Question $10$Not yet answeredFlag questionQuestion textWhich of the following is$/$are the problem$($s$)$ encountered in financial statement analysis?Question $10$Answera.All of theseb.Development of benchmarksc.Interpretation of resultsd.Window dressingQuestion $11$Not yet answeredFlag questionQuestion textWorking capital management is managing:Question $11$Answera.Long term liabilitiesb.Short term assets and liabilitiesc.Long term assetsd.Only short term assetsQuestion $12$Not yet answeredFlag questionQuestion textWhat is the maximum amount to the nearest N$ you can borrow with a $15-$year mortgage if you can pay N$$550$ a month and have been offered a $4\mathrm{.}68\%$ interest rate, compounded monthly? Based on the information above, how much will you pay in interest over the life of the loan if you make the minimum monthly payment each month?Answer:Question $13$Not yet answeredFlag questionQuestion textFly Me Airways is a private owned airline that provides air cargo and passenger services in Africa, Asia and Europe. The company has two strategic objectives which are diversification and increasing the value of the firm by $10\%$ per annum. As part of diversification strategy, Fly Me identified three individual companies from which it want to select two investment portfolios. The companies are Safe Travel Airways, Take Two Mine and Big Exploration Ltd$.$ The expected return of Safe Travel Airways is $17\mathrm{.}2\%,$ Take Two Mine is $18\mathrm{.}3\%$ and Big Exploration Ltd is $17\mathrm{.}2\%.$ The standard deviation of Safe Travel Airways is $3\mathrm{.}5\%,$ Take Two Mine is $4\mathrm{.}2\%$ and Big Exploration Ltd is $1\mathrm{.}5\%.$ At the last board meeting of the year the board passed a resolution to implement the second strategic objective by acquiring $3$ additional aircrafts. The company is currently wholly equity funded and has $30$ million shares in issue. The share price is N$$11$ per share and the ungeared cost of equity is $9\%.$ The acquisition of the new aircrafts requires an initial investment of N$$80$ million. The present value of future cash flows following this initial investment is estimated to be N$$110$ million based on a discount rate of $9\%.$ The N$$30$ million forecast increase in entity value is expected to be fully reflected in the share price immediately once the acquisition of the three aircrafts is announced. There has been some discussion amongst the directors of Fly Me Airways about how the N$$80$ million capital investment should be funded. The management proposed to the board three alternative financing structures as follows:$1.$ N$ $80$ million equity funding$2.$ N$ $80$ million borrowings$3.$ N$$48$ million equity plus N$$32$ million borrowingsThe company pays corporate income tax at $25\%,$ the covariance between Take Two Mine and Safe Travel shares is $1$ and the covariance between Big Exploration and Take Two Mine shares is $0.$ Fly Me Airways debt to equity ratio is expected to reach $100\%.$Calculate the return of portfolio consisting of $2/5$ investment in Big Exploration Ltd shares and the rest of the investment in Take Two Mine shares. $($Answer in percentage to $2$ decimal places e$.$g$.10\mathrm{.}25\%)$ Answer:Question $14$Not yet answeredFlag questionQuestion textThe management accountant of Windhoek Consulting Engineers $($WCE$)$ has provided us with the following information: WCE has N$$74$ million of accounts receivable, N$$60$ million of inventory, and N$$128$ million of accounts payable. Its average daily sales are N$$1910000$ and its gross profit margin is $30\%.$Calculate the cash conversion cycleAnswer:Question $15$Not yet answeredFlag questionQuestion textNamcool Ltd is a cooling and refrigeration company that supplies and installs refrigerators and air conditioners. Due to increased competition, the company is experiencing a reduction in its return on equity and the directors are worried that the company may fail to attract additional capital if the current trend continues. In order to boost sales, the marketing director has planned to engage into an aggressive sales promotion to increase the companys profits. The following relates to the following years performance after the aggressive sales promotion.Operating income $($EBIT$)$ N$$2400000$Sales revenue N$$16000000$Asset turn over $1\mathrm{.