To: Board of Directors From: Angel Chan Date: xx xxx xxxx Subject: Finacial performance of Winning Tools Limited and loan covenants
|
|
|
- Maud Cobb
- 6 years ago
- Views:
Transcription
1 SECTION A CASE QUESTIONS Answer 1(a) To: Board of Directors From: Angel Chan Date: xx xxx xxxx Subject: Finacial performance of Winning Tools Limited and loan covenants We would need to resolve the dividend payout of Winning Tools Limited. The company has to decide on a share repurchase programme which is appropriate given the big drop in the stock price recently. The company is facing a financing constraint in dividend payout and share buyback, coupled with signalling the future outlook on the decisions and positioning of the stock s price in the capital market. There may be a cyclical downturn in the machine tool industry because the global economy is heading into recession. Also, the business restructuring of the company may not yield the expected positive financial results as new products incur a higher level of risk to win market share. The credibility of forecasts depends largely on the assessment of the management s ability to harvest potential profits. To support the new investment and resume dividend payout will increase the chance of taking on new debt. In an increasing interest rate environment, the risk of bankruptcy and financial distress cost are mounting. Answer 1(b) Return on investment (2013) = $12,992 / $674,582 = 1.93% Return on investment (2014) = -$250,785 / $536,874 = % Debt ratio (2013) = $273,411 / $674,582 = 40.5% Debt ratio (2014) = $359,684 / $536,874 = 67.0% (Alternative method of calculating debt ratio is acceptable.) Current ratio (2013) = $489,242 / $200,318 = 2.44x Current ratio (2014) = $447,083 / $267,367 = 1.67x Asset turnover ratio (2013) = $815,979 / $674,582 = 1.21x Asset turnover ratio (2014) = $656,638 / $536,874 = 1.22x Overall the financial performance is worsening in 2014 compared with 2013, with a negative return on investment, high debt ratio and tightening liquidity. Module B (June 2015 Session) Page 1 of 10
2 Answer 1(c) Dividend payout may affect the cash flow of the operation of the company where liquidity is weakening in It may further affect the repayment ability of the company to service the debt interest and principal to the existing lenders or bankers, as the debt ratio is increasing in Given the deterioration of the financial performance of the company in 2014, existing lenders or bankers may have more reservations and may even restrict the aggressive dividend payout ratio of the company by means of negative covenant clauses in the lending agreement. Loan covenants may also limit the company to sell assets to raise cash in order to make dividend payments. The creditors may even limit the capital expenditure of the company, which may affect the long term growth of Winning Tools Limited. Answer 2(a) The company s investment spending in research and development is likely to push up the financing requirement. The traditional presses and molds segment might continue to struggle in delivering profits while it will take time for the electrical industrial equipment sections to contribute to the bottom line. In the short run, the profit picture is not rosy. There is a good chance that a combined dividend payout in 2015 may still be higher than projected earnings. There will be pressure on the company to raise money through increasing debt levels to support the growth strategy and satisfy the dividend payment promise at the same time. As a result, the capital structure is likely to be more leveraged. Given the negative sentiment of the stock market, it may not be a good time to sell equities in order to raise long term funding. Answer 2(b) The decision on whether or not to repurchase shares relies on the assessment of the intrinsic value of the company versus the current market price. However, share repurchase in this case may not solve the company s dividend and financing problem. In fact, it will compete with the dividend decision for limited cash internally if implemented. Also, the message of share repurchase execution may not be consistent with the latest strategy: generate growth from another business line with heavy long term investment in research and development. Module B (June 2015 Session) Page 2 of 10
3 Answer 2(c) In general, a higher dividend payout usually signals anticipated good financial performance ahead. As a result, the capital market may react positively to the stock price when a higher than expected dividend payout announcement is made by the company. Moreover, the profile of the company s shareholders may influence the choice of dividend policy as well. Since the management of the company are largely family members of the founders, who own the largest and major share of the company, and they have decided to generate new growth by investing heavily. On top of that, there is a substantial increase in institutional investors who would like the company to create value. These might support the company not rushing to pay decent cash dividends before real and new growth starts to materialise. Answer 3(a) Post repurchase stock price = pre- repurchase stock price + present value of interest tax savings present value of financial distressed costs + signaling value of private information The debt increase will enhance tax savings which will have a positive effect on the stock price. The management may be perceived to convey positive private information to the market by share repurchase especially if the company used to maintain a high degree of information asymmetry with its shareholders. Yet, higher level of debt will increase the direct and indirect cost of bankruptcy and financial distress which are negative for the stock price. Overall, the stock price after share repurchase will be the result of these different forces. Stock buyback reduces the supply of stock but the share price may not increase if demand for stocks drops at the same time when investors are worried about the impact on future earnings. Answer 3(b) The weighted average cost of capital is likely to drop: there will be a higher portion of debt (additional financial leverage) being used relative to equity (reduction by stock repurchase). The cost of debt is lower than the cost of equity. Module B (June 2015 Session) Page 3 of 10
