MBA Math for Executive MBA Program

Transcription

1 MBA Math for Executive MBA Program MBA Math is an online training tool which prepares you for your MBA classes with an overview of Excel, Finance, Economics, Statistics and Accounting. Each section has a pre\post quiz, overview lectures and drill exercises to test your knowledge of the material covered. Success in your upcoming courses will depend on completing sections which you are unfamiliar with prior to you beginning your MBA program. The professors for each course will assume you have mastered this introduction material so they will not review this. The following sections are highly recommended for your upcoming courses. The other sections are valuable as well, but if you only have time to complete certain sections, these are the critical ones. Analytical Tools for Decision Making Excel (51 minute lecture in 2 parts, 10 Post-Quiz questions) Statistics Basic Statistics (8 minute lecture, 11 Post-Quiz questions) Statistics Probability (6 minute lecture, 7 Post-Quiz questions) Statistics Normal Distribution (14 minute lecture, 7 Post-Quiz questions) Statistics Sampling (20 minute lecture, 6 Post-Quiz questions) Financial and Managerial Accounting Finance NPV (5 minute lecture, 3 Post-Quiz questions) Accounting Balance I (9 minute lecture, 6 Post-Quiz questions) Accounting Balance II (12 minute lecture, 6 Post-Quiz questions) Accounting Income Statement (10 minute lecture, 5 Post-Quiz questions) Accounting Cash Flow (16 minute lecture, 9 Post-Quiz questions) Accounting Connections (9 minute lecture, 4 Post-Quiz questions) Finance Finance TVM Annual (10 minute lecture, 4 Post-Quiz questions) Finance Ann/Perp Constant (11 minute lecture, 4 Post-Quiz questions) Finance Ann/Perp Constant (11 minute lecture, 4 Post-Quiz questions) Micro and Macro Economics Economics Marginal Analysis I (15 minute lecture, 3 Post-Quiz questions) Economics Supply and Demand (10 minute lecture, 2 Post-Quiz questions) Appendices A and B of this document contain Overviews and Sample Problems for some of these key sections.

2 1) Excel Appendix A - Analytical Tools for Decision Making Section Overview and Sample Problems Use Excel to design worksheets using simple formulas Design a spreadsheet to compute the dollar amount in each of the next 10 years of an initial investment returning a constant annual interest rate. Interest is reinvested each year so that the amount returning interest grows. What is the dollar amount 9 years from now of $100 invested at 10% annual interest? Please round your answer to the nearest cent. 2) Basic Stats Understand the descriptive statistics concepts of mean, median, mode, variance, and standard deviation Manually compute these measures from their definitions for custom data sets Compute descriptive statistics for custom data sets in Excel using basic functions and named statistical functions Unit sales for new product ABC have varied in the first seven months of this year as follows: Month Jan Feb Mar Apr May Jun Jul Unit Sales What is the (population) variance of the data? Please specify your answer as an integer. Note that the correct answer will be evaluated based on the full-precision result you would obtain using Excel 3) Probability Understand how to create a graphical histogram and probability density function from a data set Manually compute mean, variance, and standard deviation from probability table summaries of data sets Compute descriptive statistics from probability table summaries in Excel using basic functions and the built-in SUMPRODUCT function

3 Let X be a discrete random variable. If Pr(X<8) = 2/6, and Pr(X<=8) = 6/12, then what is Pr(X=8)? Please specify your answer in decimal terms and round your answer to the nearest hundredth (e.g., enter 12 percent as 0.12). 4) Normal distribution Understand how to solve problems represented by the uniform distribution Understand the relationship between the standard normal distribution and other normal distributions Convert any nonstandard normal distribution into its equivalent standard normal distribution for purposes of answering various questions Use reference tables to retrieve answers to questions about the standard normal distribution Use Excel to create formulas with built-in shortcut functions for the normal distribution The sales department has determined that the average purchase value for their catalog business is normally distributed with a mean of $30.55 and a standard deviation of $9.43. What is the purchase value at the 20 th percentile? Please round your answer to the nearest cent. 5) Sampling Distinguish population vs. sample, parameter vs. statistic, and description vs. inference Compute sample mean, variance, and standard deviation Understand the rationale for the distribution of sample means Compute mean, variance, and standard deviation for the distribution of sample means using the sample data Compute mean, variance, and standard deviation for the distribution of sample means using population parameters and the Central Limit Theorem Use Excel to solve sampling problems Suppose your marketing colleague used a known population mean and standard deviation to compute the standard error as 62.3 for samples of a particular size. You don't know the particular sample size but your colleague told you that the sample size is greater than 90. Your boss asks what the standard error would be if you triple the sample size. What is the standard error for the new sample size? Please round your answer to the nearest tenth. Note that the correct answer will be evaluated based on the full-precision result you would obtain using Excel.

