Assistance with finance

Questions and Problems for Module 2.

1.  Whether it is for business or personal, expenses are generally broken down into two categories, fixed and variable.  Discuss each type of expense as well as the pros and cons for each. (10 points)

2. Create a personal cash flow statement (note that you can make up numbers if you aren't comfortable using your personal information). Note: A cash flow statement is a management tool; whether it is for your personal management or to manage a business and as such it needs to be complete with a thorough evaluation of all the resources coming in and how they are going to be utilized. (10 points)

3.  Pick any publicly traded company and calculate their Earnings per share (EPS).  You must show your work. You can find the financials for any publicly traded company online at sites like yahoo finance or msn money. (10 points)

4.  Now pick a company in the same industry and compare their financial statements.

a) Compare their EPS (show calculations for the second company), which one is better and why? (10 points)

b) Calculate both companies’ net profit margin. Show calculations (10 points) 

c) Which one is better, and why. Please be specific in your answer with tangible information. (10 points)

5. Please explain one application of how you would use each of the following financial statements to make business decisions and please be specific (I want you to find a use in each one of the statements, not just one of the statements). 

Also, don’t give me the obvious answer; put some thought into it (i.e. we all know that an income statement will tell us how much profit or loss the company made).  I want you to answer as if you were preparing for a meeting with the executive operating committee and they have tasked you to find ways to help the company improve.  Hint:  use anything and everything at your disposal both in the book and on the web (ratios, comparison to other companies in a specific industry or location, fundamental analysis, etc.).  Feel free to set the stage for your explanation; just make sure that you explain it to me.

a) Income Statement (10 points)

b) Balance Sheet (10 points)

c) Statement of Changes in Financial Position (10 points)

d) Statement of Retained Earnings. (10 points)

Notes for assignments:

Please make sure you show me how you have arrived at your calculations.  For example, if you are using a formula in excel, make sure you show me the formula so that I can help you if you have done it wrong.   (so I would want you to show me that you calculated the present value like this =PV(5%,60,-1000,0,0) so that I can see where you made a mistake.  If you just give me the answer then I can’t help you see where you went wrong. 

Also, be sure to be detailed in your answers. 

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