FINANCIAL MANAGEMENT
COURSE PROJECT
PROBLEM # 1: ESSAY PROBLEM- 15 POINTS
PROBLEM # 2: CAPITAL BUDGETING PROBLEM – 35 POINTS
PROBLEM # 3: FINANCIAL ANALYSIS PROBLEM – 45 POINTS
I - ESSAY PROBLEM
Instructions:
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Read the following scenario and explain your answer.
Minimum of 150 words per item.
Answer copied from the internet will incur point deduction
1. Explain the importance of Capital structure in business?
2. How cost of capital influence financial performance of the business?
3. If you were to put-up a business, develop a capital structure for your
business, provide computation for cost of capital and explain its
implication to your business.
II - CAPITAL BUDGETING PROBLEM
1. Project X requires an initial investment of 45,000 but is expected to
generate revenues of 13,000, 29,000 and 22,000 for the first, second,
and third years, respectively. The target rate of return is 10%. Since
the cash inflows are uneven, the NPV formula is broken out by
individual cash flows.
Compute for the following:
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Payback period
NPV
Profitability Index
III - FINANCIAL ANALYSIS PROBLEM
Instructions:
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Analyse the financial statement below and compute for the following financial ratios.
The more the ratio computed the higher the score.
Compute for the ratio of each year (2017 and 2018)
Follow the PDF lesson on Ratio analysis for your guide.
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Liquidity ratios (at least 4 ratio per year)
Solvency ratios (at least 4 ratio per year)
Profitability Ratios (at least 4 ratio per year)
Efficiency ratios (at least 4 ratio per year)
Coverage ratios (at least 4 ratio per year)
Market prospect ratios (at least 4 ratio per year)
INCOME STATEMET
2017
2018
Revenue
78,824,158.00
98,559,553.00
Cost of Sales
57,166,887.00
68,470,167.00
Gross profit
21,657,271.00
30,089,386.00
Research and development expenses
6,183,641.00
7,541,998.00
Selling, general and administrative expense
9,808,376.00
11,731,213.00
Other income
1,373,961.00
2,946,890.00
553,014.00
659,069.00
Other operating expenses
Total Operating expense
16,545,031.00
19,932,280.00
Operating profit
6,486,201.00
13,103,996.00
Interest income
5,703,261.00
3,912,513.00
Interest expense
5,993,099.00
3,820,151.00
Earnings before tax
6,196,363.00
13,196,358.00
Taxes (30%)
1,858,908.90
3,958,907.40
Net Profit
4,337,454.10
9,237,450.60
BALANCE SHEET
ASSETS
2017
2018
Current Assets
LIABILITIES AND EQUITY
2017
2018
Current liabilities
Cash and cash equivalents
2,360,190
2,142,220
Trade and other payables
2,470,214
3,752,483
Short-term financial instruments
3,306,326
8,196,850
Short-term borrowings
4,052,832
4,280,493
Withholdings
161,212
275,994
Income tax payable
412,368
625,898
4,350,478
5,421,579
Available-for-sale financial assets
982,067
2,104,420
Accounts receivable
7,699,795
11,257,986
Advances
1,067,955
1,332,339
Other current liabilities
232,047
319,552
437,282
771,909
Total current liabilities
11,679,151
14,675,999
3,817,751
3,633,628
Other current assets
240,667
459,555
Total Current Assets
19,912,033
29,898,907
4,324,318
6,868,809
Retirement benefit obligation
725,195
613,791
Deferred income tax liabilities
819,541
493,371
Prepaid expenses
Inventories
Non-current assets
Available-for-sale financial assets
Accrued expenses
Non-current liabilities
Long term debt
1,128,853
1,308,675
Other non-current liabilities
174,010
202,918
Long-term investment
20,390,192
22,046,679
Total non-current liabilities
6,043,064
8,178,889
Property, plant and equipment
35,066,116
32,306,828
TOTAL LIABILITIES
17,722,215
22,854,888
1,020,146
1,020,209
Preferred stock
119,467
119,467
Deposits
271,405
256,503
Common stock
778,047
778,047
Long-term prepaid expenses
311,106
2,342,921
Share premium
4,403,893
4,403,893
Other non-current assets
557,358
428,632
Retained earnings
55,633,587
61,453,059
Total Non-Current Assets
58,745,176
59,710,447
Total Equity
60,934,994
66,754,466
TOTAL ASSETS
78,657,209
89,609,354
TOTAL LIABILITIES AND EQUITY
78,657,209
89,609,354
Intangible assets