Financial Management TMA Solution for FIN203 Course

This document presents a comprehensive solution to the FIN203 Essentials of Financial Management Tutor-Marked Assignment (TMA). The assignment includes an analysis of Golden Agri-Resources (GAR), focusing on liquidity, leverage, and asset management ratios for FY 2018. It also delves into an agency problem, investment decisions comparing Infinity Asia Fund and Global High Dividend Fund, and evaluates home renovation loan options from OCBC Bank and Maybank. The solution provides detailed calculations, analyses, and comparisons to address all the questions posed in the TMA, offering valuable insights into financial statement analysis, investment strategies, and loan evaluations.

Running head: FINANCIAL MANAGEMENT
Financial Management
Name of the Student:
Name of the University:
Author’s Note:

1FINANCIAL MANAGEMENT
Table of Contents
Question 1........................................................................................................................................2
Question 2........................................................................................................................................3
Question 3........................................................................................................................................3
References........................................................................................................................................4

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Question 1
a) The financial ratios were evaluated for the company with the help of liquidity. Leverage
and Asset Management Ratio being the key base for the purpose of valuation.
Liquidity Ratio: The liquid aspects states the ability of the company in meeting up the
current liabilities of the company and the asset and amount it has for successfully
operating the various operations of the company. The current ratio for the company was
around 1.11 times in the year 2017 and the same has slightly increased to around 1.16
times. On the other hand, the quick ratio for the company shows the better aspects of
liquidity when viewed from the company’s view point. The quick ratio for the company
was around 0.62 times that have significantly increased to about 0.476 times. But on the
other hand side it could be also seen that inventory plays an important aspect in
determining the overall liquidity position of the company (Laitinen 2018).
Asset Management Ratio: The asset management ratio of the company indicates the
utilization of the total assets done by the management of the company. The asset
management ratio shows that in terms of profitability the performance of company has
degraded over the time period. On the other hand, utilization of assets of the company
was also affected with the ratio analyzed (Kanapickienė and Grundienė 2015).
Leverage Ratio: The leverage ratio reflects that debt indeed has significant part in the
financial statement of the company and the same has also increased in the due course of
time period for the company.
b) The DuPont Analysis was done for determining the return on equity with the help of
following formula for a sum of two years as:

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Return on Equity (ROE): Profit Margin (Net Income/Total Sales)*(Net Sales/Total
Assets)*(Total Assets/Total Shareholder's Equity).
The return on equity for the company has degraded from 1.92% in the year 2017 to
around 0.04%, the fall can be well contributed to falling level of profitability for the
company (Penman 2015).
c) Agency Problem is a conflict of interest any can be seen in any form of management
relationship where one party is expected to act in the interest of another. In financial
terms the Agency Problem can well arise due to the conflict arising from the management
and the shareholders of the company (Liang et al., 2016).
Question 2
a) Value of fund in Year 12 as per Infinity Asia Fund would be around 93,077. On the
other hand value of Global High Dividend Fund would be around 100,610.
b) Infinity Asia Fund would be selected for the purpose of investment when considered
in 30 years of time frame.
c) In the 20th Year of time period it is expected that the value would almost be having an
equal amount of value.
Question 3
a) OCBC Bank would be considered for the purpose of Home Renovation as the applicable
interest rate would be around 5.97% and applicable interest rate as per Maybank would
be around 6.04%.

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b) The amount that would be paid for each installment would be around $632, the applicable
interest rate for month 8 would be $78 and interest amount for 25th month would be
around $54.
References
Kanapickienė, R. and Grundienė, Ž., 2015. The model of fraud detection in financial statements
by means of financial ratios. Procedia-Social and Behavioral Sciences, 213, pp.321-327.
Laitinen, E.K., 2018. Financial Reporting: Long-Term Change of Financial Ratios. American
Journal of Industrial and Business Management, 8(09), p.1893.
Liang, D., Lu, C.C., Tsai, C.F. and Shih, G.A., 2016. Financial ratios and corporate governance
indicators in bankruptcy prediction: A comprehensive study. European Journal of Operational
Research, 252(2), pp.561-572.
Penman, S.H., 2015. Financial Ratios and Equity Valuation. Wiley Encyclopedia of
Management, pp.1-7.