FINANCE FOR MANAGERS Assignment -
In this assignment, you are required to analyse financial information and apply relevant financial techniques and knowledge to make financial decisions and recommendations. These decisions and recommendations need to be communicated clearly in written form.
Case 1 - Track Software Limited
Q1. a. On what financial goal does Stanley seem to be focusing? Is it the correct goal? Explain your answer.
b. Could a potential agency problem exist in this firm? Explain.
Q2. Calculate the firm's earnings per share (EPS) for each year, recognising that the number of shares issued has remained unchanged since the firm's inception. Comment on the EPS performance in view of your response to question 1a.
Q3. Use the financial data presented to determine Track's operating cash flow (OCF) and free cash flow (FCF) in 2011. Evaluate your findings in light of Track's current cash flow difficulties.
Q4. Analyse the firm's financial condition in 2011 as it relates to a liquidity, b activity, c debt and d profitability, using the financial statements provided in Tables 2 and 3 and the ratio data included in Table 5. Be sure to evaluate the firm on both a cross-sectional and a time-series basis. (Note - All tables are in attached file).
5. What recommendation would you make to Stanley about hiring a new software developer? Relate your recommendation here to your responses to question 1a.
Case 2 - Lasting Impressions Company
Q1. For each of the two proposed replacement presses, determine:
a. initial investment
b. operating net cash inflows
c. terminal cash flow (Note: At the end of year 5).
Q2. Using the data developed in question 1, find and depict on a time line the relevant cash flow stream associated with each of the two proposed replacement presses, assuming that each is terminated at the end of five years.
Q3. Using the data developed in question 2, apply each of the following decision techniques:
a. payback period (Note: Ignore any terminal cash flows at the end of year 5)
b. net present value
c. internal rate of return.
Q4. Draw NPV profiles for the two replacement presses on the same set of axes; discuss conflicting rankings of the two presses, if any, resulting from the use of NPV and IRR decision techniques.
Q5. Recommend which, if either, of the presses the firm should acquire if the firm has:
a. unlimited funds
b. capital rationing.
Q6. What is the impact on your recommendation of the fact that the operating net cash inflows associated with press A are characterised as very risky in contrast to the low-risk operating net cash inflows of press B?
Textbook - Principles of Managerial Finance by Gitman, Juchau and Flanagan, 2011, 6th edition.
Attachment:- Assignment File.rar