managerial finance magister manajemen-universitas gunadarma-1 budi hermana program magister...

Managerial Finance

Magister Manajemen-Universitas Gunadarma-1Budi Hermana

Program Magister Manajemen Universitas Gunadarma

Manajemen Keuangan

Budi Hermana

Refferences:Principles of Managerial Finance, Lawrence J. Gitman, Harper Collins Publishers

Managerial Finance


Chapter 1

The Role of Finance and The Financial Manager

Managerial Finance


The Role of Finance and The Financial Manager

Finance? The art and Science of managing money

Concerned with the process, institution, markets, and instrument involved in the transfer of money among and between individuals, businesses, and governments

Areas&Opportunities?

Financial Services

Managerial Finance

The area of finance concerned with the design and delivery of advice and financial product to individual, business, and governments

concerned with the duties of the financial manager in the business firm.

Actively manage the financial affairs of many tipes of business- financial and non-financial, private and public, large and small, profit-seeking and not-for-profit

Task?

Budgeting

Financial forecasting

Cash management

Credit administration

Investment Analysis

Funds procurement

Managerial Finance


Basic Forms Of Business Organization

Sole Proprietorship

Partnerships

Corporations

A Business owned by one person and operated for his or her own profit

Small firm, unlimited liability

A Business owned by two or more persons and operated for profit

Written contract (article of partnership), unlimited liability,Limited partership

An Intangible business entity created by law (often called a “legal entity”)

Stockholders, board of directors, Chief executive officer (CEO)

Managerial Finance


Basic Forms Of Business Organization

Legal Form

Sole Propriatorship Partenrship Corporation

Stren

gth

•Owner receives all profits (as well as losses)•Low organizationak costs•Income taxed as personnel income of proprietor•Secrecy•Ease of dissolution

•Can raise more more funds than sole proprietorships•Borrowing power enhanced by more owners•More available brain power and managerial skill•Can retain good employees•Income taxed as personnel income of partners

•Owners have limited liability which guarantees they cannot lose more than invested•Can achieve large size due to marketability of stock (ownership)•Ownership is readily transferable•Long-life of firm- not dissolved by detah of owners•Can hire professional managers•Can expand more easily due to access to capital markets•Receives certain tax advantages

Weakn

esses

•Owner has unlimited liability-total wealth can be taken to satisfy debts•Limited fund-raising power tends to inhibit growth•Propietor must be jack-of-all-trades•Difficult to give employees long run career opportunity•Lacks continuity when propitor dies

•Owners have unlimited liability and may have to covers debts of other less financially sound partners•When a aparter dies, partership is dissolved•Difficul to liquidate or transfer partership•Difficult to achieve large-scale operations

•Taxes generally higher since corporate income is taxed and dividends paid to owners ara again taxed•More expensive to organize than other business forms•Subject to greater government regualation•Employees often lack personnel interest in firm•Lack secrecy since stockholders must receive financial reports

Managerial Finance


The Managerial Finance Function

Managerial Finance is closely related to, but quite different from, Economics and Accounting ?

Organizational View

Since most business decisions are measured in financial terms, the financial manager plays a key role in the operation of the firm

The size and importance of the managerial finance depend on the size of the firm

In small firm the finance function generally performed by the accounting department

In medium-to-large-size firm

Separate department, vice-president of finance (CFO),Treasurer, Controller

The officer responsible for the firm’s financial activities: financial planning and fund raising, managing cash, making capital expenditure decision, managing credit activities and managing the investment portfolio

The officer responsible for the firm accounting activities: tax management, data processing, and cost and financial accounting

Financial

Manager

Managerial Finance



Relationship to Economics

The Financial Manager must understand the economic framework, and be alert to the consequences of varying levels of economic activity and changes in economic policy ?Must be able to use economic theories as guidelines for efficient busineness operation

Supply-demand analysis Profit-Maximazing strategies Price Theory

Marginal Analysis

Economic principle which states that financial decisions should be made and actions taken only when the added benefit exceed the added costs

Benefits with new computer $100.000Less: Benefits with old computer 35.000 (1) Marginal (Added) benefits $65.000

Cost of new computer $80.000Less: Proceeds from sale of old com 28.000 (2) Marginal (added) costs $52.000

Net Benefit [(1) – (2)] $13.000

Example

Managerial Finance



Relationship to Accounting

The finance and accounting function are closely related and generally overlap; indeed, managerial finance and accounting are not often easily distinguishable. In smal firm the controller often carries out of the finance function, and in large firms many accountants are intimately involved in various finance activities ?Two Basic Differences

Emphasis of cash flows Decision Making

Accrual Method vs Cash Method

Recognizes revenue at the point of sale and recognized expenses when incurred

Recognized revenues and expenses only with respect to actual inflow and outflows of cash

Accounting View Financial View

Income statementABC CorporationFor the year xxxx

Sales Revenue $100.000Less: Costs 80.000

Net Profit $ 20.000

Income statementABC CorporationFor the year xxxx

Cash inflow $ 0Less: Cash Outflow 80.000

Net Profit ($80.000)

