ANF ACCOUNTING & FINANCE II

Transcription

1 1. The goal of financial management in a for-profit business is to make decisions that increase the value of stock.financial managers are the responsible person to achieve the company goal. a) Briefly, explain on how do financial managers able to create value? (6 Marks) b) Briefly explain the characteristic of a company (4 Marks) 2. The relationship between stockholder and management is called an agency relationship. Such relationship exist whenever someone (the principal) hires another (the agents)to represent his/her interest. a) What is agency issues? (2 Marks) b) List and explain the factor to minimize the agency problem (8 Marks) 3. There are three basic legal form of organization. Each of the form have their own advantages and disadvantages. Assume you are going to start a business, a) What forms of business you will get involved and explain why you choose that decision. (6 Marks) b) Differentiate between limited liability and unlimited liability (4 Marks) 4. Financial analysis is a comprehensive analysis of strategy of a firm's past, current, and projected financial performance. a) Why do most of suppliers and banks (lenders) are more interested in liquidity ratios? (4 Marks) b) Explain what you understand by debt ratio and why are they important to the finance manager? (6 Marks) 5. Below is the trial balance as at 31 March 2011 of Kingfisher Airlines who runs a stationary business

2 6. Mandala Airlines is a retailer dealing in electrical goods. You are presented with the following information. For the year ended 31 December 2011;

3 7. Nitto Air Lines has RM10,000 that they can deposit in any of three saving accounts for a 3-year period. AGRO BANK compounds interest on an annual basis, BUNGA BANK compounds interest twice each year, and CIMI BANK compounds interest each quarter. All three banks have a stated annual interest rate of 4%. a) What is the amount would Nitto Air Lines have at the end of the third year, leaving all interest paid on deposit, in each bank? (6 Marks) b) On the basis of your findings in part (a), which bank should Nitto Air Lines deal with? Why? (1 Mark) c) How if Nitto Air Lines deposit RM10,000 every year for 3 years in DECO BANK. The rate and the interest is just the same. Compare the answer with the answer in (b) (3 Marks) 8. Orient Thai Airlines wishes to choose the better of two equally costly cash flow streams. Annuity X and Annuity Y. X ia an annuity due with cash inflow of RM9,000 for each of 6 years. Y is an ordinary annuity with a cash inflow of RM10,000 for each of 6 years. Assume that Orient Thai Airlines can earn 15% on his investments a) Which annuity do you think is more attractive? Why? (6 Marks) b) Find the future value at the end of year 6, for both annuity X and annuity Y. (4 Marks) 9. Answer this question

4 10. Efficient capital market is the situation where the stock price fully reflects available information. a) Briefly explain the three forms of market efficiency (6 Marks) b) By using the graph, how is the reaction of the stock price to the bad and good information? (4 Marks) 11. A hundred years ago or so, companies did not compile annual reports. Even if you owned stock in a particular company, you were not allowed to see the balance sheet and income statement for the company. a) Briefly explain strong form of efficiency. (4 Marks) b) How these efficient markets give the impact to the company? (6 Marks) 12. Efficient market is a market where the share prices reflect on new information accurately and in real time. It is relevance for corporate financial manager in making decision. a) Give the situation that able to increase and decrease the share price of the company (6 Marks) b) Is it possible for the investor gain extra income in the semi-strong efficient market? (4 Marks) 13. Cash flow is something that very important to the company. It also called the lifeline of the company. a) What is working capital? Discuss the disadvantages of having shortage of working capital (6 Marks) b) Discuss what are the importances of cash flow to their users (4 Marks) 14. Cash flow is the movement of cash in or out of the business, project and financial product. It can be generated by the firm and paid to creditor and shareholder a) explain the cash movement (inflow and outflow) for account receivable and account payable (6 Marks) b) Explain the disadvantages of cash flow. (4 Marks) 15. The most important items that can be extracted from financial statement is the actual cash flow of the firm a) Is the cash flow is same as net working capital? Discuss about it. (4 Marks) b) Briefly explain the three (3) activities in cash flow (6 Marks) 16. Pacific Airlines closed its account on 30 June for each year. Given below is the list of balance as at each year

