1.a. What are the main tasks of the financial manager (CFO)? Explain briefly 1.b. What impact does the high inflation have on the value of a business? Explain briefly. 1.c. Are depreciation, depletion and amortization the same? Explain briefly. 2. In the table below is information for two companies: 37 32 $000) Company K Company L Net sales(revenues 21.472 23,314 Cost of goods sold 13,050 5.192 Average inventory 350 457 Average accounts receivable 1,837 4.996 Average accounts payable 2,025 1.048 Turnover days Days inventory outstanding Days sales outstanding 31 78 Days payable outstanding 61 75 Total assets 12.500 12.000 Cash conversion cycle From the above data, make the observations about the relative performance and determine better-performed company. (Remember that the shorter the number of days in this cycle, more the amount of available cash, and less need to borrow). 3. The initial investment and other related data of Company K are given below (5000) Initial investment: 75,000 Economic life: 10 years Annual net incomes: 22,500 Annual depreciation: 6,500 Calculate the ARR and Payback period and comment on the feasibility of investment 4.a. What is the difference between top-down and bottom-up financial managent of a company? Explain briefly. 212 4.b. How can we understand and evaluate the cash position of a company? 4.c. Why Working capital management is important? Explain briefly. 5. The capital structure of company KL is given below: Sources of capital Book value (5000) L.T.Debts 60,000 Preferred stock 10,000 Common stock 20,000 Reserves(re) 40.000 Total capital 130,000 The interest rate charged to the long term debt is 10%. Face value of company's common stock is $1 per share and currently are trading for $8 and dividend for common stock is $1.2 per share. Price of preferred stock is $10 per share and dividend for preferred stock is $1.5 respectively. Assume that the expected growth rate is 5%, average income tax ratio is 30% and corporate tax ratio is 25%. Calculate and comment the WACC of the firm