4 As a result, the weighted average cost of capital overall will go down, assuming that the increased debt level will not push the cost of financial distress to a very high level, and that outweighs the benefit of tax savings in taking on more debts. We also assume that the increase in the stock price as a result of share repurchase will not push up the market value of equity substantially. The beginning of the interest rate increase cycle will raise the cost of debt, or potential interest tax savings will benefit if the company is making a profit, not a loss. Answer 3(c) Andy s purchase of the company s stock based on his capacity as financial manager in the repurchase decision means he could be charged with insider dealing under the Securities and Futures Ordinance. The company should inform and educate its staff regarding the ethical standards in using information appropriately from time to time. Also, staff involved in stock price-sensitive information may need to sign a confidentiality agreement and make sure they are aware of the limitations of the use of information for trading purposes themselves or passing such information to someone else for trading purposes. Answer 4(a) Manufacturing cycle efficiency = manufacture time / (manufacture time+ transport time + store time + inspect time) = 7.2 / ( ) = 43.9% MCE (Winning Tools) << MCE of industry average, coupled with the unsatisfactory latest financial performance might suggest too much time is spent on non-value added activities such as transport and storage. Relatively insufficient time is spent on the quality control of the manufacturing process. Answer 4(b) Winning Tools Limited may fail to link the measure to the company s goal or strategy. It may not validate the link thoroughly. It may not set the appropriate performance target. It may measure incorrectly. * * * END OF SECTION A * * * Module B (June 2015 Session) Page 4 of 10
5 SECTION B ESSAY / SHORT QUESTIONS Answer 5(a) Actual profit margin: Sales $1,000 Direct labour $190 Direct materials $320 Variable overhead $60 Allocated overhead $380 Gross profit margin $50 (or 5%) Gross profit margin is 5% (1, ) / 1,000. Therefore current cost structure is not acceptable. The unit cost must be reduced from $950 to $930 in order to reach the 7% target gross margin. The company can achieve the $20 per unit reduction by considering one of the following three alternatives, (i) labour cost, (ii) materials cost and (iii) overheads. As given in the case, the labour cost in mainland China is rising due to economic growth and the increase is expected to be about 10% for TTC s plan, so it is unlikely that this cost can be reduced by $20 per unit or 10.5% (20/190). The reduction in materials cost is also difficult to achieve given that the commodity prices are determined by the market and TTC essentially has no control over it. Also, as TTC is already an established manufacturer of mobile phones and it has a reputation for being a low cost producer, a further increase in production efficiency is unlikely to deliver a cost reduction equivalent to a 33.33% reduction (20/60) in variable overheads. However, as TTC has an extra fixed manufacturing overhead, it is worth exploring (1) reduction of fixed manufacturing overhead, if possible, or (2) increase in the volume of production to reduce the allocated fixed overhead. As an illustration for (2), assuming total fixed overhead remains constant, in order to reduce the unit allocated fixed overhead from $380 to $360, the volume of production should be increased by 5.56% (380 / 360-1) or to 527,800 units. It is therefore worthwhile for TTC s management to explore with its customer the possibility of a higher purchase volume in order to reach the 7% target gross profit margin. Module B (June 2015 Session) Page 5 of 10
6 Answer 5(b) Total Gross Profit = $10,000,000 - $3,000,000 = $7,000,000 Traditional Gross Profit approach: ($ 000) Sales 10,000 COGS Direct labour 900 Direct materials 1,800 Manufacturing overhead 300 Gross profit margin 7,000 Yes, Model X should be developed. Life Cycle Costing approach Traditional Gross Profit approach: ($ 000) Sales 10,000 COGS: Direct labour 900 Direct materials 1,800 Manufacturing overhead 300 Gross profit margin 7,000 Brand building 4,000 R&D 2,900 Customer service (set up and running cost) 200 Termination cost (disposal of related assets, inventory write-off) 200 Abnormal wastage of materials due to learning curve 50 Life cycle profit / (loss) (350) Excluded costs: HR and admin support and legal support 300 Loss of disposal of idle equipment 500 Module B (June 2015 Session) Page 6 of 10
7 Model X is expected to suffer a loss of $350,000 during its life cycle when all relevant costs in developing, marketing, manufacturing and servicing the product are included. Unless Model X has significant strategic value to TTC, e.g. to develop an own brand to expand to a new market, it should not be launched unless total life cycle costs can be reduced and controlled to at least a breakeven level. R&D, branding, customer service, termination cost and abnormal wastage are all part of the life cycle costs incremental to Model X s development, i.e. the company will not incur these costs if Model X is not developed. HR, administration and legal support are excluded since they are allocated and these functions are shared by existing staff. Loss of disposal of idle equipment is a sunk cost and is therefore irrelevant to the decision. Answer 5(c) Advantages: - Give a better picture of the total performance of a product, particularly a new product. - Help identify design costing problems at an early phase