TEST BANK FOR FINANCIAL DECISION MAKING AND STRATEGY IN BUSINESS

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TABLE OF CONTENTS TABLE OF CONTENTS...................................................................................................................1 CHAPTER 1........................................ ................................................................................................3 NATURE OF BUSINESS FINANCE................................................................................................3 Objectives........................................................................................................................................3 Financial goals of the firm................................................................................................................5 Non-financial goals..........................................................................................................................7 AGENCY THEORY..........................................................................................................................8 Types of Business Organizations..................................................................................................13 CHAPTER 2...................................................................................................................................22 FINANCIAL STATEMENTS ANALYSIS.........................................................................................22 Objectives......................................................................................................................................22 Sources of Information..................................................................................................................24 Types of ratios...............................................................................................................................26 Financial forecasting......................................................................................................................34 CHAPTER 3:..................................................................................................................................47 TIME VALUE OF MONEY..............................................................................................................47 Objectives......................................................................................................................................47 1.compounding..............................................................................................................................48 2. Discounting.............................................................................................................................57 CHAPTER 4..................................................................................................................................68 COST OF CAPITAL.......................................................................................................................68 Objectives......................................................................................................................................68 Specific costs of capital.................................................................................................................69 CHAPTER 5:..................................................................................................................................84 CAPITAL BUDGETING DECISIONS............................................................................................84 Objectives......................................................................................................................................84 CAPITAL BUDGETING TECHNIQUES.........................................................................................92 FINANCIAL MANAGEMENT 2 Non-discounted cash flow techniques...........................................................................................93 discounted cashflow techniques...................................................................................................98 CHAPTER 6 :...............................................................................................................................117 BASIC VALUATION MODELS.....................................................................................................117 Objectives....................................................................................................................................117 Bond valuation.............................................................................................................................119 preference shares valuation........................................................................................................127 valuation of ordinary shares........................................................................................................128 CHAPTER 7:...............................................................................................................................136 WORKING CAPITAL MANAGEMENT........................................................................................136 Content........................................................................................................................................136 a .management of inventory........................................................................................................149 b. Management of cash.............................................................................................................155 c management of receivables.....................................................................................................161 d. Management of current liablities.............................................................................................174 CHAPTER: 8................................................................................................................................184 SOURCES OF FUNDS...............................................................................................................184 Objectives....................................................................................................................................184 EQUITY FINANCE.......................................................................................................................186 1) ordinary share capital..............................................................................................................186 2. Term loan.................................................................................................................................195 3. Preference shares (quasi-equity)............................................................................................198 4. Venture capital.........................................................................................................................198 5.lease financing..........................................................................................................................200 6.hire purchase............................................................................................................................204 Mortgages....................................................................................................................................208 FINANCIAL MANAGEMENT 3 CHAPTER 9:...............................................................................................................................211 DIVIDEND POLICY......................................................................................................................211 CHAPTER 10:.............................................................................................................................222 FINANCIAL MARKETS .............................................................................................................222 Financial markets i. Primary and secondary market 223 capital market authority (cma).....................................................................................................229 money market instruments..........................................................................................................233 special financial institutions.........................................................................................................238 other specialised financial institutions.........................................................................................240 ANSWERS TO REINFORCING QUESTIONS.... [Show More]

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