ANSWER :WORKING CAPITAL DECISION
CASH MANAGEMENT IS A PART OF WORKING CAPITAL DECISION.
WORKING CAPITAL IMPLIES CHANGES IN CURRENT ASSETS LESS CHANGES IN CURRENT LIABILITIES.
CASH IS A PART OF WORKING CAPITAL
UNDER WORKING CAPITAL MANAGEMENT, WE PREPARE CASH BUDGET AND FIND OUT, WHETHER WE HAVE ENOUGH CASH AVAILABLE OR NOT.
IF CASH IS NOT AVAILABLE, WE NEGOTIATE WITH BANK FOR SHORT TERM LOANS, SO THAT ENOUGH CASH IS AVAILABLE FOR DAY TO DAY OPERATIONS. [[[Thumbs up please]]]
QUESTION 7 Cash management is part of a firm's: Capital structure decision Financing decision Investment decision...
QUESTION 5 Which of the following financial management decisions deals with how the firm's earnings should be distributed? Capital structure Financing Investment Dividend Working capital QUESTION 6 Suppose a firm is considering acquiring another firm. This financial management activity is part of: Capital structure decision Financing decision Investment decision Dividend decision Working capital decision
QUESTION 3 Which of the following is NOT a financial intermediary? Investment bank Savings bank Commercial bank Investment company Technology firm QUESTION 4 Which of the following financial management policy areas deals with establishing the firm's optimal debt ratio? Capital structure Financing Investment Dividend Working capital
Discussion question on the hedging decision faced by multinationals Capital structure question (discussion) Capital budgeting questions (discussion) Forecasting exchange rates (quant and/or theory) Swaps (Practical and/or Theory) Hedging Theory (Economic / Translation exposure) Discussion questions Risk Management (Practical) Foreign Direct Investment (discussion) Forms of Debt / Equity Financing (discussion) By discussion it means "Please explain"
As we move from financial analysis to working capital management and the financing decision how does the thought process of the financial manager change? How are these items related?
The financial manager has three major tasks. These involve making decisions about capital budgeting, capital structure and working capital management. As I indicated earlier, "the acquiring funds" part or "the finding the lowest cost funds" part corresponds to capital structure decision. Should the firm borrow money from the bank, issue bonds or stocks to generate funds? This would be a capital structure decision. Finding profitable investments part of "finding those investment projects with the highest return adjusted for risk" part...
PROBLEM 2 (4 points; 2 points for each part) A firm maintains a capital structure with debt-equity ratio of 2/3 and has $24,000 earnings for the year-end. The firm follows a residual dividend policy. a. What is the maximum capital budget amount the firm can finance without raising external equity? b. Suppose the firm's capital structure before financing the maximum capital budget consisted of $500,000 debt and $750,000 equity. Calculate the firm's debt ratio after financing the maximum capital budget...
Question 1 Sumur Berhad has the following capital structure. Source of Financing Market Value Cost of Financing Bonds RM100 million 6% Preference shares RM 50 million 7% Ordinary shares RM150 million 10% Required: If the corporate tax rate is 25%, calculate the firm's WACC.
Why focus on the optimal capital structure? A company's capital structure decisions address the ways a firm's assets are financed (using debt, preferred stock and common equity capital) and is often presented as a percentage of the type of financing used As with all financial decisions, the firm should try to set a capital structure that maximizes the stock price, or shareholder value. This is called the optimal capital structure Which of the following statements regarding a firm's optimal capital...
Part II Rainbow Company is using both debt and equity financing. Its target capital structure is to achieve 30 percent debt and 70% equity. Early this year, the company invested in project A that provided an IRR of 7 percent. This project was financed by debt costing 5 percent. Later on, the company also found similar project B that had an IRR return of 12 percent. The Chief Financial Officer, however, commented that project B was not acceptable because it...
1. Which the following requires new issues to file a registration statement and issue a prospectus? a. Dodd-Frank Act of 2010 b. Glass- Steagall Act of 1933 c. Securities Exchange Act of 1934 d. Securities Act of 1933 2. The best criterion for in an investment decision: a. finance all capital budgeting projects with debt b. minimize the cost of the investment c. maximize the difference between cash inflows and cost d. maximize the number of capital budgeting projects 3....