Finance



Item Name

The following are the highly simplified financial statements of Duration Ltd for last year: / Calculate as many accounting ratios as the information provided will allow.

The following is the balance sheet (in abbreviated form) of Projections Ltd for last year: / The following plans have been made for next year: 1. Sales revenue is expected to total £350,000, all on credit. Sales will be made at a steady rate over the year and two months’ credit will be allowed to customers. 2. £200,000 worth of inventories will be bought during the year, all on credit....

What does the matching convention of accounting say?

What is a balance sheet? Does the balance sheet tell us how much the business is worth?

Why is ratio analysis of financial statements considered to be so useful? Why is a careful reading of the statements not enough?

Barclay plc is assessing an investment project. The estimated cash flows are as follows: / The business’s cost of finance is 15 per cent p.a. and it seeks projects with a three-year maximum discounted payback period. Should the project be undertaken on the basis of NPV and discounted PBP?

Branton & Co. Ltd is choosing between two mutually exclusive investment opportunities, Project A and Project B. The estimated cash flows for the two projects are as follows: / The business’s cost of finance is estimated at 10 per cent. Calculate: (a) The net present value for both projects. (b) The approximate internal rate of return for Project A. (c) The payback period for both projects.

Evidence shows that many businesses use more than one of the four methods of investment appraisal found in practice. What could be the reason for this?

Is the objective of discounting to take account of inflation? Explain.

RTB plc has recently assessed a potential project to make and sell a newly developed product. Two possible alternative systems have been identified, either one of which could be used to make the product. The results of the assessment can be summarised as follows: / The business’s cost of finance is 10 per cent p.a. Which system should the business select? Explain what assumptions you have made...