Corporate Financial Management Assignment: Ratio, Time Value, VC

This assignment provides an analysis of corporate financial management, focusing on key financial ratios such as debt-to-equity, current ratio, fixed assets turnover, inventory turnover, return on assets, days inventory, and times interest earned. It includes a comparison of these ratios for a hypothetical company, highlighting areas for improvement like enhancing fixed-assets turnover and inventory turnover. The assignment also explains the time value of money concept and its importance in financial decision-making, emphasizing the impact of timing on monetary value. Finally, it explores the role of venture capitalists in providing funding to businesses with high growth potential. The assignment includes references to relevant financial literature and journal articles.

Corporate Financial
Management

Table of Contents
TASK...............................................................................................................................................3
1. Computation of following ratios:.............................................................................................3
2. Comparison:.............................................................................................................................3
3. Time value of Money:..............................................................................................................3
4. Venture capitalist:....................................................................................................................4
REFERENCES................................................................................................................................5

TASK
1. Computation of following ratios:
(A). Liquidity Ratios:
 Debt-to-equity ratio =Debts / Total Equity = 1,325,000 / 2,965,000 =
44.69%
 Current ratio = Current Assets / Current Liabilities = 854,000 / 508,000 = 1.6811
(B). Turnover Ratios:
 Fixed Assets Turnover Ratio = Sales / Total Assets = 6,500,000 / 4,290,000 = 1.5152
 Inventory Turnover Ratio = Expenses / Inventory = 5,200,000 / 200,000 = 26
(C). Profitability Ratios:
 Return on Assets = EBIT / Total Assets = 1,012,500 / 4,290,000 = 23.60
 Days Inventory = 365 / Inventory Turnover Ratio = 365 / 26 = 14.03
 Times Interest Earned = EBIT / Interest Expense = 1,012,500 / 132,500 = 7.6415
2. Comparison:
Comparing corporation Mahmoud 's major ratios to its competitors, it has been analysed
that Mahmoud has relatively more favourable liquidity ratios, but their ratio of fixed assets
turnover is not as better as its competitor. Further, inventory turnover of respective company is
lower, although ROA ration is higher. Here based on above comparison of ratio it has
been suggested to Mahmoud is that company should enhance their fixed-assets turnover and
inventory turnover as this will help company to improve their overall profitability. For this
company should focus towards increasing overall sales and optimising operating costs which
ultimately enhance corporation's total net profitability status (Yhip and Alagheband, 2020).
3. Time value of Money:
The main concept or ideology of the time value of the money is quite critical when it
comes to financial and business decision-making. Essentially, this definition illustrates value of

currency/money value along with how it varies over a specific time-frame depending on
decisions which are taken. The factors in value of currency/money unit originate
from rate/price and time at which such monetary units are evaluated. Usually, for
example companies take time-value decisions which contrast shorter-term and longer-term
profits or funding capacity. If company are selling items on credit, recognize the missed
opportunity to gain interests on money if company has been paid cash. In case company receive
payment within 6 months and charges 2-percent penalties, company could possibly have
gained more than 2 % of company's cash-forward investment. Likewise, if company owe $1,000
on 5 percent loan, company could compare interest it save on paying balance to investment
opportunities company benefit from delaying repayment (Kakar, 2020).
4. Venture capitalist:
Venture capitalist relates to private equity investor offering funding to businesses with
higher growth potential in return for equity interest. This may be financing start-up projects or
promoting smaller businesses which seek to continue/expand but not have much investments
funds. Venture capitalists prepared to risk funds to make invest in such businesses since they can
make a large return on investments made if succeed.
Venture capitalists have an integral role to play in promoting new business
initiatives/ventures. They could enable new companies to finance their activities and sustain
them going while conventional sources of funding may not be accessible to such smaller firms.
Venture capitalists mainly focused on evolving advanced technology and marketplaces and can
specialising in certain fields to make them more useful (Gompers and et.al., 2020).

REFERENCES
Books and Journals:
Yhip, T.M. and Alagheband, B.M., 2020. Financial Statement Analysis. In The Practice of
Lending (pp. 47-94). Palgrave Macmillan, Cham.
Kakar, A.K., 2020. Investigating factors that promote time banking for sustainable community
based socio-economic growth and development. Computers in Human Behavior, 107,
p.105623.
Gompers, P.A. and et.al., 2020. How do venture capitalists make decisions?. Journal of
Financial Economics, 135(1), pp.169-190.