Financial Management Assignment: Principles and Applications
Added on 2020-05-28
11 Pages2436 Words51 Views
Running Head: Financial ManagementFinancial Management
Financial Management2Table of ContentsQuestion 1.............................................................................................................................................3Question 2.............................................................................................................................................4Question 3.............................................................................................................................................6Question 4.............................................................................................................................................8Question 5.............................................................................................................................................9References:..........................................................................................................................................12
Financial Management3Question 1Part A & BStock Jkipkpki-k(ki-k)^2*p-100.1-1-20.240.80440.251-6.29.61120.33.61.80.972200.2559.824.01160.11.65.83.364k10.2 σ78.76σ8.87Stock Mkipkpki-k(ki-k)^2*p-150.1-1.5-22.7551.7562500.250-7.7515.015625100.332.251.51875150.253.757.2513.140625250.12.517.2529.75625k7.75 σ111.1875σ10.54Stock Jk10.2σ8.87Stock Mk7.75σ10.54Question 21. Firm liquidityCurrent ratio=Current assets= $642000 =2.14Current liabilities $300000 Average collection period=Accounts Receivable= $220000 =24.85Daily Credit Sales $3231000/365
Financial Management42. Operating profitabilityOperating income Return onInvestment=Operating Income= $ 12,47,500 =1.32Total assets $ 9,47,500 Operating profit Margin=Operating Income= $ 12,47,500 =0.39Sales $ 32,31,000 Total Asset Turnover=Sales= $ 32,31,000 =3.41Total assets $ 9,47,500 Inventory turnover=Cost of Goods Sold= $ 7,17,000 =4.94Inventory $ 1,45,000 Fixed assets Turnover=Sales= $ 32,31,000 =10.59Net Fixed assets $ 3,05,000 3. Financing DecisionDebt Ratio=Total Debt= $ 66,500 =0.07Total Assets $ 9,47,500 4. Return on common equityReturn on Common Equity=Net Income= $ 7,35,000 =1.27Common equity $ 5,81,000 Analysis of RatiosRatioIndustry NormsThe Ferri Furniture CompanyCommentCurrent ratio 1.52.14GoodTotal asset turnover13.41GoodInventory turnover34.94GoodOperating profit margin 18%39%GoodOperating income return on investment18%132%Good Debt ratio60%7%BadAverage collection period 100 days 24.85 DaysGoodFixed asset turnover 1.510.59GoodReturn on equity 15%127%Good
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