QUESTION $1$ Case Scenario: You are a financial analyst evaluating the cash flow performance of Zeyrah Technologies Bhd$,$ a Malaysian SME in the consumer electronics sector.

The company has submitted its income statement and partial cash flow information for $2023.$ Your task is to assess its operating performance and working capital management.

Extract from Financial Statements $($RM in thousands$)$:

Income Statement $(2023)$:

$$ Net Sales: RM $5,000$

$$ Cost of Goods Sold: RM $3,000$

$$ Depreciation: RM $200$

$$ Operating Expenses $($excluding depreciation$)$: RM $1,000$

$$ Interest Expense: RM $100$ Tax Rate: $25\%$

Additional Cash Flow Information:

$$ Increase in Inventory: RM $300$

$$ Decrease in Accounts Receivable: RM $150$

$$ Increase in Accounts Payable: RM $250$

$$ Capital Expenditures: RM $500$

Required:

a$.$ Prepare the Operating Cash Flow $($OCF$)$ using the Indirect Method. $(10$ marks$)$

b$.$ Calculate the Net Cash Flow from Operating Activities after accounting for changes in working capital. $(5$ marks$)$

c$.$ Discuss two causes that might lead to cash flow problems for Zeyrah Technologies Bhd$,$ even when it shows positive accounting profits. $(5$ marks$)$

d$.$ Propose two short$-$term financing instruments that can be used by the company to overcome liquidity constraints and explain how they function. $(5$ marks$)$

QUESTION $2$

Your client is evaluating two investment options:

Option A: A fixed deposit offering a $6\%$ annual interest compounded quarterly over $3$ years.

Option B: A corporate bond that pays RM$500$ in annual coupons for $5$ years, with a maturity value of RM$10,000.$

The required rate of return is $8\%$ annually. Required:

a$.$ Compute the future value of Option A if the client invests RM$8,000.(5$ marks$)$

b$.$ Determine the present value of Option B $($value of the bond$).(10$ marks$)$

c$.$ If inflation is expected to average $3\%$ over the investment period, calculate the real rate of return for Option B and briefly explain its significance for investment decisions. $(5$ marks$)$

d$.$ Based on the above, recommend which investment is more suitable for a risk$-$ averse investor and justify your choice. $(5$ marks$)$