and therefore reduce future maintenance and warranty costs. - Help shape product strategy to establish early presence and create early mover advantage. - Provide an indication of financial return over the life of a product. - Can be used to determine a target selling price at different stages of a product s life cycle. Disadvantages: - Additional cost may be needed to enhance accounting system to capture cost over life cycle. - Ignores time value of money. - Substantial uncertainty in estimation of sales, cost, R&D etc. on a product with a long cycle and / or when business is operating under a dynamic environment. - Inclusion of some costs may be subjective such as the accounting system development, product enhancement. This problem can be solved by applying incremental cost analysis by asking the question: is this cost incurred or saved if the product is launched? Module B (June 2015 Session) Page 7 of 10
8 Answer 6(a) All figures are in 000. Yr 0 Yr 1 Yr 2 Yr 3 Yr 4 Future Sales 12,100 13,552 15,178 17,076 18,270 EBIT 2,178 2,440 3,036 3,416 3,472 Tax (30%) (653.40) (732) (910.80) (1,024.80) ( ) Add depreciation Capital Expenditure (1,816) (1,490) (1,518) (1,708) (1,828) Changes in working capital (384) (306) (250) (76) (56) Free cash flow (413.40) , Terminal value 12,030 Total cash flow (413.40) , PV factor Total PV (359.50) , NPV 7,728.8 Less debt (950.0) Equity value 6,778.8 Working: Working capital 2,400 2,784 3,090 3,340 3,416 3,472 Changes (384) (306) (250) (76) (56) Terminal value = [962.4 / ( )] = 12,030 (Constant Growth Model) WACC 15% Growth rate beyond 5th year 7% Module B (June 2015 Session) Page 8 of 10
9 Answer 6(b) Forward exchange rates: 1 month: = months: = Therefore, total HK dollar payment = [ 7,000,000 x (0.3 x x ) ] = HK$90,296,150 If WYZ does not hedge, how much would it pay if GBP appreciates by 2% on the prescribed payment dates compared to the spot rate? 7,000,000 x 1.02 x = HK$91,740,432. WYZ has to pay = 91,740,432-90,296,150 = HK$1,444,282 more if it does not hedge. Answer 6(c) Premium = 7,000, x 6,778,800 = 1,915,900. Possible justification for premium: WYZ will derive cost savings due to increased economies of scale as it can act as the supplier to T s fashion business. Acquisition provides fast penetration into the UK market compared to organic growth. Since this is the first cross-border acquisition, WYZ will learn from this transaction for future overseas expansion activities. The use of A s brand will help enhance business. As a partner of a major UK company, WYZ may have the possibility of business opportunities in the EU market in the future. Answer 7(a) Apply equity carve-out to SA Equity carve out is a process in which a parent company sells the whole or part of a subsidiary or business to a new or group of new shareholders for cash. The key features of this transaction are actual cash inflow to the Group and a new shareholder. Existing shareholders of HEE will not be able to participate. Module B (June 2015 Session) Page 9 of 10
10 Reasons: As this action brings cash, it will immediately reduce cash flow pressure and provide stronger liquidity for the Group s future operating use. Selling partially to an independent new shareholder will help to establish a market value for this business. The Group s shareholding in SA, which is a cash cow, will be lower after the carve out, therefore the attractiveness of the Group to a corporate raider will be reduced. Apply spin-off to SB Spin off is a restructure technique in which a parent company distributes its shareholding of a subsidiary or business to its existing shareholders on a pro rata basis. After the distribution, the effective holding of shareholders remains the same and there will be no new shareholders. For example, the shareholders of HEE effectively hold 75% of SB through HEE before distribution, if 35% is distributed, then HEE s shareholders will hold 35% of SB directly and 40% through HEE. Reasons: The Group s size is smaller after distribution, reducing the attractiveness and threat of the takeover. Distribution will increase shares in trading. Higher trading volume is expected to help reflect the internal value. Answer 7(b) The Board should further consider the following matters before implementation: Extent of restructuring considering whether the Group still wants control over either one. This decision has to be taken in conjunction with the overall long term corporate strategy. Listing rules compliance: the extent of downsizing should not jeopardise the listing status of the Group and compliance requirements. Tax effect: will this action adversely affect the overall tax position of the Group? Also, can the transactions be structured tax free? Morale of employees. Effect on overall viability of the Group after restructuring. How to communicate with the shareholders and stakeholders to ensure their support. Cost: both transactions may involve substantial professional fees. * * * END OF EXAMINATION PAPER * * * Module B (June 2015 Session) Page 10 of 10
SECTION A CASE QUESTIONS (Total: 50 marks)
SECTION A CASE QUESTIONS (Total: 50 marks) Answer ALL of the following questions. Marks will be awarded for logical argumentation and appropriate presentation of the answers. CASE Winning Tools Limited
SECTION A CASE QUESTIONS (Total: 50 marks)
SECTION A CASE QUESTIONS (Total: 50 marks) Answer 1(a) The one year forward exchange rate of HKD / JPY is not equal to the current spot exchange rate because there exists a difference between the interest
Q&A Market Implications of Tax Reform
IN-D EPTH A NALYSIS OF TIMELY INVESTMENT TOPICS Q&A Market Implications of Tax Reform December 27, 2017 Investment Strategy Team Key Takeaways» The Tax Cuts and Jobs Act was signed into law on December
*Efficient markets assumed
LECTURE 1 Introduction To Corporate Projects, Investments, and Major Theories Corporate Finance It is about how corporations make financial decisions. It is about money and markets, but also about people.
