STBC

Department of accounting and finance

P. by Genanew workie

Individual assignment cheek list

Cheeklist

 Assignment will be done by individual

 Target group 2rd year accounting and finance student ( evening )

 A maximum mark 20%

 All are ready to present.

 Submission date June 1/914

 Good hand writing will have value, this may not restrict writing in computer

1. What does mean financial management?

2. How financial management link with other disciplines? Express with example?
3. Why you learn financial management?
4. What is the objective of financial management?
5. Write limitation of profit maximization?
6. Why we make ratio analysis?
7. List and discuss types of ratio analysis?

Abc Company

Balance sheet

December 31, 2014

Assets

Current assets

Cash 360,000

Marketable security 70,000

Accounts receivable 500,000

Inventories 290,000

Total current assets 1,220,000

Fixed assets 4,670,000

Less: accumulated depreciation 2,290,000

Net fixed assets 2,380,000

Total assets 3,600,000

Liabilities and stockholders equity

Current liabilities

Accounts payable 380,000

Notes payable 80,000

Accruals 160,000

Total current liabilities 620,000

Long term debts 1,020,000

Total liabilities 1,640,000

Stockholders equity

Preferred stock 200,000

Common stock 620,000

Retained earnings 1,140,000

Total stockholders equity 1,960,000

Total liabilities and stockholders equity 3,600,000

Abc company

Income statement

For the year ended on Dec. 31, 2014

Sales 3,200,000

Less: sales returns 130,000

Net sales 3,070,000

Less: cost of goods sold 2,090,000

Gross profit 980,000

Less: operating expenses 570,000

Operating profits 410,000

Less: interest expense 90,000

Net profit before taxes 320,000

Less: taxes 90,000

Net Profit after taxes 230,000

Required

1. Determine the liquidity position of the firm (current ratio, acid test ratio and cash ratio) and intrprate the result?

2. Compute inventory turnover, average age of inventory, account receivable turn over, average collection period,
fixed assets turn over and total assets turnover ratio and interpret the result?

3. Calculate the leverage ratio analysis and interpret based on computed result?