Part 1.
Question 1
What are the discretionary financing needs? Explain the concept concisely and cite a brief example. You do not need, of course, to draw both the complete P&L and the BS for illustrating your explanation.
Question 2
Please describe the cash constraint when it comes to paying dividends over the accounting net income figure. Cite a brief example.
Question 3
After negotiating with an important customer, the CFO of Company H has just decided to stretch the credit period, from 30 to 45 days, instead of increasing the credit quantity because, according with his opinion, it will not have any impact on the financing needs of the firm. Do you agree? Justify your answer.
Question 4
Given the two cash conversion cycles, CCC1 = +90 days, and CCC2= -30 days, in which CCC would you frame an industrial company (B2B business) and an online e-commerce platform, such as Amazon, respectively?
Question 5
What is the difference between secured and unsecured debt? Cite an example
Part 2.
Question 6. Please, compute the DFN according with the financial statements below.
2020 15% Growth 2021
Sales 635.0
COGS 381.0
Gross margin 254.0
Other Exploit. Exp. 127.0
Amort. & Deprec. 50.8
EBIT 76.2
Interests 9.0
EBT 67.2
Taxes, 30% 20.2
Net Income 47.0
2020 2021
Cash + Near Cash Assets 19.5
Acc. Receivable 98.4
Inventories 133.2
CA 251.1
Fixed Assets 253.2
Acc. Depreciation -88.6
Total Assets 415.7
Acc. Payable 152.9
Short-Term Debt 16.0
Long-Term Debt 79.8
Current Profit 47.0
Retained Earnings 50.0
Capital 70.0
Total Liabilities 415.7
DFN
Question 7. Please, compute the working capitals. You can use the two methods for verifying purposes.
Cash 1.2 4.6 Accounts Payable
Near-cash assets 3.5 2.1 Other Accounts Payable
Accounts Receivable 9.1 3.5 Taxes Due
Inventories 3.8 3.1 Short-Term Debt
Machinery 10.8 15.2 Long-Term Debt
Facilities 6.2 4.7 Equity
Accrued Deprec. -1.4
Total Net Assets 33.2 33.2 Total Liabilities
WC =
WC =
