Name Due Date Via Ulearn No Later Than Midnight

Name Datedue Via Ulearn No Later Than Midnight A

Extracted assignment instructions:

Spring Term FISV 2000 Mid-Term Exam Part 1- individually- 50 points Chapters 1,2,3,5. Submit answers via uLearn no later than midnight April 15, 2019. Type answers into the provided document, show calculations and answers for problems, attach Excel worksheets if used, and answer independently without collaboration. No late exams accepted. Part 1 includes critical thinking questions on financial management decisions, business organization disadvantages, corporate ownership and control, financial goals, liquidity, income statement and balance sheet interpretation, ratios, present value concepts, and related topics. Part 2 involves numerical problems on financial ratios, working capital, sales analysis, inventory turnover, and leverage ratios.

Paper For Above instruction

The mid-term examination for the Financial Systems course constitutes a comprehensive assessment of students' understanding of core financial concepts, analytical skills, and their ability to apply theoretical knowledge to practical scenarios. This exam emphasizes critical thinking and quantitative analysis through a series of conceptual questions and numerical problems derived from chapters 1, 2, 3, and 5 of the course textbook.

Part 1 of the exam is dedicated to critical thinking questions, each worth five points, designed to evaluate foundational knowledge of financial decision-making, organizational structures, and financial management principles. Questions probe students' understanding of the three main types of financial decisions—investment, financing, and dividend decisions—with an emphasis on real-world business transactions. Furthermore, students are asked to assess the disadvantages of sole proprietorships and partnerships relative to corporate structures, highlighting issues like unlimited liability, limited capital access, and owner riks, alongside the benefits such as simplicity and ease of formation.

Additional questions examine the primary disadvantages of corporations, including potential issues like double taxation and agency problems, contrasted with advantages such as limited liability and perpetual existence. The role of financial managers in pursuing the firm’s primary goal—maximizing shareholder wealth—is stressed, along with the mechanisms of ownership—stockholders—and control via the board of directors and managerial hierarchy. The nature of agency relationships in corporations and associated conflicts of interest are explored to foster understanding of corporate governance challenges.

The exam further evaluates comprehension of liquidity, which measures a firm's capacity to meet short-term obligations. Students must explain the concept of trade-offs between high and low liquidity levels, recognizing that high liquidity offers safety but may reduce profitability, while low liquidity can hinder operational capacity. Questions about income statement figures versus actual cash flows test understanding of accrual accounting; similarly, focus is placed on why balance sheets are based on historical costs instead of market values, emphasizing the importance of consistency and verifiability in financial statements.

It is essential that students recognize that liabilities can surpass assets, resulting in negative owner’s equity under accounting standards, but such occurrences are less common under market value assessments due to market adjustments. The dynamics of net working capital (NWC), including possible negative changes between periods, and net capital spending are also evaluated for understanding cash management and investment activities.

Further, the exam discusses liquidity ratios, such as current and quick ratios, analyzing their implications for the firm’s liquidity position. For example, an increasing current ratio coupled with a decreasing quick ratio may indicate growing inventories or less liquid assets. The significance of various financial ratios—including the quick ratio, cash ratio, asset turnover, equity multiplier, debt ratios, interest coverage, profitability ratios, and valuation multiples—is examined to understand what each metric reveals about the firm's financial health.

In terms of present value concepts, the fundamental components—future value, discount rate, periods, and present value—are identified. The processes of compounding and discounting are explained as mechanisms for understanding the time value of money, which affects investment and financing decisions. A hypothetical scenario discussing the willingness to trade $24,099 today for $100,000 in 30 years underscores the importance of interest rates, risk, and opportunity costs in financial planning.

The numerical problem section comprises calculations related to liquidity ratios, profitability, turnover ratios, leverage ratios, and valuation metrics. For example, calculating the current and quick ratios from given working capital data, determination of net income, ROA, and ROE from sales figures, and receivables turnover to evaluate receivables management are included. These problems stress practical application of financial formulas and interpretation of results to assess a company’s operational efficiency and financial stability.

Additional problems examine inventory management through inventory turnover and days’ sales in inventory, leverage through the debt-to-equity ratio and equity multiplier, and cash flow management by analyzing changes in net working capital. These exercises reinforce core financial analysis skills crucial for decision-making and strategic planning in corporate finance.

Overall, this examination aims to reinforce students’ comprehension of key financial principles, analytical skills, and the ability to synthesize information for effective financial decision-making. Success in this exam depends on both conceptual understanding and technical competency in performing accurate financial calculations, interpreting ratios, and applying theoretical frameworks to real-world business scenarios.

References

• Brigham, E., & Houston, J. (2019). Fundamentals of Financial Management (15th ed.). Cengage Learning.
• Ross, S. A., Westerfield, R. W., & Jaffe, J. (2018). Corporate Finance (12th ed.). McGraw-Hill Education.
• Damodaran, A. (2012). Investment Valuation: Tools and Techniques for Determining the Value of Any Asset. Wiley.
• Jen, N., & Lent, J. (2017). Financial Statement Analysis and Valuation. Pearson.
• Higgins, R. C. (2018). Analysis for Financial Management (12th ed.). McGraw-Hill Education.
• Khan, M. Y., & Jain, P. K. (2017). Financial Management (7th ed.). McGraw-Hill Education.
• Ross, S. A., & Mott, K. (2019). Financial Market Analysis. Pearson.
• Graham, B., & Dodd, D. L. (2008). Security Analysis: Sixth Edition, Foreword by Warren Buffett. McGraw-Hill Education.
• O’Connell, V. (2014). Financial Ratios for Executives: How to Assess Company Strength, Fix Problems and Make Better Decisions. McGraw-Hill Education.
• Michel, A. (2013). Principles of Corporate Finance. McGraw-Hill Education.