Disclaimer: This resource package is for studying purposes only EDUCATION
Disclaimer: This resource package is for studying purposes only EDUCATION Chapter 6: Valuing stocks Bond Cash Flows, Prices, and Yields - Maturity date: Final payment date - Term: Time remaining until
To: Sunny Chan, CFO From: Charles Lee Date: xx Subject: Kowloon Warehouse Limited s profitability, costing and pricing policies
SECTION A CASE QUESTIONS (Total: 50 marks) Answer 1(a) To: Sunny Chan, CFO From: Charles Lee Date: xx Subject: Kowloon Warehouse Limited s profitability, costing and pricing policies Based on the activity
Fundamentals of. Finance EDITION. Richard A. Brealey London Business School
Fundamentals of Finance EDITION Richard A. Brealey London Business School Stewart C. Myers Sloan School of Management, Massachusetts Institute of Technology Alan J. Marcus Carroll School of Management,
Week-2. Dr. Ahmed. Strategic Plan
FINC 5880 Dr. Ahmed Week-2 Name Strategic Plan Financial Plan Projected Financial Statements Additional Funds Needed (AFN, EFN, DFN) Internal and External Funding Evaluation and Control Sales Forecast
MGT201 Financial Management All Subjective and Objective Solved Midterm Papers for preparation of Midterm Exam2012 Question No: 1 ( Marks: 1 ) - Please choose one companies invest in projects with negative
PAPER No. 8: Financial Management MODULE No. 27: Capital Structure in practice
Subject Financial Management Paper No. and Title Module No. and Title Module Tag Paper No.8: Financial Management Module No. 27: Capital Structure in Practice COM_P8_M27 TABLE OF CONTENTS 1. Learning outcomes
SECTION A CASE QUESTIONS (Total: 50 marks)
SECTION A CASE QUESTIONS (Total: 50 marks) Answer ALL of the following questions. Marks will be awarded for logical argumentation and appropriate presentation of the answers. CASE Sunny Capital Partners,
ACCA Paper F9 Financial Management. Mock Exam. Commentary, Marking scheme and Suggested solutions
ACCA Paper F9 Financial Management Mock Exam Commentary, Marking scheme and Suggested solutions 2 Suggested solutions Section A D Statement A is incorrect: Matching (not smoothing) is where liabilities
Since Robo contributes more on a per minute basis, the firm should use additional time in the Assembly Department to produce Robo.
SECTION A CASE QUESTIONS (Total: 50 marks) Answer 1(a) Heli HK$ Robo HK$ Selling price 8,000 24,000 Variable costs (3,240) (9,400) Contribution per unit 4,760 14,600 Answer 1(b) Time required for target
600 Solved MCQs of MGT201 BY
600 Solved MCQs of MGT201 BY http://vustudents.ning.com Why companies invest in projects with negative NPV? Because there is hidden value in each project Because there may be chance of rapid growth Because
THE HONG KONG INSTITUTE OF CHARTERED SECRETARIES THE INSTITUTE OF CHARTERED SECRETARIES AND ADMINISTRATORS
THE HONG KONG INSTITUTE OF CHARTERED SECRETARIES THE INSTITUTE OF CHARTERED SECRETARIES AND ADMINISTRATORS International Qualifying Scheme Examination CORPORATE FINANCIAL MANAGEMENT DECEMBER 2010 Suggested
Maximizing the value of the firm is the goal of managing capital structure.
Key Concepts and Skills Understand the effect of financial leverage on cash flows and the cost of equity Understand the impact of taxes and bankruptcy on capital structure choice Understand the basic components
Chapter 8. Fundamentals of Capital Budgeting
Chapter 8 Fundamentals of Capital Budgeting Chapter Outline 8.1 Forecasting Earnings 8.2 Determining Free Cash Flow and NPV 8.3 Choosing Among Alternatives 8.4 Further Adjustments to Free Cash Flow 8.5
25557 Corporate finance
25557 Corporate finance Lecture 1 Introduction and major theories: Corporate finance: Is about how corporations make financial decisions Is about money and markets, also about people Is also known as business
THE FINANCING DECISION
1 THE FINANCING DECISION You can have too much debt or too little.. Debt Ratios across Companies 2 2 Debt Ratios across Sectors 3 3 The Financial Balance Sheet 4 Assets Liabilities Existing Investments
THE GEORGE WASHINGTON UNIVERSITY. CROCS, INC. Case Study Report
THE GEORGE WASHINGTON UNIVERSITY CROCS, INC. Case Study Report ¹ SUBMITTED TO PROF. NEIL COHEN School of Business and Public Management The George Washington University BY Anil Kumar Cheerla FINA 6224
FINALTERM EXAMINATION Fall 2009 MGT201- Financial Management (Session - 3)
FINALTERM EXAMINATION Fall 2009 MGT201- Financial Management (Session - 3) Time: 120 min Marks: 87 Question No: 1 ( Marks: 1 ) - Please choose one ABC s and XYZ s debt-to-total assets ratio is 0.4. What
Financial Strategy and Valuation (FSV / SL 2) Strategic Level Pilot Paper - Suggested Answer Scheme
Financial Strategy and Valuation (FSV / SL 2) Strategic Level Pilot Paper - Suggested Answer Scheme PART I Question No. 01 (40 Marks) 1. Answer: Yes, I agree with the statement. Growth Business risk high
Chapter 17 Payout Policy
Chapter 17 Payout Policy Chapter Outline 17.1 Distributions to Shareholders 17.2 Comparison of Dividends and Share Repurchases 17.3 The Tax Disadvantage of Dividends 17.4 Dividend Capture and Tax Clienteles
Financial Analyst Training Programme 10 Days
Financial Analyst Training Programme 10 Days Delegate Profile: This course is targeted at delegates who are new to banking and finance and provides a comprehensive overview of financial reporting, financial
THE UNIVERSITY OF NEW SOUTH WALES JUNE / JULY 2006 FINS1613. Business Finance Final Exam
Student Name: Student ID Number: THE UNIVERSITY OF NEW SOUTH WALES JUNE / JULY 2006 FINS1613 Business Finance Final Exam (1) TIME ALLOWED - 2 hours (2) TOTAL NUMBER OF QUESTIONS - 50 (3) ANSWER ALL QUESTIONS
All In One MGT201 Mid Term Papers More Than (10) BY
All In One MGT201 Mid Term Papers More Than (10) BY http://www.vustudents.net MIDTERM EXAMINATION MGT201- Financial Management (Session - 2) Question No: 1 ( Marks: 1 ) - Please choose one Why companies
Advanced Corporate Finance. 3. Capital structure
Advanced Corporate Finance 3. Capital structure Objectives of the session So far, NPV concept and possibility to move from accounting data to cash flows => But necessity to go further regarding the discount
Professional Level Options Module, Paper P4
Answers Professional Level Options Module, Paper P4 Advanced Financial Management March/June 2017 Sample Answers 1 (a) A reverse takeover enables a private, unlisted company, like Chrysos Co, to gain a
Mercurio Capital - Financial System, Economic Strategy, Capital Budgeting, Quantitative Methods
1 Main Objective: Growth in Shareholder Value Increase the general valuation of the company Increase the share premium Reduce Risk Integrate Financial Strategy in the Business Strategy (as an extra layer
Downloaded From visit: for more updates & files...
