Rift Valley University: Department of Accounting and Finance

Financial Management I- Individual Assignment -1 (20%) To be submitted on January 04 /24

Part I: The followings are the financial statements of XYZ & ABC Company.

Required:
Based up on the above financial statements of XYZ & ABC Company: Calculate and interpret:
i. Current Ratio
ii. Quick Ratio
iii. Operating Profitability Ratio
iv. Net Profit Ratio
v. Return on Equity (ROE)
vi. Return on Capital Employed (ROCE)
 vii. Inventory Turnover Ratio
viii. Receivable Turnover Ratios
ix. Payable Turnover Ratios
x. Debt Equity Ratio
xi. Financial Leverage

Part II: Answer the following question by showing the necessary steps.

1. Br.1,000 is deposited into an interest bearing account that pays 10% interest compounded
yearly. The investor's goal is Br. 1,500. How many years must the principal earn
compound interest before the desired amount is realized?
2. Jambo just inherited the family business, and having no desire to run the family business,
he has decided to sell it to an entrepreneur. In exchange for the family business, Jambo
has been offered an immediate payment of br. 100,000. Jambo will also receive
payments of br. 50,000 in one year, br. 50,000 in two years, and br. 75,000 in three years.
The current market rate of interest for Joe is 6%.10). In terms of present value, how much
will Joe receive for selling the family business?
3. If you want to have br. 50,000 saved for your child's college education in 18 years. How
much do you need to save each month if you can earn an annual interest rate of 7%?
4. You want to have Br. 75,000 saved for your child's college education in 18 years. How
much do you need to save each month if you can earn an annual interest rate of 7%?

5. If you are considering investing in a bond that pays an annual coupon rate of 5% and has
a face value of Br. 1,000. If the bond matures in 10 years and your desired rate of return
is 8%, what is the maximum price you should be willing to pay for the bond?