Exam (elaborations)
FIN 401 Managerial Finance II Final Exam TIPS 2024 Toronto Metropolitan University
- Course
- Institution
FIN 401 Managerial Finance II Final Exam TIPS 2024 Toronto Metropolitan University
[Show more]
Content preview
FIN 401 Managerial Finance II Final Exam TIPS 2024 TorontoMetropolitan University
Factors that affect the best level of long-term financing relative to the cumulative capital
requirement? - --1. Matching Maturities 2. Permanent working capital requirement 3.
Maintaining liquidity
Steps to Preparing a Cash Budget - --1. Forecast the sources of cash 2. Forecast the uses of cash
3. Calculate whether the firm is facing a cash shortage or surplus
Accounts Receivable Ending Balance = - --Accounts Receivable beginning balance + sales -
collections
Dynamic Forecasted Uses of Cash - --1. Payments of Accounts Receivable 2. Labor,
Administrative, and other expenses 3. Capital Expenditures 4. Taxes, Interest, and Dividend
payments 5. Increase in Inventory (with expected increase in sales) - Increase in Accounts
Receivable
Net Cash Inflow = - --Total Sources - Total Uses
Net Working Capital (NWC) - --= current assets - current liabilities; Often called working capital;
Needs of NWC depend on its business process
Cash Conversion Cycle - --Period between firm's payment for materials and collection on its
sales
, Operating Cycle = - --Inventory period + accounts receivable period
Cash Conversion Cycle = - --(inventory period + accounts receivable period) - accounts payable
period
Inventory Period = - --inventory / (annual COGS/365)
Accounts Receivable Period = - --accounts receivable / (annual sales/365)
Accounts Payable Period = - --accounts payable / (annual COGS/365)
Credit Management Steps - --1. Establish terms of sale 2. What form of IOU will you require 3.
Perform a credit analysis 4. Create a credit policy 5. Develop a collection policy
Terms of Sale - --Credit, discount, and payment terms offered on a sale; ex. 5/10 net 30: 5 %
discount for early payment, 10 days that the discount is available for, net 30 number of days
before the payment is due
Effective Annual Rate (EAR) = - --(1 + (discount / discount price))^(365/extra days credit) -1
Credit Analysis - --procedure to determine the likelihood a customer will pay its bills
Credit Policy - --standards set to determine the amount and nature of credit to extend to
customers
Based on the Probability of Payoffs, expected profit = - --p x PV (rev - cost) - (1 - p) x PV (cost)
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller smartzone. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
75323 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now