Downloaded From http://www.cacracker.com, visit: http://www.cacracker.com for more updates & files... 1 PP FTFM December 2011 PROFESSIONAL PROGRAMME EXAMINATION DECEMBER 2011 FINANCIAL, TREASURY AND FOREX
Managing and Identifying Risk
Managing and Identifying Risk Fall 2013 Stephen Sapp All of life is the management of risk, not its elimination Risk is the volatility of unexpected outcomes. In the context of financial risk the volatility
Cost and Management Accounting
Paper 2 Cost and Management Accounting Syllabus......................................... 2.2 Line Chart Showing Relative Importance of Chapters...... 2.6 Table Showing Importance of Chapter on the Basis
RISK MANAGEMENT AND VALUE CREATION
RISK MANAGEMENT AND VALUE CREATION Risk Management and Value Creation On perfect capital market, risk management is irrelevant (M&M). No taxes No bankruptcy costs No information asymmetries No agency problems
MGT201 Financial Management Solved MCQs A Lot of Solved MCQS in on file
MGT201 Financial Management Solved MCQs A Lot of Solved MCQS in on file Which group of ratios measures a firm's ability to meet short-term obligations? Liquidity ratios Debt ratios Coverage ratios Profitability
AGENDA: MANAGEMENT ACCOUNTING
14-1 Management Accounting Tutorial 8 (, chapter 13, 14, 1, 2, 3) Mid Module Review Bangor University Transfer Abroad Programme 1. Globalization. 2. Strategy. 3. Organizational structure. 4. Process management.
Professional Level Options Module, Paper P4
Answers Professional Level Options Module, Paper P4 Advanced Financial Management December 2012 Answers 1 (a) Before implementing the proposal Cost of equity = 4% + 1 1 x 6% = 10 6% Cost of debt = 4% +
The following learning and growth perspective measures could enhance the implementation and management of Wellgas strategy:
SECTION A CASE QUESTIONS (Total: 50 marks) Answer 1(a) Wellgas strategy is to transform a fill-the-petrol tank routine into a delightful shopping experience for service-oriented customers who are ready
5. Bulgarian National Bank Forecast of Key
5. Bulgarian National Bank Forecast of Key Macroeconomic Indicators for 2018 2020 The BNB forecast of key macroeconomic indicators is based on data published as of 15 June 2018. ECB, EC and IMF assumptions
Transactional Valuation - M&A / Private Equity August 2011
www.pwc.com Transactional Valuation - M&A / Private Equity Agenda Valuation for Mergers and Acquisition Valuation for PE Valuation for Demergers Slide 2 Valuation for Mergers and Acquisitions Understanding
Index COPYRIGHTED MATERIAL
A ABC (activity-based costing). See also costs; peanut butter costing allocating indirect costs, 77 78 allocations to cost pools, 79 analyzing cost activities, 78 79 applying to bottlenecks, 353 applying
Institute of Certified Management Accountants of Sri Lanka. Operational Level May 2014 Examination. Operational Management Accounting (OMA / OL 1-201)
Copyright Reserved Serial No Operational Level May 2014 Examination Examination Date : 11 th May 2014 Number of Pages : 05 Examination Time: 9.30 a:m. 12.30 p:m. Number of Questions: 07 Instructions to
Cost and Management Accounting
Paper 2 Cost and Management Accounting Syllabus... Q&A-2.2 Bird's-Eye View... Q&A-2.5 Line Chart Showing Relative Importance Chapters... Q&A-2.7 Table Showing Importance of Chapter on the Basis of Marks...
