Report on Managing Financial Resources in Organization

Running head: MANAGING FINANCIAL RESOURCES
Managing Financial Resources
Name of the Student
Name of the University
Authors Note
Course ID

MANAGING FINANCIAL RESOURCES1
Table of Contents
Answer to question 1:.................................................................................................................3
Answer to A (i):.........................................................................................................................3
Answer to (ii):............................................................................................................................4
Answer to question B:................................................................................................................5
Answer to question 2:.................................................................................................................5
Answer to question 3:.................................................................................................................6
Answer to question 4:.................................................................................................................6
Commercial Bank, Investment Bank and Insurance Bank.........................................................6
Mutual Fund, Hedge Fund and Pension Fund:...........................................................................7
Answer to question 5:.................................................................................................................8
Primary and Secondary Market..................................................................................................8
Capital Market and Money Market............................................................................................8
Stock Market and Fixed Income Market:...................................................................................9
Answer to question 6:.................................................................................................................9
Answer to question 7:...............................................................................................................10
Answer to 8B:..........................................................................................................................11
Answer to 8B:..........................................................................................................................12
Reference List:.........................................................................................................................14

MANAGING FINANCIAL RESOURCES2
Answer to question 1:
Answer to A (i):
Profitability
Ratios
Gross Profit Ratio
Contemporary
Clothing
Modern
Fashion
Sales 2425000 3735000
Gross Profit 475000 835000
Gross Profit Ratio 19.587 22.356
Net Profit Ratio
Contemporary
Clothing
Modern
Fashion
Net Profit 32000 91000
Total Revenue 2425000 3735000
Net Profit Ratio 1.319 2.436
Operating Margin Ratio
Contemporary
Clothing
Modern
Fashion
Operating Margin 113000 285000
Net Sales 2425000 3735000
Operating Margin Ratio 4.659 7.630
Return on Equity
Contemporary
Clothing
Modern
Fashion
Net Income 32000 91000
Shareholders Equity 625000 750000
Return On Equity 5.12 12.133
Contemporary
Clothing
Modern
Fashion
Efficiency Ratios Total Asset Turnover Ratio
Net Sales 2425000 3735000
Average Total Assets 1250000 2000000
Asset turnover ratio 1.94 1.867
Accounts Receivables Ratio
Contemporary
Clothing
Modern
Fashion
Revenue 2425000 3735000
Average Accounts
Receivables 230000 610000
Accounts Receivables
Ratios 10.543 6.122

MANAGING FINANCIAL RESOURCES3
Liquidity Ratios Current Ratios
Contemporary
Clothing
Modern
Fashion
Current Assets 640000 1280000
Current liabilities 325000 600000
Current Ratio 1.969 2.133
Quick Ratio
Contemporary
Clothing
Modern
Fashion
Cash 70000 45000
Accounts Receivables 230000 610000
Current Liabilities 325000 600000
Current Ratio 0.923 1.091
Cash Ratio
Contemporary
Clothing
Modern
Fashion
Cash 70000 45000
Current Liabilities 325000 600000
Cash Ratio 0.215 0.075
Leverage Ratio Debt Equity Ratio
Contemporary
Clothing
Modern
Fashion
Short term Debt 100000 150000
Long Term Debt 300000 650000
Total Equity 1250000 2000000
Debt Equity Ratio 0.32 0.4
Answer to (ii):
On considering the financial health of Contemporary Clothing and Modern Fashion a
recommendation can be provided concerning the acquisition of the two companies based on
the financial ratio. Modern Fashion is most suitable for acquisition as gauging into the
profitability ratio it is noticed that the gross profit ratio and the net profit ratio reported by
Modern Fashion stood 22.35 and 2.43 respectively. While the contemporary clothing reported
a lower gross profit ratio and net profit ratio of 19.58 and 1.31 respectively.
Considering the efficiency of Modern Fashion, the asset turnover ratio and accounts
receivable ratio represented 1.86 and 6.12 respectively however the Contemporary Clothing
reported a higher ratio of 1.94 and 10.54. Considering the liquidity position of Modern