Chapter 1: Financial Management
What is Finance?
The art and science of managing wealth
Using financial data to make sound decisions
Is it accounting? No, past vs. future
Financial management:
(wealth
Financial Statement Analysis - Exam #1
(September 12, 2017)
You will be handed the financials (Balance Sheet, Income Statement, & Statement of Cash Flows) for a
company recently in the news. The finan
Liquidity Ratios
Current ratio = Current assets / Current liabilities
Net working capital = Current assets - Current liabilities
Net operating working capital = Current assets - Current liabilities (e
Revenue from contract with customers IFRS
15
9/9/2015
Introduction
Learning outcomes
Understand the following
Why the need for the new standard
Recognition and measurement of
IFRS 15
revenue
Commo
Regulatory & Conseptual Framework
8/14/2014
Introduction
Learning out come
Explain the Conceptual Framework
for Financial Accounting
Explain the
Regulatory
Framework
Explain the Recogonition and
M
Cashflow statement IAS 7
8/14/2014
Introduction
Learning objective
prepare a statement of cash flows using
the direct method
prepare a statement of cash flows using
the indirect method
usefulness o
Accounting cycle & Presentation of financial
statements(IAS1)
8/14/2014
Introduction
Learning Objectives
Understand the accounting cycle
Prepare an entitys financial statements
in accordance with p
8/14/2014
Introduction
Learning objective
Distinguish between legal and
constructive obligations
Explain in what circumstances a
provision may be made
Show how provisions are accounted for
8/14/201
8/14/2014
Introduction
Learning outcomes
1. Define a construction contract as per
CONSTRUCTION
CONTRACTS
IAS 11
2.
3.
4.
5.
14/08/2014
IAS 11 CONSTRUCTION CONTRACTS
1
IAS11
Calculate contract revenue
8/14/2014
Introduction
Learning objective
Understand how to account for
changes in policies
Understand how to account for
estimates and errors
8/14/2014
PROVISION, CONTINGENT LIABILITIES AND
ASSETS
Taxation in Financial Statement IAS 12
9/9/2015
Introduction
By the end you should be able to;
Define and account for current tax as
per IAS 12
Distinguish between taxable and
deductable per tempor
Assume today is August 1, 2006. Natasha Kingery is 30 years old and has a Bachelor of
Science degree in computer science. She is currently employed as a Tier 2 field service
representative for a telep
FINA 301 Fall 2013
Dr. Mark D Griffiths
Self Test #11
Use the following data for Problems 1-6.
Number of Shares
Original cost
Estimated current value
Expected return
Standard deviation
Correlation wit
FINA 301 Fall 2013
Dr. Mark D Griffiths
Self Test #12
1. You have a bond with $10,000 par value, 6.16% coupon, paid semi-annually, 11
years to maturity, selling for $9180.76. What would be the price f
FINA 301 Fall 2013
Dr. Mark D Griffiths
Self Test #13
Answer TRUE/FALSE
1.
The difference between correlation and covariance is that covariance is a
standardized measure and correlation is a measure o
1
FINA 301 Fall 2013
Dr. Mark D Griffiths
Self Test #2
Use the following information to answer the questions:
Exhibit 1: Operating Statements for the years ending December 31, 2010-2012
(All amounts i
FINA 301 Fall 2013
Dr. Mark D Griffiths
Self Test #7
Time Value of Money Problems
1. What will a deposit of $4,500 at 10% compounded semiannually be worth if left in the bank
for
six years?
a. $8,020.
1
FINA 301 Fall 2013
Dr. Mark D Griffiths
Self Test #4
1. What is the present value to an investor today of receiving a lump sum of $10,000 in one
year if one-year rates are 4.75%?
2. How much will $1
1
FINA 301 Fall 2013
Dr. Mark D Griffiths
Self Test #3
Use the following information to answer the questions:
Maturity
Yield
1 year
6.0%
2 years
6.2
3 years
6.4
4 years
6.5
5 years
6.5
1. If the pure
1
FINA 301 Fall 2013
Dr. Mark D Griffiths
Self Test #5
1. A US homeowner borrowed $350,000 through a 25 year standard (monthly compounding)
mortgage at a rate of 5.75% fixed exactly 10 years ago. He n
FINA 301 Fall 2013
Dr. Mark D Griffiths
Self Test #15
1. You have the following cash flow situation:
Year
0
1
2
3
4
Cash Flow
(70,000)
0
0
0
96,500
If the NPV for the cash flows is ($8010), what is th
FINA 301 Fall 2013
Dr. Mark D Griffiths
Self Test #16
Answer TRUE/FALSE
1.
When analyzing mandatory cost only projects, it is possible to calculate the IRR but it
will always be less than the WACC.
2.
FINA 301 Fall 2013
Dr. Mark D Griffiths
Self Test #17
1.
Last year, Star Corp reported annual revenue of $14 million, CoGS of $9.8 million
and a weighted average cost of capital of 8%. At year end, it
FINA 301 Fall 2013
Dr. Mark D Griffiths
Self Test #14
1. You Have Been Considering a New Business Opportunity. Glendale Mall Has Offered to
Pay You $30,000 Per Year at the End of Each of the Next 4 Ye
Formula Sheet
Exam 2
Total Return =
Income
+
[Ending Value Beginning Value]
Beginning Value
Beginning Value
Stated, Quoted, Simple Rate = Annualized rate with no consideration of compounding
Periodic
FINA 301 Fall 2013
Dr. Mark D Griffiths
Self Test #13
Answer TRUE/FALSE
1.
The difference between correlation and covariance is that covariance is a
standardized measure and correlation is a measure o
FINA 301 Fall 2013
Dr. Mark D Griffiths
Self Test #11
Use the following data for Problems 1-6.
Number of Shares
Original cost
Estimated current value
Expected return
Standard deviation
Correlation wit
FINA 301 Fall 2013
Dr. Mark D Griffiths
Self Test #10
1.
Assume that the risk-free rate is 6% and the market risk premium is 5%. Given this
information, what is the required return on the market portf