This paper concentrates on the primary theme of Explain the BENEFITS of setting and implementing an agreed budget. in which you have to explain and evaluate its intricate aspects in detail. In addition to this, this paper has been reviewed and purchased by most of the students hence; it has been rated 4.8 points on the scale of 5 points. Besides, the price of this paper starts from £ 40. For more details and full access to the paper, please refer to the site.
FINANCIAL MANAGEMENT
Instructions to candidates:
a) Time allowed: Three
hours (plus an extra ten minutes’ reading time at the start – do not write
anything during this time)
b) Answer any FIVE
questions
c) All questions carry
equal marks. Marks for each question are shown in [ ]
d) Non-programmable calculators are
permitted in this examination
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1.
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a)
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Explain the BENEFITS of setting
and implementing an agreed budget.
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[12]
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b)
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Explain the following terms:
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i
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A share prospectus
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ii
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A stock exchange
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[4
each]
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2. The following data
relates to a company:
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£000
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£000
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£000
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Year ended 28/29 February
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2014
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2015
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2016
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Sales (all on credit)
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120
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140
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155
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Cost of sales
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70
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80
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90
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Expenses
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35
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40
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45
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Provision for tax
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10
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12
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13
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====
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====
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====
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£1 ordinary shares in issue
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100,000
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100,000
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100,000
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Share price
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£1.30
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£1.40
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£1.50
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Closing debtors
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£15,000
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£15,500
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£15,900
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TASKS
a)
For EACH of the three
years calculate the following ratios:
i. The gross profit
percentage
ii. The net profit after
tax percentage
iii. The expenses to
sales percentage
iv. The debtor
collection period in days
v. The EPS
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vi.
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The PE ratio
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[2
each]
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b) Analyse the trends revealed by
the above ratios.
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[8]
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Continued overleaf
3. JUQ Ltd is considering investing in a project
which has the following cash flows:
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£000
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Initial investment
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2,700
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Cash flows:
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Year 1
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700
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Year 2
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1,000
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Year 3
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1,100
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Year 4
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800
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Year 5
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500
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The cost of capital is 9%
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Extracts from NPV (DCF) tables:
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Rate of discount:
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8%
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9%
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10%
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Year 0
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1.000
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1.000
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1.000
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Year 1
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.926
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.917
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.909
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Year 2
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.857
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.842
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.826
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Year 3
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.794
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.772
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.751
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Year 4
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.735
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.708
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.683
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Year 5
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.681
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.650
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.621
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Year 6
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.630
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.596
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.564
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TASKS
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a)
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Calculate the payback period (in
years and months).
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[2]
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b)
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Calculate the ARR (accounting rate
of return).
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[2]
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c)
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Calculate the NPV (net present
value).
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[4]
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d)
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Explain briefly if you think that
the project is viable.
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[4]
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e)
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Explain the sources of long-term finance
available to a large company.
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[8]
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4. a) Prepare a cash
flow statement from the following data:
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£000
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Purchase of new equipment
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