Financial Statements and Analysis
Review the contents of the stockholders report and the procedures for consolidating international
Understand who uses financial ratios, and how.
Use ratios to analy
Risk and Refinements In Capital Budgeting
Understand the importance of recognizing risk in the analysis of capital budgeting projects.
Discuss breakeven cash flows, sensitivity and scenario analysis, and simulation as beha
The Cost of Capital
Understand the key assumptions, the basic concept, and the specific sources of capital associated
with the cost of capital.
Determine the cost of long-term debt and the cost of preferred stock.
Understand cash dividend payment procedures, the tax treatment of dividends, and the role of
dividend reinvestment plans.
Describe the residual theory of dividends and the key arguments with regard to divid
Leverage and Capital Structure
Discuss leverage, capital structure, breakeven analysis, the operating breakeven point, and the effect
of changing costs on it.
Understand operating, financial, and total leverage and the rel
Cash Flow and Financial Planning
Understand tax depreciation procedures and the effect of depreciation on the firms cash flows.
Discuss the firms statement of cash flows, operating cash flow, and free cash flow.
Current Liabilities Management
Review the key components of credit terms, accounts payable, and the procedures for analyzing
Understand the effects of stretching accounts payable on their cost and on the use of accru
Capital Budgeting Cash Flows
Understand the motives for key capital expenditure and the steps in the capital budgeting process.
Define basic capital budgeting terminology.
Discuss relevant cash flows, expansion versus re
Working Capital and Current
Understand short-term financial management, net working capital, and the related tradeoff between
profitability and risk.
Describe the cash conversion cycle, its funding requir
Differentiate between debt and equity capital.
Discuss the rights, characteristics, and features of both common and preferred stock.
Describe the process of issuing common stock, including venture capital
Time Value of Money
Discuss the role of time value in finance, the use of computational aids, and the basic patterns of
Understand the concept of future value and present value, their calculation for single amoun
Pakistans share in the international wooden furniture market too date is much less than its
potential, despite the fact that the country has a history of craftsmanship and innovation in the
field of wooden furniture. The wooden furniture industry represen
Solutions to Problems: Chapter 5
Using a time line
LG 1; Basic
a, b, and c
d. Financial managers rely more on present value than future value because they typically make
decisions before the start of a project, at time zero, as does the present valu
Solutions to Problems: Chapter 7
Authorized and available shares
LG 2; Basic
LG 2; Intermediate
$8.80 per year or $2.20 per quarter.
$2.20. For a noncumulative preferred only the latest dividend has
Answers to Review Questions
1. The real rate of interest is the rate that creates an equilibrium between the supply of savings and
demand for investment funds. The nominal rate of interest is the actual rate of interest charged by the
supplier and paid by
The Role and Environment
of Managerial Finance
Define finance, its major areas and opportunities available in this field, and the legal forms of
Describe the managerial finance function and its relati
Interest Rates and Bond Valuation
Describe interest rate fundamentals, the term structure of interest rates, and risk premiums.
Review the legal aspects of bond financing and bond cost.
Discuss the general features, quot
Risk and Return
Understand the meaning and fundamentals of risk, return, and risk preferences.
Describe procedures for assessing and measuring the risk of a single asset.
Discuss the measurement of return and standard de
Student ID # 8584
Spring Semester 2007/2008
As far as one can look into the pages of history, the economic exchanges between
communities and countries were similar to the shape of the sin