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FIN3702 EXAM ANSWERS JUNE 2020
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FIN3702 Exam answers for June 2019
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Exam Summary Financial Management 2, FM2, AMSIB
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Financial Management 2 notes
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Summary chapters 3-4-5-10-15 | Principles of Managerial Finance, Global Edition, ISBN: 9781292018201 Financial Management 2 (2060FM2_19)
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MEMO – FIN3702 JUNE 2019ralphtsuro@gmail.com +27815657602
, MCQ QUESTIONS 1 to 30
ANSWER EXPLANATION
1 2 Sales forecast → production plans → estimation of costs (labour,
fixed costs) → pro forma statements → cash budget
2 4 Depreciation is a noncash item
3 2 Trade and other payables and accruals.
4 1 An increase in CA increase NWC, thereby reducing the risk of
technical insolvency.
5 1 If a firm uses an aggressive financing strategy, it increases return
and increases risk.
6 2 Produce low-cost short cycle goods.
OC = AAI + ACP
7 3
AAI = OC - ACP
= 120 -40
= 80
8 1 CCC = OC - APP
Strategies for managing the cash conversion cycle
▪ Turn inventory over in shorter time without running out of
stock.
▪ Collect trade receivables quicker without losing sales from
high pressure collection techniques.
▪ Manage mail, processing and clearing time to reduce them
when collecting from customers and to increase them when
paying suppliers.
▪ Pay trade and other payables as slowly as possible with
damaging the firm’s credit rating.
9 3 realized an annual savings of R120,000.
ralphtsuro@gmail.com +27815657602
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