Financial Management questions & Answers complete

Financial Management 2 Financial Management PLAGIARISM Plagiarism is a form of cheating, by representing someone else's work as your own or using someone else's work (another student or author) without acknowledging it with a reference. This is a serious breach of the Academic Regulations and will be dealt with accordingly. Students found to have plagiarised can be excluded from the program. Plagiarism occurs whenever you do any of the following things without acknowledging the original source:  Copy information from any source (including the study guide, books, newspapers, the internet)  Use another person's concepts orideas  Summarise or paraphrase another person's work. How do I avoid plagiarism? To ensure you are not plagiarising, you must acknowledge with a reference whenever you:  use another person's ideas, opinions or theory  include any statistics, graphs or images that have been compiled or created by another person or organization  Paraphrase another's written or spokenword. What are the penalties? The penalties for plagiarism are:  Deduction of marks,  A mark of zero for the assignment or the unit, or  Exclusion from the program. Plagiarism is dealt with on a case-by-case basis and the penalties will reflect the seriousness of the breach. Please note: claiming that you were not aware of need to reference is no excuse. 3000 WORDS Financial Management 3 Financial Management Contents Q1. i) Explain the importance of analysing Financial Statements through Ratios. .............. 5 Introduction .......................................................................................................................... 5 The Importance of Ratio Analysis......................................................................................... 6 Conclusion............................................................................................................................ 8 Calculate : Accounts Receivable Turnover and Average Collection period ratios. ................. 8 In order to calculate turnover ratio, Net Credit Sales and Average accounts receivable need to be calculated. ........................................................................................................................ 9 Q2. If you plan to invest $7000 annually for 5 years and the discount rate is 10%. ............ 9 i) Calculate what is the future value ? .............................................................................. 10 ii) Briefly explain the time value of money......................................................................... 10 Introduction ........................................................................................................................ 10 The Five Variables that You Simply Ought To Know: ........................................................ 11 Conclusion.......................................................................................................................... 11 Q3. Following information is given of ABC Ltd.............................................................. 12 Explain the Capital Budgeting process of any Organization................................................. 13 Introduction ........................................................................................................................ 13 What is a Budget? ............................................................................................................... 14 Different Budget Methods................................................................................................... 14 Financial Management 4 Financial Management Conclusion.......................................................................................................................... 16 b. Market Value Weight................................................................................................... 17 c. What are the Factors Affecting costs of Capital? .......................................................... 17 Calculate the NPV and the Profitability Index and suggest which project should be ............ 18 recommended based on each method................................................................................... 18 Explain what are the key decisions a Finance Manager has to take in an Organization with suitable examples. ............................................................................................................... 19 Introduction ........................................................................................................................ 19 Conclusion.......................................................................................................................... 22 Q6. Write a short note on the following Financial Management Axioms : ....................... 22 a. Risk – return trade off .................................................................................................. 22 Q7. i) Robbins Corporation is a retail dealer for electronic equipment. The taxable income is $601,500. Calculate the tax liability. ................................................................................ 25 ii) Explain the importance of Taxation in an economy and how it contributes to the overall well-being of the society at large. ........................................................................................ 25 Introduction ........................................................................................................................ 26 Why it is Important to Pay Taxes ........................................................................................ 26 Conclusion.......................................................................................................................... 26 Financial Management 5 Financial Management Answer the below questions. Each question carries equal marks. Q1. i) Explain the importance of analysing Financial Statements through Ratios. Introduction The term ratio analysis is employed in the quantitative relationship between two variables. The Ratios are required for evaluating the financial plan. Employment of ratios within the hands of a financial specialists works as a tool for evaluating totally different financial statements (Rashidjaved , N.D.). Effective planning and financial management are the keys to running a financially flourishing business. Ratio analysis is important to help you perceive monetary statements. It will distinguish trends over time and measure the general monetary state of the business. Additionally, lenders and potential investors usually consider ratio analysis once creating loaning and investment selections (Lohrey & Seidel, 2019). Ratios are important quantitative analysis tools. One of their most significant functions lies in their capability to act as lagging indicators in distinguishing positive and negative monetary trends. The knowledge analytic thinking provides permits you to form, and implement in progress monetary plans and, once necessary, create course corrections to short-term financial plans. Ratio analysis conjointly provides ways to check the monetary