North South University

School of Business, BBA

FIN 254 Introduction to Financial Management Midterm

Name………………………………….

ID………………………………………… Section…….………

Time : 1 hr 10 Mins Full Marks:35

Part A [10x1 = 10]

1. Where are existing shares traded?

2. What is the amount called by which the sale price of an asset exceeds the asset’s purchase price?

3. What is an annuity called whose payments occur at the end of each period?

4. Where are short-term marketable securities traded?

5. Which law regulates the trading of securities such as stocks and bonds in the secondary market?

6. All else being equal, does an increase in the Accounts receivables decrease a company’s debt
ratio? (Answer Yes or No).

7. Which concept teaches us that a dollar today is worth more than a dollar received in the future?

8. What is the primary goal of a company’s management?

9. What is the sale of securities such as bonds or stocks to the general public called?

10. What is one of the disadvantages that limited companies (or corporations) face?

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 North South University
School of Business, BBA

Part B

11. How much money would you have today if you deposited Tk. 5500 four years ago and your
deposit earned an annual return of 7% compounded quarterly? What rate of return did you
effectively earn annually? [5]

12. If you make the following investments at the beginning of each year for the next five years, then
how much money would you accumulate at the end of five years if your deposits earn an annual
return of 9%? [5]

Year Cash Flows

1 $2350

2 $4675

3 $2025

4 $5035

5 $4400

Part C

13. Following are the Income Statement and the Balance sheet of “ACI Limited” for the year 2019
and 2020. Finance costs are the interest expenses. A new CFO was appointed and he wanted to
know about the results of the ratios for 2020 in the following areas: Liquidity, Activity and
Profitability.
[5 × 3 = 15 marks]

Calculate the following ratios in 2020 and comment on them:

a. Quick ratio
b. Total Asset Turnover
c. Return on Assets

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North South University
School of Business, BBA

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North South University
School of Business, BBA

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