BMGT 301 Sections 201/501 Exam II Study Guide
Exam Date: October 26, 2016
This exam will cover all material in book and in class discussions from the end of Exam I until and including the
October 19 class. The questions will be a mix of multiple choice, t
Chapter 2 book notes
Introduction to Financial Statement Analysis
o 2.1 Firms Disclosure of Financial Information
Financial statements accounting reports issued by a firm
quarterly and/or annually that present past performance
information and a snapshot
Chapter 2 class notes
Introduction to financial statement analysis
o What is depreciation designed to capture?
Accounts for the wear and tear on an asset
Lowers taxes for a firm
o What does a high debt-to-equity ratio tell you?
Firm is using a lot of
Chapter 3
Time value of money: An Introduction
o Valuation Principle: Net present value = present value of benefits
present value of costs
NPV = PVbenefits Pvcosts
o Arbitrage is not over time, has to be right then
Over time the value changes
o *Value
Chapter 4
Time value of money problems, problems and more problems
PV = FV1/(1+r) + FV2/(1+r) + FV3/(1+r) + etc.
o Problem:
Invest $100 today, you will receive $40 in 1 year and $75 in 2
years
o Cash outflow = negative (PV)
If you require a 15% ROI of
Net Working Capital (NWC) = CA CL
Gross Margin: Gross profit/sales
Operating Margin: Op Income/Sales
RE: NI-dividends
Operating Cash Flow (OCF) = EBIT + Depr.
Taxes (cash from day to day activities)
Enterprise Value: Market value of eq+ debt-cash
Net Cas
MULTIPLE CHOICE. Choose the one alternative that best completes the
statement or answers the question.
1) Howard is saving for a holiday. He deposits a fixed amount every month in a bank
account with an EAR of 14.7%. If this account pays interest every mo
Exam 3, BMGT 340, Spring 2014, Version 1 ANSWER KEY
Name_
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or
answers the question.
1)
Year
1
2
Free Cash Flow $12 million $18 million
3
4
$22 million $26 million
Conundrum Minin
Chapter 9:
Capital budgetlists the projects and investments that a company plans to undertake
during future years
Incremental Earnings before Interest and Taxes(EBIT)= Incremental revenueincremental costs- depreciation
^if above just says incremental earn
Exam 3, BMGT 340, Spring 2014, Version 1 ANSWER KEY
Name_
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers
the question.
1)
Year
1
2
Free Cash Flow $12 million $18 million
3
4
$22 million $26 million
Conundrum Minin
KEY - Exam 3 Fall 2014 VERSION 1
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the
question.
1) Year
1
2
3
4
Free Cash Flow $22 million $26 million $29 million $30 million
5
$32 million
General Industries is expe
Chapter 10
Dividend payments determine the stock price no adjustment
necessary
Total payouts (all div and repurchases) determine the equity
value
Enterprise Value =Market value of equity + debt Cash
FCF = EBIT * (1-tax rate) + dep capital expenditures
i
BMGT 340 Exam 3 Fall 2013 - version 1 Key
1. Gonzales Corporation generated free cash flow of $88 million this year. For the next two years, the company's free cash flow is
expected to grow at a rate of 8%. After that time, the company's free cash flow is
EAR(effective annual rate )
Annual percentage yield (APY)- indicates total interest
earned at end of one year
Convert EAR for one period to an equivalent discount rate
for n periods
N period discount = (1+r)n -1
APR= simple interest. Convert APR to EAR
I-
Chapter 1 book notes
Corporate Finance and the Financial Manager
o Why Study Finance?
Career paths have become less predictable and more dynamic
Change jobs pretty frequently compared to years ago
All decisions are linked to Valuation Principle
o The F
Chapter1slidessupplement
1)Ifinterestratesrise,whatwilltypicallyhappentobondprices?
o Fall
PV=Sumofcfw_FVi/(1+r)^n
2)Buyingasinglecompany'sstockusuallyprovidesasaferreturnthanastock
mutualfund
o False
Lose100%ifownsinglecompanystock,wontloseallofyour
mo
Chapter 7: Stock Valuation
Stocks Beta- percentage change in its return that we
Example: Decide to hold stock for 3 years, get a
expect for each 1% change in the markets return
dividend of $2, then $2.10 and $2.205, stock price is Expected Return= Riske f
Chapter 1
Balance Sheet Identities
'
Assets=Liabilities+ Stockholder s Equity
Net WorkingCapital=Current AssetsCurrent Liabilities
M arket Valueof Equity
Market Book Ratio =
Book Value of Equity
Enterprise Value=Market Value of Equity+ Debt Cash
Income St
Ratio and Industry Analysis Report: Manpower Group Inc.
Economic and Industry Analysis.
According to Hoovers, Manpowergroup Inc. (MAN) primarily operates in the Staffing
Services Industry (SIC code 7359), but often works in the Business Services Sector
in
CHAPTER6 INTEREST RATES
More risk, more interest wanted
Prefer to consume now rather than later
Higher rates, people spend less
Good times: money flowing freely, smaller spreads, easier credit
Best investments return more (declining marginal returns)
Only
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