Financial Management Assignment Question Answers

Answer All The Questions

Question 1

a)   Write an essay on optimal methods of Inventory Management
b)   What controls will you put towards best actions for EOQ (Economic Order Quantity)
c)   With examples elaborate on Advantages and Disadvantages of Variance Analysis – use business case analysis approach


Question 2

a) What are the characteristics of externally reported information?
b) Summarize the types of the cost incurred in a company’s manufacturing process. Support your case with a business example.
c) Write an essay on organizational budgeting principle and reflect upon which principal budget methodology inspires you the most and why? 

Question 3

	PROJECT X	PROJECT Y
Year	Cash Flow ($)	Cash Flow ($)
0	(100,000)	(100,000)
1	50,000	10,000
2	40,000	20,000
3	20,000	20,000
4	20,000	40,000
5	10,000	70,000

 


 

For these two independent projects X and Y, use the following capital budgeting techniques:

1. Payback Period
2. Accounting rate of return
3. Net Present Value
4. Profitability index

And recommend acceptance/rejection and which project should be chosen by the company. A rate of 12% has been selected for the NPV analysis.

Question 4

Explain and elaborate on the following axioms of finance: 

1. Risk-return trade-off
2. Time value of money
3. Cash is king
4. Incremental cash flows
5. The agency problem
6. Taxes bias business decisions
7. All risk is not equal
8. Ethical dilemmas are everywhere in finance

 

 What is meant by the phrase: “Although it is not necessary to understand finance to understand these axioms, it is necessary to understand these axioms to understand finance”? 

FORMULAE

• FINANCIAL RATIOS

Click and Download Financial Ratios Formula

 

RETURN

• RISK

Variance                  =         ∑ (ki– )2Pi

Standard Deviation (RISK)

• Payback Period     =          Base Year + (Initial Investment - Cumulative of Base Year)

Cash Inflow of Next Year

Accounting Rate of Return    =          Average Profit      x100

Average Investment

            Net Present Value       =          Cumulative Present Value of Cash Inflow –

Initial Investment

Profitability Index                  =          PV of future cash flows

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