FIN622 Solved MCQs BY
FIN622 Solved MCQs BY http://vustudents.ning.com Question # 1 of 15 Which of the following investment criteria does not take the time value of money into consideration? Simple payback method (page#34)
MGT201 Subjective Material
MGT201 Subjective Material Question No: 50 ( Marks: 3 ) Management Buyouts is a form of buyouts. Explain this term in your own words. Management buyouts are similar in all major legal aspects to any other
SUGGESTED SOLUTIONS TO SELECTED QUESTIONS
SUGGESTED SOLUTIONS TO SELECTED QUESTIONS Chapter 4 4.7 Journal entries: 1. Funds introduced to business Dr Cash 50,000 Cr Proprietorship 50,000 2. Recording purchase of business Dr Plant 5,000 Dr Inventory
Management Accounting
Management Accounting Level 3 Model Answers Series 3 2008 (Code 3023) 1 ASE 3023 2 06 1 3023/2/06 >f0t@w9w2`?[i]bkbw5k# Management Accounting Level 3 Series 3 2008 How to use this booklet Model Answers
GROUP PROJECT CASE STUDY. The Ivory Furniture Company. (Financial Analysis)
GROUP PROJECT CASE STUDY The Ivory Furniture Company (Financial Analysis) The Ivory Furniture Company is a manufacturer of home and office furniture and such household hardware items as curtain rods, picture
FCF t. V = t=1. Topics in Chapter. Chapter 16. How can capital structure affect value? Basic Definitions. (1 + WACC) t
Topics in Chapter Chapter 16 Capital Structure Decisions Overview and preview of capital structure effects Business versus financial risk The impact of debt on returns Capital structure theory, evidence,
MOCK CPA Evaluation CFE Day 1- Case that links back to Capstone 1 Page 1
MOCK CPA Evaluation CFE Day 1- Case that links back to Capstone 1 Page 1 Arndt Industries Suggested Time: Maximum 4 hours The CFE Day 1 (Capstone 1 individual certification case) will require students
accounts receivable: dollar amount due from customers from sales made on open account.
GLOSSARY 1 above-the-line: income items related to core operations. Typically assumed to have high predictive power for future earnings. accrual accounting: system of accounting that purports to measure
Analysing and Restructuring Distressed Corporate Debt
Analysing and Restructuring Distressed Corporate Debt Combining Financial Theory with Practical Examples This Course Can Be Presented In The Following Formats: Public Course Dates: 3-5 September 2019 Standard
MGT201 Financial Management Solved MCQs
MGT201 Financial Management Solved MCQs Why companies invest in projects with negative NPV? Because there is hidden value in each project Because there may be chance of rapid growth Because they have invested
Chapter 16: Financial Distress, Managerial Incentives, and Information
Chapter 16: Financial Distress, Managerial Incentives, and Information-1 Chapter 16: Financial Distress, Managerial Incentives, and Information I. Basic Ideas 1. As debt increases, chance of bankruptcy
Corporate Finance Solutions to In Session Detail Review Material
Corporate Finance Solutions to In Session Detail Review Material COPYRIGHT 2013 4 POINT LEARNING SYSTEMS INC. ALL RIGHTS RESERVED. 1 Disclaimer: These questions are designed to provide the student with
Analyzing Project Cash Flows. Principles Applied in This Chapter. Learning Objectives. Chapter 12. Principle 3: Cash Flows Are the Source of Value.
Analyzing Project Cash Flows Chapter 12 1 Principles Applied in This Chapter Principle 3: Cash Flows Are the Source of Value. Principle 5: Individuals Respond to Incentives. Learning Objectives 1. Identify
Introduction to CMA Part Section A External Financial Reporting Decisions... 2 A.1. Financial Statements... 2
CMA Part 1 Introduction to CMA Part 1... 1 Section A External Financial Reporting Decisions... 2 A.1. Financial Statements... 2 Users of Financial Information 2 The Financial Statements 3 Differences Between
Module 4: Free Cash Flow (FCF) Which cash flows do we discount?
70391 - Finance Module 4: Free Cash Flow (FCF) Which cash flows do we discount? 70391 Finance Fall 2016 Tepper School of Business Carnegie Mellon University c 2016 Chris Telmer. Some content from slides
Sensitivity = NPV / PV of key input
SECTION A 20 MARKS Question One 1.1 The answer is D 1.2 The answer is C Sensitivity measures the percentage change in a key input (for example initial outlay, direct material, direct labour, residual value)
Answer to MTP_ Final _Syllabus 2012_ December 2016_Set 1. Paper 20 - Financial Analysis and Business Valuation
Paper 20 - Financial Analysis and Business Valuation Page 1 Paper 20 - Financial Analysis and Business Valuation Time Allowed: 3 Hours Full Marks: 100 Question No. 1 which is compulsory and carries 20
F3 Financial Strategy. Examiner s Answers
Strategic Level Paper F3 Financial Strategy May 2012 examination Examiner s Answers Question One Rationale This question begins by evaluating the recent financial performance and dividend policy of B.
MGT201 Financial Management Solved Subjective For Final Term Exam Preparation
MGT201 Financial Management Solved Subjective For Final Term Exam Preparation Operating lease Operating Lease offers Financing AND MAINTENANCE: often the Lessor is the Supplier / Vendor of the Asset i.e.
