based on the root cause to solve the problems of Millennium
 HBS CASE – Organization and Strategy at Millennium (A)

As  Deborah  Dunsire,  M.D.  returned  home  from  her  January  2005  interviews  at  Millennium Pharmaceuticals (Millennium), she ran through her assessment of the challenges she would face at  the Cambridge, Massachusetts-based biopharmaceutical firm. As a potential successor to founding CEO Mark Levin, Dunsire’s first priority was to bring Millennium to profitability. To succeed, she knew   that   she   would  need  to  rapidly   establish  a   productive   relationship   with Millennium’s management team. Among other things, the team would need to reevaluate the number of disease classes Millennium could feasibly tackle and to determine how the firm should allocate its limited resources  across  the  value  chain  activities  of  early-stage  discovery  research,  later-stage      drug development and final product commercialization. Dunsire would present her initial plans for Millennium to the board on Monday morning. Sitting in her living room, she pulled out a legal pad and began to jot down her thoughts……………..

Millennium

Core issues related to Millennium

  • To establish a formal set up in the organisation and a productive relationship with Millennium’s management team while maintaining its entrepreneurial vision and culture.
  • To bring Millennium back to profitability by moving it from its R&D roots to a more commercially-focused platform.
  • To regain credibility with the investment community.
  • To reallocate the resources of Millennium between its commercial and R&D platforms.
  • To optimize current commercial opportunities without jeopardizing future product development.
  • Informal review process and compensation system.
  • Lack of employees in commercial wing of Millennium.
  • Ignorance of competition faced by the company with regard to its products.
  • Failure due to marketing philosophy of Millennium.
  • Losses due to failure of some alliances.
  • Lack of competent employees at executive level mainly in R&D.

Analysis of data for the root cause/s of the problem

Millennium’s organizational structure and processes had always been more informal than those of larger companies. It was organized around its people.  Employees relied on informal committees and ad-hoc systems throughout the firm to help guide the business and coordinate operations. A lot of people resisted or resented the change in culture when Levin began to professionalize executive meetings when Millennium prepared to launch Velcade commercially and to restructure its business. There was Frustration among employees due to informal review process and biasness in terms of deciding over compensation policy.

Over time some disadvantages of the alliances began to manifest themselves. Failure occurred in acquisition of CORE by Millennium. Huge cost incurred in restructuring process in 2003. Millennium fails to consider the competition Integrilin faced in the market. Marketing philosophy of Millennium that markets were won through good science and clinical data so products based on good data would sell them itself posed a problem. Less number of employees in commercial team of Millennium and also they were not experts in what they were selling in the market.

Partnership revenues were falling, due to the shift in business model from an R&D services organization to a fully-integrated company focused on its own pipeline, and raising significant amounts of additional outside capital was unlikely following the 2001 burst of the technology bubble and subsequently weak capital markets. Millennium booked $191 million in restructuring charges and the company booked a net loss of $590 million in 2002 $484 million in 2003. Millennium’s management believed that markets were won through good science and clinical data so products based on good data would sell themselves. This philosophy left little room for a marketer to express his or her opinions on competing in the marketplace through education and promotion.

Millennium’s commercial team was relatively small. The Velcade sales team detailed to oncologists with a vast majority working from their own private practices or in out-patient units of hospitals. The Integrilin team detailed to cardiologists and purchasing groups in hospitals with critical care facilities for percutaneous infusions. Both therapeutic areas required keen understanding of the clinical trial results of their respective products and those of their competitors. It was unrealistic to require a sales Representative to master the material of both products. Complicating these differences was that both products faced intense competition and required significant investment to remain competitive. It was difficult to imagine diluting the focus of a commercial rep by leveraging him or her to work on both products.

 Probable solutions based on the root cause to solve the problems:

The company should increase the number of experienced sales representatives in its commercial departments to cope up with the competition prevailing in the market. Instead of filling vacant positions at senior levels in R&D and commercial departments, Dunsire should go for internal recruitment as existing employees better understand the organisation and they can optimize the resources at the maximum possible to maintain a sound equilibrium between R & D and commercial segment. The company should also facilitate intense training to the existing and new employees in commercial segment. Employees should be given autonomy in performing their task, organizing adhoc meetings in order to maintain the culture of entrepreneurship but a continuous performance management system should be implemented in the organisation to decide over the compensation, promotion and other benefits to be provided to the employees. The company should prepare an intense marketing strategy with an objective is to become market leader in the products they deal in at the minimum time possible. Investors will show confidence in the company only it starts generating huge revenue from both of its segments commercial as well as R &D. The company should decide over its R&D products and reduce its cost of research spend at the minimum possible in order to increase the profitability of the company.

Organization and Strategy at Millennium (A) HBS CAse Study solution

Federal Bureau of Investigation

Federal Bureau of Investigation, 2001 (Abridged) FBI HBS Case Study Solution

Core issues related to FBI case:

1. Occurrence of terror attack at pentagon due to mishandling of information.

2. Conflicts among various federal agencies in terms of information dissemination and authority responsibility relationship.

3. Ignorance of the analysis of information received to FBI from different sources which could if properly analyzed and examined, stop the incident that took place.

