Additional funds needed AMT Alternative minimum tax APR b Annual percentage rate Beta coefficient, a measure of an asset’s riskiness bL Levered beta bU Unlevered beta BEP BVPS CAPEX CAPM CCC Basic earning power Book value per share Capital expenditures Capital Asset Pricing Model Cash conversion cycle CF Cash flow; CFt is the cash flow in Period t CR Conversion ratio CV Coefficient of variation Dp Dividend of preferred stock Dt Dividend
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Questions Module 1 – Introduction to Financial Risk Management 1. What are the major categories of risk? Please provide examples. (Topic heading: Main categories of risk controls) Seven categories of risk are outlined. These are summarised in the table below: Type of risk Liquidity Definition The risk of not being able to pay back what you owe due to the inability to convert assets into cash quickly, without materially moving the price. Example Holding long-term property investments that
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Chapter 12 Cash Flow Estimation and Risk Analysis LEARNING OBJECTIVES After reading this chapter, students should be able to: • Discuss difficulties and relevant considerations in estimating net cash flows, and explain the four major ways that project cash flow differs from accounting income. • Define the following terms: relevant cash flow, incremental cash flow, sunk cost, opportunity cost, externalities, and cannibalization. • Identify the three categories to which incremental
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Chapter-1 Introduction Before an investment decision is made it is necessary to determine whether or not the planned investment idea is feasible. The feasibility of an investment has to be considered with respect to several different aspects in order to determine whether the investment should be realized or not. Carrying out a feasibility analysis is therefore one of the most critical steps in the decision-making process. A feasibility analysis is an effective analytical tool that can be used
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B1. (Choosing financial targets) Bixton Company's new chief financial officer is evaluating Bixton's capital structure. She is concerned that the firm might be underleveraged, even though the firm has larger-than-average research and development and foreign tax credits when compared to other firms in its industry. Her staff prepared the industry comparison shown here. a. Bixton's objective is to achieve a credit standing that falls, in the words of the chief financial officer, "comfortably within
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it is also a critical component of “financial theory”. The theory is focused on cash flow and return on the investment. The tool used in investment decisions is net present valued (NPV) which was calculated from present valued minus required investment or which was reduced to discounted cash flow formula because the net present value is a matter of cash flow that will gain in the future. [pic] The company is comprised of tangible assets
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......................... 1 1.2. Ideal conditions under uncertainty ................................................................................................... 3 2. An application of present value accounting: Reserve Recognition Accounting (RRA) .......................... 6 3. How does current value accounting match up against historical cost accounting? ............................... 7 4. What prevents ideal conditions from existing? ....................................................
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Capital spending in petrochemicals was expected to grow in the near term. Much of the new investment would be undertaken my joint ventures outside US. The primary goals of Midland’s financial strategy are to fund substantial overseas growth, invest in value-creating projects, optimize capital structure, and repurchase undervalued shares. To achieve these goals, Midland must calculate an appropriate cost of capital that will allow reasonable valuations of their strategies. Janet Mortensen, the senior vice
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mixing up assignments, you must name your assignment with the following format: * unit code, your name, your student number, and the assignment number * for example: EFB210 John Doe n1234567 Assignment Part A.xlsx Finally, complete the table below and add it to your assignment. Notes to Markers * Assignments are accessed and marked through grade centre. If the student has submitted multiple assignments, mark their last submission. * Marking for Knowledge and Understanding
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Business Decision Making Introduction Decision making is one of the very important tasks that we all have to do in every now and then. And when it is in terms of business then it makes a lot of sense incorporated with a lot of values as well as importance. Whether an organization succeed or fail this all depends on the effective decision making. Valid information & expertise plays a vital role to make good decisions. If decision is great we get good outcomes and the result is actually vice
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