What are the components for credit policy

Assignment Help Financial Management

Reference no: EM131316479

Instructions

•Use Microsoft word 2010 in formulating your answers.
•Write brief answers, with no more than 100 words per answer, avoid long or general answers.
•Write the answers in your language and avoid copying from the internet.

Learning Outcomes:
1. Scope and importance of Financial Management, functions of financial manager.
2. Valuation. Time value of Money.Interest rate. Simple and Compound Interest.Compounding more than once a year.
3. Annuities, Ordinary, Due and Perpetuity. Amortization of Loan.
4. Financial Statements.
5. Trend Analysis. Common size and Index Analysis
6. Analyzing the credit applicant.
7. Inventory Management and control.
8. Project Estimating

Questions:

1. Dis investment and shut down are important tasks ofthe finance manager, explain this statement.

2. As you are a business man, you decide to invest $500 for ten years to earn an annual interest rate of 4.5%. What will be the future value of this investment if:
a. Investment compounded quarterly.

b. Investment compounded monthly.

3. Assume that you have 6,000$ and you want to deposit this amount, in a saving account that earns 4.5% per year, for next nine years, How much money will you accumulate by the end of year 9?

4. Whatis the lump sum equivalent of receiving $9,500 per year for the coming 32 years if the interest rate is4.5%?

5. Bp is one of the largest companies in the world that specialized in petroleum industry. The company has provided you with comparative balance sheets of the years ended December 31, 2012 and 2011. Depending on the provided sheets, find the horizontal analysis of the information provided. (Assume that numbers in thousands of dollars) :


			Increase /Decrease
	2011	2012	Amount	%
Current assets:
Current assets:
Cash	12,000	23,500
Accounts receivable, net	60,000	40,000
Inventory	80,000	1,00,000
Prepaid expenses	3,000	1,200
Total current assets	1,55,000	1,64,700
Property and equipment:
Property and equipment:
Land	40,000	40,000
Buildings and equipment, net	1,20,000	85,000
Total property and equipment	1,60,000	1,25,000
Total assets	3,15,000	2,89,700

6. Fill The following table that represent an Indexed Balance Sheet for 3 fiscal years (2009, 2010, 2011) assuming that the base year is 2010.

	Regular (thousands of $)			Indexed (%)
Assets	2009	2010	2011	2009	2010	2011
Cash	148	191	221
AR	283	201	189
Inv	322	295	250
Other CA	10	22	1
Tot CA	763	709	661
Net FA	349	412	201
LT Inv	0	0	2
Other LT	111	83	62
Tot Assets	1223	1204	926

7. Fill The following table that representa firm's Common Size Balance Sheet for 3 fiscal years (2009, 2010, 2011).

	Regular (thousands of S)			Common-Size (%)
Assets	2009	2010	2011	2000	2010	2011
Cash	148	191	221
AR	283	201	189
Inv	322	295	250
Other CA	10	22	1
Tot CA	763	709	661
Net FA	349	412	201
LT Inv	0	0	2
Other LT	111	83	62
Total Assets	1223	1204	926

8. What are the components for credit policy ,and what will be the different costs of granting credit?

9. Inventory represents one of the most important assets that most businesses possess, explain this statement and show how can
the inventory management be effective?

10. The more accurate your estimate of project cost is, the better able you will be to manage your project's budget and quality, discuss
this statement from your point of view .

Reference no: EM131316479

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