Chapter 4
Evaluating a Firms Financial Performance
I.
Financial Statement Analysis
A.
Internal uses for ratios: Are our decisions maximizing
shareholder wealth?
1.
2.
3.
4.
5.
6.
B.
External usesused by groups/individuals outside the firm
(Investors, cred
Chapter 14
S h o r t - Te r m F i n a n c i a l P l a n n i n g
OMIT Objective 3 pages 444-447
I.
Why do firms engage in financial planning and thus create
financial forecasts?
a.
b.
II.
Financial forecasting:
a. Step 1: Predict next year s sales revenues
TIME VALUE OF MONEY EXAMPLES
1. If Alpha invests $800,000 today, how much could Alpha withdraw at
the end of each year for 7 years at 8% compounded annually?
2. How much should Alpha invest today at 9% interest in order to make
withdrawals of $25,000 each
C H AP T E R 5
THE TIME VALUE
OF
MONEY
TIME VALUE OF MONEY (Most basic concept in finance): A dollar in your hand today is worth
more than a dollar that you will receive some time in the future.
A.
Why is this so?
Interest! If you had a $1 you could inves
Chapters 5 Problems
1.
How much would you need to deposit today so that beginning 10 years from now, you could
withdraw $30,000 per year (at the end of each year) for 8 years plus an additional amount of
$50,000 at the end of the 13 th year? Assume that y
Chapter 2
Financial Markets and Interest Rates
This chapter considers the market environment in which long-term capital is raised. The underlying
rationale for the existence of security markets is presented, investment-banking services and
procedures are
Additional Chapter 5 Problems (In-Class)
Example 1
You need a new car! You are going to trade-in your old model and apply the trade-in
value ($5,500) the dealer gives you as the down payment. If you take out a loan at
5.5% to buy a $45,000 vehicle, what w
Spring 2015
FIN 3310 Intro to Financial Management
Exam II Chapters 5-8
Each question is worth 3.75 points for a total of 101.25 points.
Theory
Chapter 5 The Time Value of Money
3 theory questions
5 problems
Chapter 6 Measuring Risk & Return
3 theory q
Chapter 1
An Introduction to the Foundations of Financial Management
This chapter lays a foundation for what will follow. First, it focuses on the goal of the firm, then the five
basic principles that form the foundations of financial management, followed