5 a) Prepare the extract cash flow statement as at 30 June year 6 by using the direct method (10 Marks) 17. Phuket Air is considering two mutually exclusive projects. The firms which has a 12% cost of capital, has estimated is cash flows as shown in the following table a) Calculate the payback period of each project (3 Marks) b) Calculate the Net Present Value (NPV) of each project, and assess its acceptability (4 Marks) c) Calculate the Internal Rate of Return (IRR) for each project (3 Marks) 18. Riau Airlines products have three projects under consideration. The cash flows for each of them are shown in the following table. The firm has a 16% cost of capital a) Calculate each project's payback period. Which project is preferred according to this method? (4 Marks)

6 b) Calculate each project's net present value (NPV). Which project is preferred according to this method? (5 Marks) c) Comment your finding in parts a and b and recommend the best project. (1 Mark) 19. Project N and M are alternatives for expending a firm's capacity. The firm's cost of capital is 13%. The cash inflows for each project are shown in the following table: a) Calculate each project's payback period (3 Marks) b) Calculate the Net Present Value for each project (4 Marks) c) Calculate the Internal Rate of Return (IRR) for each project (3 Marks) 20. There are always the first time for everything happened in our life. The same thing goes with taxation. Taxation has great history a) Briefly explain the types of taxation (4 Marks) b) Explain the history of taxation based on their phases (6 Marks) 21. Taxation is system of compulsory contributions levied by a government or other qualified body on people, corporations and property in order to fund public expenditures a) Briefly explain the form of scutage, tallage, tithe and poll tax (4 Marks) b) Why we need to implement the taxation? Discuss about it. (6 Marks) 22. Section 3 of the Act provide, "Subject to and in accordance with this Act, a tax to be known as income tax shall be charged for each Y/A upon the income of any person accruing in or derived from Malaysia or received in Malaysia from outside Malaysia a) Your company annual account is indicating a loss. Explain two (2) reasons why you still have to pay income tax to the government even though your company suffered loss (6 Marks) b) What is difference between tax avoidance and tax evasion? (4 Marks) 23. The term dividends usually refer to a cash distribution of earning. The most common types of dividend is in the form of cash a) Explain the types of dividend together with the example (4 Marks) b) There are a few commonly dividend policies that applied in our country. Briefly explain about them (6 Marks) 24. Dividend policy represents the firm's plan of action to be followed whenever the dividend decision is made. In setting the policies, a few factors need to be considered a) Briefly explain the factor the affect the dividend policy in the company (6 Marks) b) What happened if the company is suffering the losses? Give the answer if you are the manager of the company, and you as an investor (4 Marks)

7 25. Dividends paid to shareholder represent a return on the capital directly or indirectly contribute to the corporation by the shareholders. Dividends also have their own characteristic. a) Explain any two internal factors that shareholder should take into consideration in setting the company's dividend policy (4 Marks) b) Government set some legal constrain in developing the dividend policy. What are they? Briefly explain about each of them (6 Marks) 26. An equity instrument of a company may comprise more than one type of shares. These shares differ in their voting right, in priority to received dividends and in the return of capital a) Explain any 2 shares that you know. (4 Marks) b) In your opinion, how these shares will help in increasing the company's value? (6 Marks) 27. Financial leverage has an obvious objective of finding an optimum capital structure leading to maximization of value of firm. During the operation of the company, they will face the different risk a) Briefly explain about these 2 risks (4 Marks) b) Why should we care about capital structure? (6 Marks) 28. Foreign exchange is a market consisting of large international banks that purchase and sell currencies to facilitate international purchases of products, services and securities a) What is foreign exchange spot market? (3 Marks) b) Briefly explain the nature of the foreign exchange spot market (3 Marks) c) Why the trades to be settled 'on the spot' (4 Marks) 29. Forward exchange markets deal in promises to sell or buy foreign exchange at a specified rate, and at a specified time in the future with payment to be made upon delivery. a) When is the forward market active? (3 Marks) b) Briefly explain the custom of forward exchange market (4 Marks) c) Create one situation to explain about Forward market (3 Marks) 30. The foreign exchange market operates 24 hours a day permitting intervention in the major international foreign exchange markets at any point in time a) Briefly explain on the roles of foreign exchange market? (4 Marks) b) Differentiate between Forward exchange markets and spot exchange market (6 Marks)