Finance: Balance Sheet and Southwest Development Company

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BFN1014 Financial Management I (Semester 53)

BFN1014 Financial Management I TUTORIAL 1 (Week 2): Tutorial Questions Chapter 1: The Role of Managerial Finance Review Questions 1-3 Which legal form of business organization is most common? Which form is dominant in terms of business revenues? What is the goal of a firm and, therefore, of all managers and employees? Discuss how one measures achievement of this goal. What are the major differences between accounting and finance with respect to emphasis on cash flows and decision making?

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Problems P1-1 (Page 27) Merideth Harper has invested $25,000 in Southwest Development Company. The firm has recently declared backruptcy and has $60,000 in unpaid debts. Explain the nature of payments, if any, by Ms. Harper in each of the following situations a. Southwest Development Company is a sole proprietorship owned by Ms. Harper. b. Southwest Development Company is a 50-50 partnership of Ms. Harper and Christopher Black. c. Southwest Development Company is a corporation. P1-3 (Page 27) a. It is typical for Jane to plan, monitor and access her financial position using cash flows over a given period, typically a month. Jane has a savings account, and her bank loans money at 6% per year while it offers short-term investment of 5%. Jane’s cash flows during August were as follows: Item Clothes Interest Received Dining out Groceries Salary Auto Payment Utilities Mortgage Gas Cash Inflow $450 500 800 4500 355 280 1,200 222 Cash Outflow $ 1,000

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BFN1014 Financial Management I (Semester 53)

a. b. c. d.

Determine Jane’s total cash inflows and outflows. Determine the net cash flow for the month of August. If there is a shortage, what are a few options open to Jane? If there is a surplus, what should be a prudent strategy for her to follow?

Chapter 3: Financial Statements and Ratios Analysis Review Questions 3-17 How do the...
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