The Goals and Activities of Financial Management
TRUE or FALSE
Field of finance is closely related to economics and accounting, and financial managers need to understand the relationships between these fields.
TRUE
TRUE or FALSE
In determining the Present Value, we measure the value of an amount that is allowed to grow at a given interest rate over a period of time.
Future Value
The income statement shows you how your business is doing at a specific point of time?What is
FALSE
The income statement is a time-dynamic document prepared for a period of time, not a specific point in time (Typically over a one year period).
TRUE or FALSE
Percent of Sales Method determine assets and liabilities that do not change spontaneously with sales
TRUE
The Great Recession—the most recent world-wide economic downturn—started in what year?
2007
Established by Dodd-Frank within the treasury department to oversee the insurance industry and streamline state-based insurance regulation.
Federal Insurance Office
The simple formula for Present Value is:
PV = FV (1/(1+i)^n)
This is used to weigh and evaluate the operating performance of the firm.
Financial Ratio
The ability to financially plan ahead and make necessary adjustments before actual events occur
Financial Forecasting
When was the World Trade Organization established?
Responsible for establishing auditing standards within companies, controlling the quality of audits, and setting rules and standards for the independence of the auditorsWhat is
Public Company Accounting Oversight Board
This is a payment stream when payment occurs at the end of each year.
Ordinary Annuity
What are the four primary categories of ratio?
-Profitability Ratios, Asset Utilization Ratios, Liquidity Ratios, Debt Utilization Ratios
Systems approach to develop pro forma statement
1. construct a pro forma income statement based on sales projections and a production plan
2. translate into a cash budget
3. assimilate into a pro forma balance sheet
In 1967, who became the first woman to own a seat on the New York Stock Exchange?
Muriel Siebert
The restructuring of companies like Hewlettt-Packard and McGwa Hill were a direct result of whose influence to the board of directors in response to their concerns related to maximizing the values of their investments?
Institutional Investors
Calculate the Future Value of annuity payment using the following information:
Annuity Payment (A) = 1,000
Interest Rate (i) = 10%
Number of payments (n) = 4
FVa = 4,641
Compute for the days based on a 365-calendar days in a year using these limited date: Sales of 1,000,000; Average Total Assets of 4,300,000 and Average Inventory of 180,000What is
73
Solution:
Sales 1,000,000
Av. In. 200,000
ToR. 5
Days in a year 365
= 365/5
What do investors want to see in forecasts? State at least 2.
Realistic assumptions, Logical and defensible analysis, Sufficient cash flow to provide a return to shareholders and support the valuation of the company
Name at least 1 of the new taxes introduced by the TRAIN law.
Excise tax on cosmetic surgery
Excise tax onsugar-Sweetened Beverage
In order for financial managers to make and apply decisions correctly they must understand economics in relation to what?
Gross Domestic Product, Interest Rates, Taxes, Employee Attrition, Inflation
You will deposit $13,000 today. It will grow for 7 years at 12% interest compounded semiannually. You will then withdraw the funds annually over the next 5 years. The annual interest rate is 10%. Your annual withdrawal will be____
$7,753
Solution:
PV Factor
13,000 x (1 + (12%/2))^(7x2)
= 29,391.75
FV Factor
= 29,391.75
(((1-1/(1.10^5)))/0.10)
The company had the following information: Total noncurrent assets, ₱494,000 which was 26% of total assets; Inventory, ₱166,000, and Total current liabilities, ₱200,000. What was the company’s quick ratio?
6.2
Solution:
TNCA 494,000
26%
TA 1,900,000
CA 1,406,000
Inv 166,000
CL 200,000
CA - Inv = 1,240,000
CL = 200,000
= 1,240,000/200,000
A firm has targeted a 20% growth in sales this year. Last year's cash as a percent of sales was 10%, accounts receivable 30%, and inventory 25%. What percentage growth in current liabilities is required to support the growth in sales under the percent-of-sales forecasting method?
13%
Solution:
Percentage growth in current liabilities = Percentage growth in current assets
= 0.20 × (0.10 + 0.30 + 0.25)
Microsoft invested $300 million dollars in which company's Nook in 2012?
Barnes & Noble