IFRS 9 Financial Instruments
July 2014 Implementation Guidance International Financial Reporting Standard IFRS 9 Financial Instruments Implementation Guidance IFRS 9 Financial Instruments These Illustrative Examples and Implementation
1 (a) Net present value evaluation Year $000 $000 $000 $000 $000 Sales revenue 1,575 1,654 1,736 1,823 Selling costs (32) (33) (35) (37)
Answers Fundamentals Level Skills Module, Paper F9 Financial Management December 2010 Answers 1 (a) Net present value evaluation Year 1 2 3 4 5 $000 $000 $000 $000 $000 Sales revenue 1,575 1,654 1,736
Chapter 16 Debt Policy
Chapter 16 Debt Policy Konan Chan Financial Management, Fall 2018 Topic Covered Capital structure decision Leverage effect Capital structure theory MM (no taxes) MM (with taxes) Trade-off Pecking order
European Edition. Peter Moles, Robert Parrino and David Kidwell. WILEY A John Wiley and Sons, Ltd, Publication
European Edition Peter Moles, Robert Parrino and David Kidwell WILEY A John Wiley and Sons, Ltd, Publication Preface Organisation and coverage Proven pedagogical framework Instructor and student resources
F3 Financial Strategy
Strategic Level Paper F3 Financial Strategy Senior Examiner s Answers SECTION A Answer to Question One (a)(i) Valuation of Company NN (excluding potential synergistic benefits and integration costs) NN:
A Framework for Getting to the Optimal
A Framework for Getting to the Optimal 100 Is the actual debt ratio greater than or lesser than the optimal debt ratio? Actual > Optimal Overlevered Actual < Optimal Underlevered Is the firm under bankruptcy
ZEBRA TECHNOLOGIES SECOND-QUARTER 2016 RESULTS. August 9, 2016
ZEBRA TECHNOLOGIES SECOND-QUARTER 2016 RESULTS August 9, 2016 Anders Gustafsson Chief Executive Officer Mike Smiley Chief Financial Officer 2 Safe Harbor Statement Statements made in this presentation
ACC 501 Solved MCQ'S For MID & Final Exam 1. Which of the following is an example of positive covenant? Maintaining firm s working capital at or above some specified minimum level Furnishing audited financial
9. Short-Term Liquidity Analysis. Operating Cash Conversion Cycle
9. Short-Term Liquidity Analysis. Operating Cash Conversion Cycle 9.1 Current Assets and 9.1.1 Cash A firm should maintain as little cash as possible, because cash is a nonproductive asset. It earns no
CHAPTER 13 RISK, COST OF CAPITAL, AND CAPITAL BUDGETING
CHAPTER 13 RISK, COST OF CAPITAL, AND CAPITAL BUDGETING Answers to Concepts Review and Critical Thinking Questions 1. No. The cost of capital depends on the risk of the project, not the source of the money.
Credit Insurance Limit Underwriting Case Studies AMAN Union 2 nd Training Session, Dubai - April 2012 Maroun Abi Saad
Credit Insurance Limit Underwriting Case Studies AMAN Union 2 nd Training Session, Dubai - April 2012 Maroun Abi Saad Case 1: Unknown Limited Unknown Limited Financial Ratios and KPIs Key KPIs & Ratios
Z I C A ZAMBIA INSTITUTE OF CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANTS EXAMINATIONS LICENTIATE LEVEL L6: CORPORATE FINANCIAL MANAGEMENT
Z I C A ZAMBIA INSTITUTE OF CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANTS EXAMINATIONS LICENTIATE LEVEL L6: CORPORATE FINANCIAL MANAGEMENT SERIES: DECEMBER 2011 TOTAL MARKS 100 TIME ALLOWED: THREE (3) HOURS
Fin 622 Quiz #4. MC : Imtiaz Sarwar
Fin 622 Quiz #4 MC080200629 : Imtiaz Sarwar Question # 1 of 15 ( Start time: 11:13:02 AM ) Which of the following investment criteria does not take the time value of money into consideration? Simple payback
MOCK CPA Evaluation CFE Day 1- Case that links back to Capstone 1 Page 1
MOCK CPA Evaluation CFE Day 1- Case that links back to Capstone 1 Page 1 Ardnt Industries Suggested Time: Maximum 4 hours The CFE Day 1 (Capstone 1 individual certification case) will require students
CHAPTER 13 EFFICIENT CAPITAL MARKETS AND BEHAVIORAL CHALLENGES
CHAPTER 13 EFFICIENT CAPITAL MARKETS AND BEHAVIORAL CHALLENGES Answers to Concept Questions 1. To create value, firms should accept financing proposals with positive net present values. Firms can create
applications & theory
finance applications & theory third edition Marcia Millon Cornett Bentley University Troy A. Adair Jr. Berkeley College John Nofsinger Washington State University Mi brief table of contents PART ONE: INTRODUCTION
MGT201 - Financial Management FAQs By
MGT201 - Financial Management FAQs By Explain me in detail with example what is "double taxation"? Answer: Double taxation occurs when tax is paid more than once on the same taxable income or asset. For
Analyzing Project Cash Flows. Chapter 12
Analyzing Project Cash Flows Chapter 12 1 Principles Applied in This Chapter Principle 3: Cash Flows Are the Source of Value. Principle 5: Individuals Respond to Incentives. 2 Learning Objectives 1. Identify
Chapter 021 Credit and Inventory Management
Multiple Choice Questions 1. The conditions under which a firm sells its goods and services for cash or credit are called the: A. terms of sale. b. credit analysis. c. collection policy. d. payables policy.