}6$ timesInterest N$$400000$Total debt N$$5000000$The companys income tax rate is $30\%$ and the current years return on equity is $20\%.$Calculate the net profit Answer:Question $16$Not yet answeredFlag questionQuestion textNamcool Ltd is a cooling and refrigeration company that supplies and installs refrigerators and air conditioners. Due to increased competition, the company is experiencing a reduction in its return on equity and the directors are worried that the company may fail to attract additional capital if the current trend continues. In order to boost sales, the marketing director has planned to engage into an aggressive sales promotion to increase the companys profits. The following relates to the following years performance after the aggressive sales promotion.Operating income $($EBIT$)$ N$$2400000$Sales revenue N$$16000000$Asset turn over $1\mathrm{.}6$ timesInterest N$$400000$Total debt N$$5000000$The companys income tax rate is $30\%$ and the current years return on equity is $20\%.$Calculate return on assets in percentageAnswer:Question $17$Not yet answeredFlag questionQuestion textIn an agency relationshipQuestion $17$Answera.managers act as agents for the customersb.managers act as agents for the board of directorsc.managers act as agents for the employeesd.managers act as agents for the shareholdersQuestion $18$Not yet answeredFlag questionQuestion textFinancial management is mainly concerned with:Question $18$Answera.arrangement of funds.b$.$profit maximizationc.efficient management of every businessd.all aspects of acquiring and utilizing financial resources for firms activitiesQuestion $19$Not yet answeredFlag questionQuestion textNet working capital refers to:Question $19$Answera.Current assetsb.Total assets minus fixed assetsc.Current assets minus inventoriesd.Current assets minus current liabilitiesQuestion $20$Not yet answeredFlag questionQuestion textFly Me Airways is a private owned airline that provides air cargo and passenger services in Africa, Asia and Europe. The company has two strategic objectives which are diversification and increasing the value of the firm by $10\%$ per annum. As part of diversification strategy, Fly Me identified three individual companies from which it want to select two investment portfolios. The companies are Safe Travel Airways, Take Two Mine and Big Exploration Ltd$.$ The expected return of Safe Travel Airways is $17\mathrm{.}2\%,$ Take Two Mine is $18\mathrm{.}3\%$ and Big Exploration Ltd is $17\mathrm{.}2\%.$ The standard deviation of Safe Travel Airways is $3\mathrm{.}5\%,$ Take Two Mine is $4\mathrm{.}2\%$ and Big Exploration Ltd is $1\mathrm{.}5\%.$ At the last board meeting of the year the board passed a resolution to implement the second strategic objective by acquiring $3$ additional aircrafts. The company is currently wholly equity funded and has $30$ million shares in issue. The share price is N$$11$ per share and the ungeared cost of equity is $9\%.$ The acquisition of the new aircrafts requires an initial investment of N$$80$ million. The present value of future cash flows following this initial investment is estimated to be N$$110$ million based on a discount rate of $9\%.$ The N$$30$ million forecast increase in entity value is expected to be fully reflected in the share price immediately once the acquisition of the three aircrafts is announced. There has been some discussion amongst the directors of Fly Me Airways about how the N$$80$ million capital investment should be funded. The management proposed to the board three alternative financing structures as follows:$1.$ N$ $80$ million equity funding$2.$ N$ $80$ million borrowings$3.$ N$$48$ million equity plus N$$32$ million borrowingsThe company pays corporate income tax at $25\%,$ the covariance between Take Two Mine and Safe Travel shares is $1$ and the covariance between Big Exploration and Take Two Mine shares is $0.$ Fly Me Airways debt to equity ratio is expected to reach $100\%.$Calculate the risk of a portfolio consisting of $2/5$ investment in Big Exploration Ltd shares and the rest of the investment in Take Two Mine shares. $($answer in percentage to $2$ decimal places e$.$g$.10\mathrm{.}25\%)$Answer: