BAF 301 Introduction to Financial Management Assignment

Reference no: EM132516289

BAF 301 Introduction to Financial Management - Emirates College of Technology

Learning Outcome 1: Calculate the value of securities.
Learning Outcome 2: Calculate the cost of capital.
Learning Outcome 3: Describe techniques used in capital budgeting
Learning Outcome 4: Criticize financing decisions in business environment.

Read the following statements (Balance sheet & Income Statement) to answer the following questions?

Question 1: Calculate the following ratios for two years above (2019, 2018) and write your comments in the regards of the situation of the firm depend on your results:

1. Current Ratio: (Industry average = 7)
2. Inventory Turnover: (Industry average = 12)

Question 2: BASF Group has opportunity to use the Retained Earnings (€42056: as shown in the balance sheet 2019) to invest in new project, the following is the cash flow expected in the upcoming for years. (K: discounted rate: 13%)

Calculate NPV net present value for this project, and give them an advice to invest or no, explain your answer?

Advise

Question 3: Answer the following questions:

Use the Balance sheet for BASF Group to calculate the following:

A. Operating current assets 2019

B. Operating current liabilities 2019

Question 4: Answer the following questions:

1. Why is NPV considered a superior method of evaluating the cash flows from a project? For a project the net present value is $15. What does this number explain?

2. Differentiate between ‘required rate of return' and ‘cost of capital'?

3. When we say the ‘cost of equity capital' or cost of equity of a firm is 15%, what does it mean? In otherwords, interpret the meaning of ‘15% cost of equity'.

4. What are some of the disadvantages of using the IRR method?

Attachment:- Introduction to Financial Management.rar

Reference no: EM132516289

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