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Financial risk management Assignment

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Added on  2021-04-17

Financial risk management Assignment

   Added on 2021-04-17

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RUNNING HEAD: FINANCIAL RISK MANAGEMENTRisk Management
Financial risk management Assignment_1
Financial risk management 2Problem 1Part 1The current and quick ratios are the liquidity ratios which reflect the position of company’s liquidity. Having high ratios indicate that the organization is performing well and is able to meet its short term financial obligations easily and quickly. Considering the data provided forFV Ltd., the statement given by CFO is correct as it can be seen that there is a constant increase in the current ratio of the company and in 2017 it was 1.33 which was more than thatof in 2016 and 2015. Also the ratio is more than the industry average of 1.25. Hence, it implies that the company has improved its liquidity position with high liquid assets. Also the quick ratio of the FV Ltd is almost equal to the industry average, which means the company is able to pay off its current liabilities with its quick assets (Tracy, 2012).Part 2The working capital management of FV is analysed through its inventory turnover ratio and the collection period of receivables. Company has a high and increasing ITR, which means it is very much efficient in managing its inventories. However, the collection period has increased over the year but is less than industry average. This means company has a better management of its working capital (Sagner, 2010).Problem 2Part 6Beta is basically a measure of a systematic risk of a security or portfolio, in comparison to thewhole market. It is the most important variable used in CAPM calculation. Company’s beta is2.1 which means it is more than 2 times as volatile as the overall market. In other words, it will give more returns than the market (Brigham and Ehrhardt, 2013).
Financial risk management Assignment_2

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