By David Harper
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What are the essentials of Walters dividend model? Explain its shortcomings.
Prof. J E Walter argues that the choice of dividend policies almost always affects
the value of the firm. Walters model is based on the followi
RECEIVABLES MANAGEMENT AND FACTORING
Explain the objective of credit policy? What is an optimum credit policy?
The objective of credit policy is to promote sales up to that point where profit is
maximized. To achieve this basic
FINANCIAL STATEMENTS AND
CASH FLOW ANALYSIS
Explain the concept of working capital flow. Give examples of transactions that affect working capital,
and that do not affect working capital.
The working capital flow means increase or decre
FINANCIAL STATEMENTS ANALYSIS
Explain the need for financial analysis. How does the use of ratios help in financial analysis?
Financial analysis is the process of identifying the financial strength and weaknesses of the firm
VENTURE CAPITAL FINANCING
Define venture capital. Explain its characteristics.
Venture capital is risk financing available in the form of equity or quasi-equity. It
is often thought of as the early stage financing of new and young enter
LONG TERM FINANCE: SHARES, DEBENTURES AND TERM LOANS
What is an ordinary share? How does it differ from a preference share and
debenture? Explain its most important features.
Ordinary shares (called common stocks in USA) are important s
ASSET BASED FINANCING: LEASE, HIRE PURCHASE AND PROJECT
Define a lease. How does it differ from a hire purchase and instalment sale? What
are the cash flow consequences of a lease? Illustrate.
A lease is an agreement for the u
CONVERTIBLE DEBENTURES AND WARRANTS
Define the following terms: (a) conversion price, (b) conversion value, and (c)
A convertible debenture is a debenture that can be changed into a specified
number of ordinary share
VALUATION AND FINANCING
What is an asset beta? How is it calculated? Assume no taxes.
We know that a portfolio consists of individual securities. Each security has its
beta, and the beta of the portfolio is the weighted average beta of
CAPITAL MARKET EFFICIENCY AND CAPITAL MARKETS IN INDIA
Explain the concept of the capital market efficiency. What are the different forms
of the capital market efficiency?
Capital markets deal with financial assets or securities. Securi
Explain the nature of the factors which influence the dividend policy of a firm.
The following factors generally influence the dividend policy of the firm.
1. Shareholders expectations: Shareholders expectation relating
FINANCIAL AND OPERATING LEVERAGE
Explain the concept of financial leverage. Show the impact of financial leverage
on the earnings per share.
The use of fixed-charges sources of funds, such as debt and preference capital,
along with owne
PRINCIPLES OF WORKING CAPITAL MANAGEMENT
Explain the concept of working capital. Are gross and net concepts of working
capital exclusive? Discuss.
Working capital signifies money required for day-to-day operations of an
Explain the three principal motives for holding cash.
Cash is required to meet a firms transactions and precautionary needs. A firm
needs cash to make payments for acquisition of resources and services for the
Ch. 3: Valuation of Bonds and Shares
VALUATION OF BONDS AND SHARES
(1) 1-year government bond maturity value (Rs)
Market rate of interest
PV of the bond: 1,000/1.08 (Rs)
(2) Purchase price of bond (Rs)
Implied return: (1,000 904.98)/90
Ch. 4: Risk and Return
RISK AND RETURM:
AN OVERVIEW OF CAPITAL MARKET THEORY
Purchase price of L&Ts share, Rs
Number of shares purchased 1 Jan. 2004
Share price on sale after one year 31 Dec. 2004, Rs
Total dividend received, Rs
INTERNATIONAL FINANCIAL MANAGEMENT
How does financial management of an international firm differ from that of a
International or multinational firms operate in more than one country and their
Ch. 1: Nature of Financial Management
NATURE OF FINANCIAL MANAGEMENT
Case 1.1: The Anandnagar Electricity Company
The objective of this case is to initiate a discussion on the financial objectives of a private sector company. A private
FINANCIAL MANAGEMENT IN GOVERNMENT COMPANIES
What is the nature and scope of finance function in government companies? What are
the special features of financial functions in government companies?
Finance objectives constitute the core
SHAREHOLDER VALUE AND CORPORATE GOVERNANCE
Describe the interface between financial policies and corporate strategy.
In practice, financial policy of a company is closely linked with its corporate
strategy. A firms strategy establishes an
DERIVATIVES FOR MANAGING FINANCIAL RISK
What are derivatives? Why do companies hedge risk using derivatives?
A derivative is a financial instrument whose pay-offs is derived from some other
asset which is called an under
CORPORATE RESTRUCTING, MERGERS AND ACQUISITIONS
Q1. Define and distinguish between the concepts of merger, takeover and
amalgamation. Illustrate your answer with suitable examples in the Indian
A1 A merger is said to occur when two or
Balance sheet as on 16 Dec 1946
Sources of Funds
Application of Fu
GT COMPANY (GTC)
Time 25 minutes
The financial statements of GTC, a dividend paying company, are given below:
Balance Sheet as on 31 March. (in `)
Income Statement for the year ended 31st March 2009 (in `)
1. The company invested ` 200,000 in shares of ot
Reclassify: Dividend income
Less: Profit on sale of asset
Increase in receivables
Increase in inventories
Decrease in creditors
Increase in taxes payable
Add: Loss s
Net cash f
Decrease in debtors (AR)
Decrease in invetories
Increase in prepaid expenses
Increase in AP
Decrease in accrued expenses
Decrease in IT Payable
Purchase of fixed assets