4. Lack of coordination among different officials of FBI and among FBI officials and other federal agencies such as CIA, FAA, NSA and SLTLE.

5. Information did not always flow smoothly within and beyond the Bureau, particularly due to the complexity of the organization and its tasks as well as the sensitivity of information.

6. Special rules and regulations for issuing warrants and gathering intelligence about agents of foreign powers as per Foreign Intelligence Surveillance Act (FISA) of 1978 also created a problem leading to occurrence of the attack.

Analysis of data for the root cause/s of the problem

Ignorance  of the electronic  memo sent by Phoenix Special Agent Kenneth Williams advising the Bureau and New York of the possibility of a coordinated effort by Osama Bin Laden to send students to the United States to attend civil aviation universities and colleges and putting themselves  in a position in the future to conduct terror activity against civil aviation targets. Even after 17 days of sending of electronic memo, dated July 10, 2001, it did not enter the Automated Case System of FBI until July 27, 2001. His recommendation was totally ignored .No actions have been taken by IOS in the Radical Fundamentalist Unit and Osama Bin Laden Unit on the information provided in the memo. Neither they shared it with senior FBI personnel, nor did they distribute it to other federal agencies. Several agents in the New York field office who received the memo also took no action.

Failure of FBI agents in Minnesota to secure a FISA warrant from FBI headquarter to search Moussaoui’s laptop computer and other belongings on the ground of FISA rules as it required the agents to demonstrate that Moussaoui was an agent of a foreign power. It was later found that he had ties to the hijackers. There was a complete communication failure among different agencies and their officials. Minnesota agents were startled when they learned of Williams’ memo, and Williams had no idea about events in Minneapolis. Neither CIA officials, who had been made aware of the Moussaoui investigation, had information about neither Williams’ memo nor FBI personnel who had quashed the Moussaoui warrant request.

In case of Khalid and Nawaf, there was a complete information and security failure. Twenty months before 9/11, U.S. government officials identified Khalid as a likely terrorist and realized that he had a valid U.S. visa. Yet he managed to enter the U.S. twice, apply for and receive a new visa, and rent a room from an FBI informant…all without being tracked or detained. As per the information given by NSA to CIA, CIA agents noted that he had a valid U.S. visa, but they did not tell the FBI about Mihdhar’s U.S. visa. Immigrations and Customs officials were not aware that the CIA suspected them to be terrorists. Even they used their real names to open bank accounts, apply for driver’s licenses, and enroll in flight school. In March 2000, Thai officials alerted the CIA that Hazmi had flown to Los Angeles. CIA personnel did not pass this information to the FBI. The FBI informant told his FBI handler about the arrival of “two Saudi nationals,” but agents in the local field office had not given special attention to the two neither shared this information to senior officials.

Photograph given by Yemen official who had been suspected as the mastermind of U.S.S. Cole had associations with both of them. Mihdhar had a valid U.S. visa; and Hazmi had landed in Los Angeles. No individual, however, had all this information. CIA and FBI agents were working together to discuss the progress on cole case but none of them shared the information to each other as CIA participants felt not to share CIA information to FBI resulting in getting the visa to Mihdhar in time to fly to New York on July 4, 2001 for the second time, passing through Immigrations and Customs without scrutiny.

After a month’s review and analysis of information regarding the Kuala Lumpur meeting. An FBI analyst at CIA’s Counterterrorism Center realized the potential significance of Mihdhar and Hazmi. She called the Immigration and Naturalization Service on August 22 and learned that Mihdhar had entered the U.S. twice. She asked FBI agents to investigate the two men. An argument broke out within FBI ranks about who should be involved. Agents conducting the criminal investigation of the Cole bombing wanted badly to speak with the two men. FBI lawyers objected due to FISA concerns and the task of tracking down Mihdhar and Hazmi was assigned to a New York agent with no experience in counterterrorism was again a mistake. The FBI agent at the CIA’s Counterterrorism Center again misconceptualised the urgency and placed Mihdhar and Hazmi on the State Department’s watchlist, which named 60,000 suspected terrorists who would be denied visas. They neither informed FAA nor asked them to put their names in ‘NO FLY list’ due to which American Airlines permitted them to board Flight 77, which the hijackers crashed into the Pentagon.

Probable  solutions based on the root cause to solve the problems

Due to such a complex structure and conflicts among various security and federal agencies in terms of information dissemination and power authority relationships, the context of whole information got distorted and none of the officials investigating the case has all concrete information available at one table leading to communication and security failure. There must be a central information processing system which can keep an integrated record of all the information possessed by different agencies of USA. Autonomy to work in their own fashion and culture should be encouraged keeping in view the sharing of all the information to a centralized information procession, which can facilitate to eliminate the disaster, happened in the form of 9/11.

Since FBI hires employees and promotes them on the basis of law enforcement criteria, either they must restrict its scope to a law enforcement agency or if it wanted to remain the nation’s domestic intelligence service as well the president of USA and Congress should restructure FBI and its interactions with other agencies of the country on a horizon centralized information processing system.

Create your website with WordPress.com
Get started
%d bloggers like this: