These are Exam questions and solutions as well as those that were found in assignments, study guides and practice questions. When you work through these together with explanations in your study guide, you will gain an excellent understanding of concepts, theories, techniques and methods which will ...
, LUCIANO SCHOOL OF LAW & SOCIAL SCIENCE [LSLSS]
“Inspired to impact with a difference”
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Contents
.................................................................................................. 4
......................................................................................................... 4
.......................................................................................................................... 5
Ratios ....................................................................................................................................................... 5
Profitability ratios ............................................................................................................................ 6
Liquidity ratios .................................................................................................................................. 9
Activity ratios (Efficiency Ratios) ................................................................................................ 10
Debt ratios (leveraging ratios) ..................................................................................................... 12
Market ratios.................................................................................................................................... 13
DEFINITION of 'DuPont Analysis' ..................................................................................................... 15
INVESTOPEDIA EXPLAINS 'DuPont Analysis'................................................................................. 15
Return, Risk and the Security Market Line - An Introduction to Risk and Return ................. 21
Return, Risk And The Security Market Line - Expected Return, Variance And Standard
Deviation Of A Portfolio ..................................................................................................................... 22
Systematic And Unsystematic Risk .................................................................................................. 42
Security Market Line And Beta Basics............................................................................................. 51
Chapter objectives .............................................................................................................................. 60
Structure of the chapter ..................................................................................................................... 60
Sources of funds .................................................................................................................................. 61
Ordinary (equity) shares ................................................................................................................... 61
Loan stock ............................................................................................................................................. 67
Retained earnings ............................................................................................................................... 70
Bank lending ........................................................................................................................................ 71
Leasing .................................................................................................................................................. 73
Hire purchase....................................................................................................................................... 77
Government assistance ...................................................................................................................... 78
Venture capital .................................................................................................................................... 78
Franchising ........................................................................................................................................... 80
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, LUCIANO SCHOOL OF LAW & SOCIAL SCIENCE [LSLSS]
“Inspired to impact with a difference”
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Weighted Average Cost of Capital ........................................................................................................ 83
Formula ................................................................................................................................................. 83
Example................................................................................................................................................. 84
Uses of WACC........................................................................................................................................ 85
DEFINITION of 'Capital Budgeting' .................................................................................................. 85
INVESTOPEDIA EXPLAINS 'Capital Budgeting' .............................................................................. 86
Chapter objectives .............................................................................................................................. 89
Structure of the chapter ..................................................................................................................... 89
Capital budgeting versus current expenditures ........................................................................... 90
The classification of investment projects....................................................................................... 91
The economic evaluation of investment proposals...................................................................... 93
Net present value vs internal rate of return ................................................................................ 103
Allowing for inflation ....................................................................................................................... 123
Key terms ............................................................................................................................................ 130
Mergers and Acquisitions: Valuation Matters ................................................................................. 139
Mergers and Acquisitions: Why They Can Fail ................................................................................ 142
DEFINITION of 'Working Capital Management' .......................................................................... 145
INVESTOPEDIA EXPLAINS 'Working Capital Management' ...................................................... 146
Take control of your working capital management ................................................................... 146
DEFINITION of 'Cash Management'................................................................................................ 148
INVESTOPEDIA EXPLAINS 'Cash Management' ........................................................................... 149
Treasury Functions ............................................................................................................................... 149
TYPICAL EXAMINATION PAPER ................................................................................................................. 153
VARIOUS QUESTIONS ................................................................................................................................ 178
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, LUCIANO SCHOOL OF LAW & SOCIAL SCIENCE [LSLSS]
“Inspired to impact with a difference”
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STUDY NOTES
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