4 Appendix B Financial Accounting Section Overview and Sample Problems 1) NPV (Under the Finance Section) Understand the assumptions about discount rates embedded in the NPV formula Translate word problems into clearly defined sets of cash flows Clarify the known and unknown quantities Determine the appropriate concepts and equations to structure the cash flows Use Excel to lay out a cash flow model and compute NPV for various alternatives Perform a sense check of whether the results are reasonable A firm that purchases electricity from the local utility is considering installing a steam generator. A large generator costs $330,000 whereas a small generator costs $220,000. The cost of operating the generator would be $150,000 per year for the large and $180,000 for the small. Either generator will last for five years. The cost of capital is 10%. For each generator option, assume immediate installation, with purchase and operating costs in the current year and operating costs continuing for the next four years. Assume payments under both options at the start of each year (i.e., immediate, one year from now,..., four years from now). What is the net present value of the more attractive generator? Please round your answer to the nearest dollar. Report the NPV of cost as a negative number. 2) Balance I Understand the definition of assets, liabilities, and equity Understand why assets are uses of funds Understand why liabilities and equity are sources of funds Understand the balance sheet equation that states assets must equal liabilities plus equity Compute missing values from logical relationships among balance sheet categories Use the balance sheet equation to evaluate common business transactions Evaluate each of the following transactions in terms of their effect on assets, liabilities, and equity. 1. Buy $15,000 worth of manufacturing supplies on credit 2. Issue $85,000 in stock What is the net change in Total Liabilities? 3) Balance II Work with the asset types cash, accounts receivable, inventory, and property, plant & equipment Work with the liability types accounts payable and debt

5 Work with the equity types paid-in capital and retained earnings Understand that balance sheet amounts reflect historical cost rather than market value Identify the appropriate balance sheet adjustments for common business transactions The balance sheet value of a firm's inventory is $50,000. Suppose that the firm purchases supplies at a cost of $4,000 and adds them to inventory. Shortly thereafter, the market value of the recently purchased supplies changes to $3,500. Assuming no other changes to inventory, and using the historical cost method, what is the final balance sheet value of inventory? 4) Income Understand the expense types cost of goods sold (COGS) and sales, general, and administration (SG&A), depreciation, and income taxes Recognize that net income and profit are synonyms but differ from cash flow Understand the difference between cash payments and depreciation expense for investments in longterm property, plant, and equipment Suppose Dansko Integrated has the following revenue and expenses for 2010: Revenues of $8,500,000 Cost of Goods Sold of $2,550,000 Depreciation Expenses of $800,000 Income Taxes of $1,144,000 Interest Expenses of $90,000 Other Expenses of $500,000 Sales, General, & Administrative Expenses of $1,700,000 Create an income statement with amounts in thousands What is the value of Profit? Please specify your answer in the same units as the financial statement. 5) Cash Flow Understand the operating adjustment for non-cash depreciation expenses Understand the operating adjustments for changes in asset categories such as accounts receivable and inventory Understand the operating adjustments for changes in liability categories such as accounts payable Understand the investing adjustments for changes in the asset category property, plant, and equipment Understand the financing adjustments for changes in debt and dividends

6 Suppose Torche Corporation has the following results related to cash flows for 2010: Net Income of $10,000,000 Increase in Accounts Payable of $800,000 Increase in Accounts Receivable of $600,000 Decrease in Inventory of $100,000 Assuming no other cash flow adjustments than those listed above, create a statement of cash flows with amounts in thousands. What is the Net Cash Flow from Operating Activities? Please specify your answer in the same units as the financial statement. 6) Connections Use a balance sheet, income statement, and changes in balance sheet categories to create an updated balance sheet Use an income statement and changes in balance sheet categories to compute the change in cash flow Use a balance sheet and statement of cash flows to compute an updated balance sheet Use a balance sheet and information about revenues and expenses to compute profit Use the starting balance sheet, income statement, and the list of changes to answer the question. Nippon Technology Balance Sheet As of December 31, 2010 (amounts in thousands) Cash 37,000 Liabilities 24,000 Other Assets 39,000 Equity 52,000 Total Assets 76,000 Total Liabilities & Equity 76,000 Nippon Technology Income Statement January 1 to March 31, 2011 (amounts in thousands)

7 Revenue 5,800 Expenses 3,400 Net Income 2,400 Between January 1 and March 31, 2011: 1. Other Assets increase by $300, Liabilities decrease by $200, Paid-In Capital does not change 3. Dividends increases by $100,000 What is the value for Cash on March 31, 2011? Please specify your answer in the same units as the financial statements.