Busıness Fınance I

Yanıt Açıklaması: The difference between the sale price per unit and the variable costs per unit gives the unit contribution margin

Yanıt Açıklaması: Inventories can be classified into five major categories: - Raw Material: It is the basic and the most important part of inventories. These are goods directly or used in the production process, and the expenses incurred for the procurement of raw materials are reflected to the cost per unit of product. - Work in Progress: These include those materials which have been committed to production process but have not yet been completed. - Consumables: These are the materials which are needed for smooth running of the manufacturing process. - Finished Goods: These are the final output of the production process. - Spares: It is also a part of inventories, which includes small spares and parts. - Transaction costs

Yanıt Açıklaması: Risk-free return is the rate of return that investors require to invest in risk-free investments in that environment. The short term T-Bill rate is usually used to measure it.

Yanıt Açıklaması: Expected return of a portfolio is the weighted average of returns of securities in that portfolio. The share of C=1-0.5-0.3=0.2 Thus, expected return will be: ER=0.3*10+0.5*8+0.2*5=3+4+1=8%

Yanıt Açıklaması: Risk-free return is the rate of return that investors require to invest in risk free investments in that environment. The short term T-Bill rate is usually used to measure it. The Risk premium is the return in excess of the risk-free rate that investors require to compensate for the risk of an investment.

Yanıt Açıklaması: Delinquency Cost: This type of cost arises on account in relation with the delay in payment of receivables by the customer when they fall due and become doubtful debts. Some sanctions can be applied such as blocking of company’s funds for a period of time until the payment is realized, costs associated with the collection of overheads and legal expenses.

Yanıt Açıklaması: • Regression Method: It assumed that there exists a linear relation with sales volume as dependent variable and some predetermined economic factors as independent variables. • Managerial Assessment Method: In many case it is not easy to determine the independent variables in a regression. In such cases managers who have insight about the dynamics in market place use their own assessments to forecast the future sales targets. Sometimes the managerial assessments are used as a contributor to the regression results. • Special Purpose Methods: There exist three special purpose methods to analyze the determinants of sales to make more realistic sales forecasts. The first one is industry analysis in which the individual company sales forecast is based on total industry sales. In the product analysis method, the focus is on individual product demand. It is also possible for some special sectors such as component manufacturing to use the forecast of the clients’ demand forecasts and this method is named as latest use method. • Combined Methods: It is the most proper approach to combine two or more of the methods mentioned above in order to fully address the company specific factors such as size, structure, suppliers and seasonality etc.

Yanıt Açıklaması: (1+0.21) = (1+r)*(1+0.18) r=0.0254=2.54%

Yanıt Açıklaması: When the market interest rate is equal to the coupon interest rate, bonds sell at their par value. When the market interest rate is below the coupon interest rate, bonds sell above their par value and they are called premium bonds. When the market interest rate exceeds the coupon interest rate, bonds sell below their par and are called discount bonds. There is an inverse relationship between value of bonds and market interest rates. As market interest rates increase, the present value of future cash flows declines and the value of bond decreases. Conversely, if market interest rates decrease, the present value of future cash flows increases and the value of bond increases. It is important to note that market interest rates might change but there is no change in coupon interest rate. As also understood from the information given, all of the statements in the options about interest rates and bond values are correct, so the correct answer is E.

Yanıt Açıklaması: Manufacturing overhead consist of any expenses directly related with the production except direct materials and direct labor. Structurally manufacturing overhead may be in the form of fixed or variable costs.

Yanıt Açıklaması: Direct materials cost is in direct materials budget and labor costs are included in direct labor budget, but the costs other than these are addressed in the manufacturing overhead budget.

Yanıt Açıklaması: Current price of stock = $50+$4 /1.15 =$46.96

Yanıt Açıklaması: Rate of return = [$5 + ($60 - $50)] / $50 = 0.30

Yanıt Açıklaması: Yield-to-maturity has two components. The first one is the return you get from coupon payments, called current yield (annual coupon/current bond price). The second one is the return you get from the change in the value of bond, called capital gains yield. Therefore, the correct option is A.

Yanıt Açıklaması: In order to prepare the proforma financial reports, the existing financial reports are used as starting point. The following forecasts and estimations should be made in order to prepare the proforma financial reports: • Sales, direct materials, direct labor and manufacturing overhead budgets, • The forecasted sales, management expenses budget, • Existing funding structure, • The ownership structure, • The volume and amount of direct materials, • The volume and amount of finished products, • The existing amount of fixed assets, • The receivables and payables, • The sales and proceeds, • Non operating and extraordinary expenses, • Operating expenses, • Net profit. Therefore, the correct option is E.

Yanıt Açıklaması: Plans up to 1 year are called short term in financial planning.

Yanıt Açıklaması: There is not a cost called promotion cost among the inventory costs.

Yanıt Açıklaması: Conservative policy of working capital management creates the lowest level of risk.

Yanıt Açıklaması: Prepaid Expenses are a component of current assets

Yanıt Açıklaması: Financial controls are the means by which an organization’s resources are directed, monitored, and measured. It is fact that budgets and proforma financial statements are the major tools of financial control.