MODULE II Capital structure-theories of capital structure – MM model‚ incentive issues and agency cost; financial signaling; Capitalization-under capitalization –over capitalization-capital gearing Leverage – operating leverage-financial leverage Cost –volume- profit analysis PREPARED BY MRS. REKHA VENUGOPAL Capital structure In order to run and manage a company funds are needed. Right from the promotional stage
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Financial Management This document placed forward is to aid in the explanation of the nature of the Jamaican financial markets to Valentino Rossi‚ a professional motorcyclist who recently came to the Jamaica from Italy. Valentino is a highly ranked cyclist who expects to invest substantial amounts of money through the Jamaica Money Market Brokers. He is keen on financial matters and would like to understand in general terms what will happen to his money. So a set of questions and scenarios have
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FINANCIAL MANAGEMENT INTRODUCTION Business firms exist because they satisfy a human need by providing a product or service. No business firm can be established without sufficient financing. The owner(s) therefore put personal loans they have entered into‚ and/or their hard-earned savings‚ at stake to partially finance the firm. The owner’s or owners’ contribution is referred to as owners’ equity. Normally‚ owners’ equity is not sufficient Borrowed funds (loans) have to be repaid through
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customers and projects with his loan application. He also included a list of current receivables. Gupta told the loan officer that he had monitored his firm’s financial status closely and that he had financial reports prepared every six months. He said that the would send a copy to the bank. In addition‚ he was willing to file a personal financial statement with the bank. Question: 1. Prepare your recommendation on Agarwal Cast Company Caselet 2 This case has been framed in order to test the skills
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FINANCIAL MANAGEMENT FOR NON-FINANCE MANAGERS Questions Exercise 1: This exercise is intended to make sure that we are all familiar with terms used debt financing. (10 points) (10) Fill the blanks by choosing the appropriate term from the following list: lease‚ funded‚ floating-rate‚ Eurobond‚ convertible‚ subordinated‚ call‚ sinking fund‚ prime rate‚ private placement‚ global bond‚ public issue‚ senior‚ unfunded‚ Eurodollar rate‚ warrant‚ debentures‚ term loan. a. Debt maturing in
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Financial Management Questions- Short answers and Multiple Choice Short Answer 1. What is the difference between stock price maximization and profit maximization? Under what conditions might profit maximization not lead to stock price maximization? 2. Assume that you are serving on the board of directors of a medium-sized corporation and that you are responsible for establishing the compensation policies of senior management. You believe that the company’s CEO is very talented‚ but your
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Financial Management 1. Problem 1-7 (Accrual income vs cash flow) What is the Primary economic principle used in managerial finance? The primary economic principle used in managerial finance is marginal cost-benefit analysis‚ the principle that financial decisions should be made and actions taken only when the added benefits exceed the added costs. Nearly all financial decisions ultimately come down to an assessment of their marginal benefits and marginal costs. 2. Problem 2-15 (Ratio
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features of ordinary share & bonds? (B) Explain the steps involved in preparing a financial plan. What are the merits of financial planning? Q2. (A) What are the incremental cash flows? Briefly explain effects of the follow on calculation of incremental cash flows : A – sun costs. B- Allocated over heads. C- Opportunity cost. (B) “There are 2 dangerous situations that management should usually avoid in Controlling inventories”. Explain? Q3. (A) “The
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SUNWAY UNIVERSITY BUSINESS SCHOOL BACHELOR OF SCIENCE (HONS) IN ACCOUNTING AND FINANCE ACADEMIC SESSION: MARCH – JULY 2013 ACC 2034: PRINCIPLES OF AUDITING GROUP ASSIGNMENT INSTRUCTIONS TO CANDIDATES 1. There are FOUR (4) pages in this Group Assignment including the cover page. 2. This Group Assignment will contribute 30% to your final grade. 3. The assignment must be typewritten on double line spacing‚ A-4 size paper and single sided. Work should be presented in a folder‚ with a cover
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FINANCIAL MANAGEMENT SECTION A PART ONE: ANSWERS ONLY. 1.a)ignored non-corporate enterprise 2.c)redeemable preference shares 3.a)political risk 4.a)future cost 5.c)designing optimal corporate capital structure 6.b)firms point 7.d)agency cost 8.a)legal requirement 9.b)default risk 10.a)beta PART TWO: 1. . Annuity is fixed sum of money paid every year in at any other fixed interval shorter than a year. This annuity may be by way of return of some principal plus interest payment
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