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    Answer To 1a:: Rate of Interest Total Interest / Total Borrowings 38.46 %

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    Sumit Sharma
    The document compares and contrasts the roles of a controller and treasurer. It notes that a controller's responsibilities include accounting, financial reporting, fraud prevention, and ensuring compliance with standards. A controller works from a long-term perspective and focuses on the income statement. A treasurer focuses on liquidity management, risk management, and the balance sheet. A treasurer works regularly to forecast cash flows and future capital needs. However, in most Indian companies, the roles of controller and treasurer are combined, with the controller overseeing treasury functions.

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    Answer To 1a:: Rate of Interest Total Interest / Total Borrowings 38.46 %

    Uploaded by

    Sumit Sharma
    21 views2 pages
    The document compares and contrasts the roles of a controller and treasurer. It notes that a controller's responsibilities include accounting, financial reporting, fraud prevention, and ensuring compliance with standards. A controller works from a long-term perspective and focuses on the income statement. A treasurer focuses on liquidity management, risk management, and the balance sheet. A treasurer works regularly to forecast cash flows and future capital needs. However, in most Indian companies, the roles of controller and treasurer are combined, with the controller overseeing treasury functions.

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    Original Title

    Answer to 1a

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    The document compares and contrasts the roles of a controller and treasurer. It notes that a controller's responsibilities include accounting, financial reporting, fraud prevention, and ensuring compliance with standards. A controller works from a long-term perspective and focuses on the income statement. A treasurer focuses on liquidity management, risk management, and the balance sheet. A treasurer works regularly to forecast cash flows and future capital needs. However, in most Indian companies, the roles of controller and treasurer are combined, with the controller overseeing treasury functions.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    21 views2 pages

    Answer To 1a:: Rate of Interest Total Interest / Total Borrowings 38.46 %

    Uploaded by

    Sumit Sharma
    The document compares and contrasts the roles of a controller and treasurer. It notes that a controller's responsibilities include accounting, financial reporting, fraud prevention, and ensuring compliance with standards. A controller works from a long-term perspective and focuses on the income statement. A treasurer focuses on liquidity management, risk management, and the balance sheet. A treasurer works regularly to forecast cash flows and future capital needs. However, in most Indian companies, the roles of controller and treasurer are combined, with the controller overseeing treasury functions.

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    of 2

    Answer to 1a:

    Controller & Treasurer are independent & they have their own Perspectives & Drivers as detailed below:
    Controller
    Responsibilities
    include,
    Double
    entry
    accounting, financial reporting, Fraud measure,
    detective controls, Financial restatement,
    Compliance with statutory requirements like
    Rules, Accounting standards, GAAP, IFRS etc.,
    Controller works & forecasts the events for a
    long term. Main focus income statement

    Treasurer
    Responsible for Liquidity management ( very
    important function), Risk Management, More
    focus on financial statements, follows leading
    practices & responsible for the future
    performance of company (projects cash flows)
    Treasurer works/ forecasts the events regularly
    ( daily / weekly) focus Balance sheet & future
    capital structure, capital expenditure etc.,
    Treasurer concentrates more on cash availability
    focus i.e. how to bring in the required cash etc,

    Ex: Cash involved event


    Controller looks from compliance angle (how to
    record, what GAAP provides etc.,)
    Therefore, from the above it is clear that, controller & treasurer have different roles to play.
    However, majority of the Indian companies works with Financial Controller who himself takes care
    of the treasury department / Portfolio.

    Therefore, as far as from Indian context, it can be concluded that, controller is also responsible for
    treasury jobs & there is no separate treasurer / treasury department exists

    Answer to Q1b:
    Particulars

    Ref

    Cost of Machinery
    Down Payment
    made by firm
    Financed through
    borrowings

    (a)

    800,000

    (b)
    c = (ab)

    150,000
    650,000

    d=6*15
    0,000

    900,000

    e=d
    c

    250,000

    f=e/c

    38.46 %

    Repayment in equal
    instalments every
    year
    ( maximum of six
    years)
    Total interest paid
    over 6 year period

    Rate of Interest
    = total interest
    / total
    borrowings

    Year 0

    Year 1

    Year 2

    Year 3
    Rs.

    Year 4

    Year 5

    Year 6

    150,000

    150,000

    150,000

    150,000

    150,000

    150,00
    0

    Rate of interet g = f / 6
    yrs
    per annum

    6.41 %

    Break of interest
    cost / principal
    repayment:
    1) interest cost
    (can
    be apportioned in
    the ratio of no
    of
    years
    repayment i.e.
    earlier the years
    more
    the interest cost &
    vice versa)

    2) Principal
    Outstanding
    adjustment

    Yearwise
    Interest rates: Principal
    Outstanding at year
    end
    (prinicpal o/s at
    year beginning Principal
    repayment)

    RATE OF
    INTEREST
    EVERY YEAR

    6:5:4:3:
    2:1

    (ratio)
    h

    21

    (6+5+4+3+2
    +1)
    25000
    0

    71429

    59524

    (250,000
    *6/21)

    (250,000
    *5/21)

    47619
    (250,00
    0*4/21)

    3571
    4
    (250,00
    0*3/21)

    23810
    (250,000*
    2/21)

    1190
    5
    (250,0
    0
    0*1/21
    )

    i=d-h

    65000
    0

    78571

    90476

    102381

    114286

    126190

    13809
    5

    65000
    0

    571429

    480952

    378571

    26428
    6

    138095

    (480952
    - i)

    (37857
    1
    - i)

    (264286i)

    (13809
    5
    - i)

    (650000i)
    h/
    princip
    al o/s
    at year
    beginni
    ng)

    11.0%
    (h /
    650000)

    (571429i)

    10.4%
    (h /
    571429)

    9.9%
    (h /
    480952)

    9.4
    %
    (h /
    378571
    )

    9.0%
    (h /
    264286)

    8.6
    %
    (h/
    13809
    5)

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