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Fundamentals of Financial Management Revision

Fundamentals of Financial Management Revision

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Published by Mazen Adel

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Published by: Mazen Adel on Oct 22, 2012
Copyright:Attribution Non-commercial


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Fundamentals of Financial ManagementRevision 1
1-Define :-Financial Management-Financial Decisions-Investment Decisions-Asset Management Decisions-Maximize Shareholder Wealth-Earnings per share-Agent-Corporate Governance-Common-size Analysis-Index Analysis2-Why maximizing profits is not a good goal for firm?3-Differentiate between the roles of controller and treasurer.4-Mention the external and internal usage of statement analysis.5-What are the primary types of Financial Statements.6-The Followings are financial statements of Sindbad LTD.
Sindbad Balance Sheet (thousands) 31/12/ 2007Cash $ 180Notes Payable $580
Acct. Rec. 788Inventories 1392Prepaid Exp
10Accum Tax Prepay 20Current Assets $ 2890Fixed Assets (@Cost) 2060Less: Acc. Depr. (658)Net Fix. Assets
$1402Investment, LT 100Other Assets, LT 446Total Assets
$ 4,338Acct. Payable 188Accrued Taxes
32Other Accrued Liab.
200Current Liab.
$1000Long-Term Debt
1060Shareholders’ EquityCom. Stock ($1 par)
400Add Pd in Capital
1458Retained Earnings
420Total Equity $2,278Total Liab/Equity $4,338Sinbad Statement of Earnings (in thousands) for Year EndingDecember 31, 2007Net Sales $ 4,422Cost of Goods Sold 3,198Gross Profit
$ 1224SG&A Expenses
804EBIT $ 420Interest Expense
$ 302Income Taxes
$ 182Cash Dividends 76Increase in RE
$ 106Calculate :a-Liquidity ratiosb-Debt(Leverage and coverage) ratiosc-Activity ratiosd-Profitability ratios
Revision 2
7-Determine the sources and uses of fund for the following balance sheet :
2010 2009
Cash and C.E. $ 90 $ 100Acct. Rec. 394 410Inventories 696 616Prepaid Exp
5 5Accum Tax Prepay
10 9Current Assets $ 1,195 $ 1,140Fixed Assets (@Cost)
1030 930Less: Acc. Depr. (329) (299)Net Fix. Assets
$ 701 $ 631Investment, LT 50 50Other Assets, LT 223 223Total Assets
$ 2,169
$ 2,044LiabilitiesNotes Payable $ 290 $ 295Acct. Payable
94 94Accrued Taxes
16 16Other Accrued Liab. 100 100Current Liab.
$ 500 $ 505Long-Term Debt
530 453Shareholders’ EquityCom. Stock ($1 par)
200 200Add Pd in Capital
729 729Retained Earnings
210 157Total Equity $ 1,139 $ 1086Total Liab/Equity
$ 2,169 $ 2,044
Mickey Ltd is a wholesale supplier of stationary. In recent months, the business hasexperienced liquidity problems. The business has an overdraft at the end of November 2009and the bank has been pressing for a reduction in this overdraft over the next six months.The business is owned by the Mickey family who are unwilling to raise finance through long-term borrowing. The balance sheet of the business as at 30 November 2009 is as follows:

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