FINANCIAL MANAGEMENT UNIT - 1 ___________________________________________________________________________ Meaning of Financial Management Financial Management means planning‚ organizing‚ directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. It means applying general management principles to financial resources of the enterprise. Definition : “Financial Management is the operational activity of a business that is responsible for obtaining
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Eurazeo aimed to enhance the Fraikin’s operational performance and growth and create long-term shareholder value. To make this acquisition successful‚ CIC and Calyon‚ two French banks‚ granted Fraikin a bridge loan on condition that the acquirers would refinance the loan within the year. In March 2004‚ Gerony‚ the CFO of Fraikin were hesitated about three financing alternatives‚ leverage buyout‚ assets-backed loan‚ and securitization‚ which would enable Fraikin to repay this large bridge loan at cost-efficient
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TEST QUESTIONS: Questions 1-3 refer to the following: The following selected data for March were taken from Rubenstein Company’s financial statements: Cost of goods available for sale Manufacturing overhead Cost of goods manufactured Finished goods inventory ‑ ending Direct materials used Sales Selling and administrative expenses Direct labor Work in process inventory ‑ beginning $ 65‚000 20‚000 51‚000 10‚000 15‚000 105‚000 30‚000 20‚000 0 1. The gross
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Critical Thinking Questions 1. A call option confers the right‚ without the obligation‚ to buy an asset at a given price on or before a given date. A put option confers the right‚ without the obligation‚ to sell an asset at a given price on or before a given date. You would buy a call option if you expect the price of the asset to increase. You would buy a put option if you expect the price of the asset to decrease. A call option has unlimited potential profit‚ while a put option has limited potential
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CAPITAL BUDGETING ANALYSIS To achieve success over time‚ a firm’s managers must identify and invest in projects that provide positive net present values to maximize shareholder wealth. Capital Budgeting Is the process of identifying‚ evaluating‚ and implementing a firms investment opportunities. Involves long-term projects Requires large initial investment Constructing plant and equipment Time frame maybe as short as a year or as long as twenty to thirty years The profitability of a firm
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Chapter 10 Capital budgeting is fundamental to the FM decision-making process; focused on investment in fixed assets. It involves measuring the incremental cash flows associated with investment proposals and the evaluation of the attractiveness of such cash flows relative to the project’s costs. At issue is the estimation of those cash flows based on various decision criteria and how to adjust for riskiness of a given project or combination of projects. Incremental after-tax cash flows are initial
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FIN/370 Final Examination Study Guide This study guide prepares you for the Final Examination you complete in the last week of the course. It contains practice questions‚ which are related to each week’s objectives. Highlight the correct response‚ and then refer to the answer key at the end of this Study Guide to check your answers. Use each week’s questions as a self-test at the start of a new week to reflect on the previous week’s concepts. When you come across concepts that you are unfamiliar
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because the value of an asset is determined by expected future income streams‚ and investments are undertaken now to generate income in the future. When you buy a share in a company you buy an asset‚ and the value of that asset depends on the market view of the expected income stream likely to be generated by the company in the future. When the company undertakes an investment it changes the expected future income stream and hence changes its own value as an asset. Consequently‚ the value of shares
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internet 4.6 million landline telephone Expected consolidated revenue of $30.9 billion (2007) Expected Net Income of $2.6 billion (2007) AirThread Connections One of the largest regional wireless companies in the United States Service more than 200 markets in 5 geographical regions Firms network covers 80 million people Expected revenue of $3.9 billion (2007) Expected Net income of $400 million (2007) Wireless Communications Market Intensely competitive AirThread competed directly
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By looking at cash flows we are able to analyze the timing of the benefit or cost. The company should only be interested in the incremental cash flows‚ because the incremental cash flows will be marginal benefits from this project and increased value to the company. (Cite study paper) Although depreciation is a non-cash expense‚ it does affect the level of the differential cash flow‚ because it is a tax-deductible expense. The higher the depreciation expense‚ the lower the firms profits
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