FINANCIAL STATEMENTS Accrual-based approach – revenues are recorded at the point of sale and costs when they are incurred‚ not necessarily when a firm receives or pays out cash Cash flow approach – used by financial professionals to focus attention on current and prospective inflows and outflows of cash 1. Balance sheet a. Assets Cash and Cash Equivalents Marketable securities Accounts receivable Inventories Net property‚ plant and equipment Intangible assets b. Liabilities Accounts
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Fundamentals of corporate finance (European edition) by David Hillier Quartile 4 IBA Chapter 1 - 14 Chapter 1 Introduction to corporate finance 1.1 Corporate finance and the financial manager Corporate finance must be considered with three basic types of question: 1. What long-term investments to make 2. Where will we get the money for those investments from 3. How will we manage everyday financial activities 1. What long-term investment to make: To process of planning and
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with a local bank. As part of its evaluation process‚ you must take an examination on time value of money analysis covering the following questions. A. Draw time lines for (1) a $100 lump sum cash flow at the end of Year 2‚ (2) an ordinary annuity of $100 per year for 3 years‚ and (3) an uneven cash flow stream of -$50‚ $100‚ $75‚ and $50 at the end of Years 0 through 3. ANSWER: [Show S5-1 through S5-4 here.] A time line is a graphical representation that is used to show the timing of
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CATHOLIC UNIVERSITY OF SANTIAGO DE GUAYAQUIL FACULTY OF ECONOMICS AND ADMINISTRATIVE SCIENCES INTERNATIONAL BUSINESS MANAGEMENT FINANCIAL MANAGEMENT I TOPIC: DUTY CHAPTER 5 - EXERCISES MEMBERS: BRYAN CARRION LILIBETH LIGER KARLA SARANGO TEACHER: Mr. PEDRO ZAMBRANO SEMESTER A 2015 CHAPTER 5 – EXERCISES P5–2 Future value calculation Without referring to the preprogrammed function on your financial calculator‚ use the basic formula for future value along with the given interest rate‚ r‚ and the
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Exam2 FIN370 Fall 2011 Key Version B 1. A call provision in a bond agreement grants the issuer the right to: A. repurchase the bonds prior to maturity at a pre-specified price. B. change the coupon rate provided the bondholders are notified in advance. C. replace the bonds with equity securities. D. buy back the bonds on the open market prior to maturity. E. call the bondholder to determine if he or she would like to extend the term of the bond agreement. BLOOMS TAXONOMY
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1. An agency problem is prone to exist in public corporations because: E. management is frequently separated from ownership.2. Larson‚ Inc. has total assets of $248‚000 and an equity multiplier of 2.5. What is the debt-equity ratio? E. 1.5 3. Kate wants to invest $1‚000 for five years. Which one of the following will provide her with the largest future value? B. 7 percent interest‚ compounded monthly 5. Hilltop‚ Inc. earns $.12 in profit on every $1 of sales. The firm pays out 55 percent of its profits
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Answer: aEASY Time lines can be constructed for annuities where the payments occur at either the beginning or the end of the periods. a. True b. False (5-2) Compounding 8. F J Answer: bEASY Time lines cannot be constructed for annuities unless all the payments occur at the end of the periods. a. True b. False (5-2) Compounding 9. F J Answer: aEASY Some of the cash flows shown on a time line can be in the form of annuity payments while others can be uneven amounts.
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opportunity cost of 10%‚ what is the future value of a $1‚000 ordinary annuity for 1 year? a. $1‚200 b. $1‚120 c. $1‚100 d. $1‚210 7. Given an annual opportunity cost of 10%‚ what is the future value of a $1‚000 ordinary annuity for 10 years? a. $15‚937 b. $15‚739 c. $10‚000 d. $12‚000 8. If you require a 9 percent annual return on your investments‚ you would prefer $15‚000 five years from today rather than an ordinary annuity of $1‚000 per year for 15 years. a. True b. False 9. How
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1. EP Enterprises has the following income statement. How much net operating profit after taxes (NOPAT) does the firm have? Sales $1‚800.00 Costs 1‚400.00 Depreciation 250.00 EBIT $ 150.00 Interest expense 70.00 EBT $ 80.00 Taxes (40%) 32.00 Net income $ 48.00 a. $81.23 b. $85.50 c. $90.00 EBIT $150.00
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TEST 2 MGF 301 Corporation Finance Fall 2013 Please sign name in box (Note: Total Points = 100; Multiple Choice = 4 points each unless otherwise indicated) 1. YT Inc. is considering implementing a new project. Which of the following is a cash flow that should be taken into account for capital budgeting purposes? (a) Expected lost sales in a related YT Inc. product caused by the new product (b) The annual bonus paid to the YT Inc. President based on last year’s earnings
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