HKICPA Qualification Programme
HKICPA Qualification Programme Module B Corporate Financing KPMG Mock Exam Answers http://www.kaplanfinancial.com.hk Copyright Kaplan Financial (HK) Limited All rights reserved. No part of this examination
CS Professional Programme Module - II (New Syllabus) (Solution of June ) Paper - 5: Financial, Treasury and Forex Management
Solved Scanner Appendix CS Professional Programme Module - II (New Syllabus) (Solution of June - 2015) Paper - 5: Financial, Treasury and Forex Management Chapter - 1: Nature, Significance and Scope of
Final Case: Friendly Cards, Inc. FINAN Lutz
Final Case: Friendly Cards, Inc. FINAN 4210 Lutz Jonathan Matsen 05/01/2013 Problem Identification Wendy Beaumont, president of Friendly Cards, is currently faced with 3 time sensitive issues that need
Quiz Bomb. Page 1 of 12
Page 1 of 12 Quiz Bomb Indicate whether the following statements are True or False. Support your answer with reason: 1. Public finance is the study of money management of individual. False. Public finance
Chapter 13 Capital Structure and Distribution Policy
Chapter 13 Capital Structure and Distribution Policy Learning Objectives After reading this chapter, students should be able to: Differentiate among the following capital structure theories: Modigliani
EMP 62 Corporate Finance
Kellogg EMP 62 Corporate Finance Capital Structure 1 Today s Agenda Introduce the effect of debt on firm value in a basic model Consider the effect of taxes on capital structure, firm valuation, and the
Investec Global Strategy Fund. Product Key Facts Statements July 2018
Investec Global Strategy Fund Product Key Facts Statements July 2018 Contents Money Sub-Funds U.S. Dollar Money Fund... 1 Sterling Money Fund... 4 Bond Sub-Funds Global Total Return Credit Fund... 7 Investment
School of Business & Enterprise. Module Code: ACCT08009 ACCOUNTING & FINANCE. Date: 19 June 2017 Time:
School of Business & Enterprise Paisley Campus Session 2016-17 Resit Paper Module Code: ACCT08009 ACCOUNTING & FINANCE Date: 19 June 2017 Time: 0900-1100 EXAM PAPER HAS TWO SECTIONS: A AND B Answer Questions
Full Year Results Presentation For the year ended 31 March May 2017
Full Year Results Presentation For the year ended 31 March 2017 30 May 2017 Important information EROAD Limited ( EROAD ) registered a prospectus in July 2014 ( Prospectus ) in relation to an initial public
CHAPTER 6 MAKING CAPITAL INVESTMENT DECISIONS
CHAPTER 6 MAKING CAPITAL INVESTMENT DECISIONS Answers to Concepts Review and Critical Thinking Questions 1. In this context, an opportunity cost refers to the value of an asset or other input that will
Russian manufacturing industry overview. May 2016
Russian manufacturing industry overview May 2016 Introduction Srbuhi Hakobyan Partner Deloitte CIS Deloitte CIS thanks all those who participated in the survey that we conducted in February 2016 as part
FINALTERM EXAMINATION Fall 2009 FIN622- Corporate Finance (Session - 1) A project would be financially feasible in which of the following situations?
FINALTERM EXAMINATION Fall 2009 FIN622- Corporate Finance (Session - 1) Question No: 1 ( Marks: 1 ) - Please choose one A project would be financially feasible in which of the following situations? If
Solved MCQs MGT201. (Group is not responsible for any solved content)
Solved MCQs 2010 MGT201 (Group is not responsible for any solved content) Subscribe to VU SMS Alert Service To Join Simply send following detail to bilal.zaheem@gmail.com Full Name Master Program (MBA,
Professional Bridging Examination. Paper I PBE Financial Accounting
Professional Bridging Examination Pilot Examination Paper Paper I PBE Financial Accounting Questions & Answers Booklet The suggested answers given in this booklet are purposely made to give more details
MGT201 Current Online Solved 100 Quizzes By
MGT201 Current Online Solved 100 Quizzes By http://vustudents.ning.com Question # 1 Which if the following refers to capital budgeting? Investment in long-term liabilities Investment in fixed assets Investment
Paper P1 Performance Operations Post Exam Guide November 2014 Exam. General Comments
General Comments Performance on this paper was fairly poor, with the pass rate below the average for the 2010 syllabus. Many candidates scored very highly; however there were a large number of low-scoring
FULL YEAR RESULTS PRESENTATION WELL POSITIONED FOR CONTINUED GROWTH. 3 April 2017
FULL YEAR RESULTS PRESENTATION WELL POSITIONED FOR CONTINUED GROWTH 3 April 2017 AGENDA Introduction and overview John Hornby Financial review David Main Strategic progress and outlook John Hornby Questions
Credit Evaluation. Assessment of borrower capacity to repay the loan. Assessment of borrower s ability to bring in profits from operations.
Credit Evaluation Credit Evaluation Assessment of borrower capacity to repay the loan. Assessment of borrower s ability to bring in profits from operations. Assessment of project viability. Assessment
Part A: Corporate Finance
Finance: Common Body of Knowledge Review Part A: Corporate Finance Time Value of Money Financial managers always want to determine how much a periodic receipt of future cash flow is worth in today s dollars.
MID CAP INTRINSIC VALUE PORTFOLIO
MID CAP INTRINSIC VALUE PORTFOLIO May 1, 2017 SUMMARY PROSPECTUS Class I The Fund is offered to certain life insurance companies to serve as an investment vehicle for premiums paid under their variable