Sources of Sustainable Growth

answered on 28-Apr-24 21:37

An excerpt from the ICAI study material reads, "Growth can come from two sources: increased volume and inflation. The inflationary increase in assets must be financed as though it were real growth. Inflation increases the amount of external financing required and increases the debt-to-equity ratio when this ratio is measured on a historical cost basis. Thus, if creditors require that a firm's historical cost debt-to-equity ratio stay constant, inflation lowers the firm's sustainable growth rate." Can you please provide an explanation to the above or further elaborate on it?

latest answer

Makes so much more sense now. Thank you for the response :D

Ruthvik Reddy

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why we take Market value for calculating weights of each share, instead of face value ?

answered on 27-Apr-24 16:05

Dear sir, for all the remaining problems you have considered the face value of the shares to compute the weights of each share. but in this question you have considered the Market value to compute weights of the each share. please explain this

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Where did I use Book Value - which illustration please?

B. Dinesh

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Doubt on withholding tax

answered on 26-Apr-24 15:33

Sir, 1.What is the meaning of withholding tax? 2.Where is it impacts?

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WHT is TDS on foreign remittances Form 15CA / CB Sometimes WHT can be claimed by foreign country recipient if there is a DTAA ( like input tax)

Hanumanthu Rajesh

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ICAI RTP MCQ 2024

answered on 25-Apr-24 14:33

In this below question in ICAI RTP MCQ 2024, isn't Growmore Ltd the originator and MAC fin corp the investor? ICAI RTP answer is given as MAC Fin Corp to be the originator. Please clarify Sir.

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Thank you so much Sir. Got the doubt clarified.

Dheebhan Mahalingam T

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Mutual Funds

answered on 24-Apr-24 20:51

Sir, In Illu:14 FV of Rs.10 for opening value of Investment is not found in the question. whether we have taken it as assumption. Kindly clarify it sir.

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Ok sir Thank you

Guru aravindh s

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Forex

answered on 24-Apr-24 10:45

Hello Sir In this question if we consider the net cash settlement in Selling put option strategy- we will have a loss of 145.2-144.9 which is 0.3 Yen/USD which will total to 0.3 million Yen. Premium receipt of 2.53 million. Now when we buy 1 million USD @ ask rate 145.05. So total payment is 145.05-2.53+0.3= 142.82. But institute has considered taking delivery. How should we decide whether to take delivery or settle in cash?

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Good point - if options are OTC, only then delivery is possible. If options are exchange traded, then only Net cash settlement. In exam suggest you take both scenarios and explain the same and give solutions as per both options with assumptions clearly stated

Suresh Avinash

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MTP Series ii - Mutual Funds Q

answered on 22-Apr-24 18:23

Question - 5(b) of AFM MTP Series ii Please explain the logic of using NPV to compute effective yield and how the PV of cash inflows have been calculated in computing NPV

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Thank you sir, very well explained.

Vish

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Macaulay's Duration

answered on 22-Apr-24 15:34

Here at the end of the year , we are multiplying the cashflows with year and then discounting with PVF, got 464.65 . In the previous illustration 1, we are compounting bond period by multiplying propotionate value with no of years.. Please clarify why we are doing so

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Both are same are they not? can you please put it down ( that is both methods) on an excel sheet or a piece of paper have a look for say a 2 year bond instead of a 5 or 7 year bond?

Rahul Kumar

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MCQ

answered on 28-Apr-24 07:14

As told in vedio, How to access mcq separately for purchased classes, because before purchasing AFM also i was able to access afm mcq section, is there any separate mcq provided for paid version

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Ok sir

R Yashwanth Kumar

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page 175 - is answer is correct

answered on 21-Apr-24 21:30

In the Part two of the question is not multiplied by r. is it correct question 14 part ii

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solved, it was my mistake

ezy pan

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