The accountant devotes the majority of attention to the collection and presentation of financial data

The financial manager evaluates the accountant’s statements, develops additional data, and makes decisions based on subsequent analyses

This does not mean that accountant never make decision, or that financial manager never gather data

Managerial Finance


The Managerial Finance FunctionKey Activities of The Financial Manager

Primary Activities

Performing Financial Analysis and Planning

Making Investment Decisions

Making Financing Decision

1. Transforming financial data into a form that can be used to monitor the firm’s financial condition

2. Evaluating the need for increased (or reduced) productive capacity

3. Determining what additional (or reduced) financing is required

Determine both the mix and the type of assets found on the firm’s balance sheet

The left-hand side of the balance sheet

Deals with The right-hand side of the balance sheet and involves two major area:

1. Most appropriate mix of short-term and long-term financing must be established

2. Which individual short-term or long-term sources of financing are the best at given

point in time

Balance Sheet

CurrentAssets

FixedAssets

CurrentLiabilities

Long-TermFunds

Performing Financial Analysis

and Planning

Mak

ing

Inve

stm

ent

Dec

isio

n

Making F

inancing

Decisio

n

Managerial Finance


The Managerial Finance FunctionGoal of The Financial Manager

Maximize Profit?

Some pepople believe that the owner’s objective is always to maximize profits

The Financial Manager are expected to make a major contribution to the firm’s overall profit

For Corporation, profit are commonly measured in terms of Earnings per Share (EPS)

EPS:The amount earned during the period on each outstanding share of common stock

period’s total earnings avaliable for the firm’s common stock holders

The number of shares of common stock outstanding Investment year 1 year 2 year 3 total

X $1.40 $1.00 $0.40 $2.80 Y 0.60 1.00 1.40 3.00

Earning per share (EPS)

Profit maximization fails for reason:1. Timing of return2. Cashflow avaliable to stockholder3. Risk

The chance that actual outcomes may differs from those expected

Basic primises in managerial finance is that trade-off exist between return (cash flow) and risk

Return and risk are in fact the key determinant of share price– which represents the wealth of the owners in the firm

Stockholder are risk-averse ?

√

Managerial Finance



Maximizing Shareholder Wealth

The goal of the financial manager is to maximize the wealth of the owners for whom the firm is being managed

Measured by the share price of the stock

Timing of return (cash flow)

magnitude

Risk

FinancialManager

Financial DecisionAlternative or action

Return?Risk?

Increase SharePrice ?

Yes

Yes

Reject

Acept

Financial decisions and share price

Managerial Finance



The Agency Issue

The goal of the financial manager should be to maximize the wealth of the owners of the firm

Management can be viewed as agents of the owners who have hired them and given them decision-making authority to manage the firm for the owners’ benefit

In theory In practise

Most financial managers would agree with the goal of owner wealth maximization

However, managers also concern with their personnel wealth, job security, lifestyle, and privilege

Agency problem

The likelihood that managers may place personnel goals ahead of corporate goals

Agency Cost

Monitoring expenditure

Bonding expenditure

Structuring expenditure

Opportunity cost

To prevent or minimize problem

Audit&control

Fidelity bond

Managerial compensation: stock option, performance share, cash bonuses

Managerial Finance



The Role of Ethics

Ethics – Standard of conduct or moral judgement example

Corporate Ethics Guidelines and Policies

Ethics and share price

Issues Update

http://www.cfainstitute.org

Good Corporate Governance

Corporate Social Responsibility

Certified Financial Analyst

http://www.kpk.go.id/modules/edito/content.php?id=27 http://www.bi.go.id/NR/rdonlyres/2246113B-DC63-4731-8558-3693A6254962/3449/pbi8406.pdf

Responsibility

Fairness

Transparency

Accountability

www.fcgi.or.id

http://www.goodyear-indonesia.com/social_responsibility.html http://www.telkom.co.id/pojok-media/siaran-pers/telkom-memperoleh-penghargaan-corporate-social-responsibility.html

Managerial Finance


Chapter 2

The Operating Environment ofThe Firm

Managerial Finance


Business TaxationOrdinary Income

Income earned through the sale of a firm’s goods and services

Corporate Tax Rate Schedule

Range of taxable income Base Tax + (rate x amount over base bracket)$ 0 to $ 50.000 $ 0 + (15% x Amount over $ 0) 50.000 to 75.000 7.500 + (25 x Amount over 50.000) 75.000 to 100.000 13.750 + (34 x Amount over 75.000)100.000 to 335.000 22.250 + (39 x Amount over 100.000) over $335.000 113.900 + (34 x Amount over 335.000)

Tax Calculation

Example

PT X has before-tax earnings of $250.000 Total Tax due = $22.250 + [0.39 x ($250.000-100.000)] = $22.250 + (0.39 x $150.000) = $22.250 + $58.500 = $80.750

Indonesia ?

Managerial Finance



Average Tax Rates

A Firm’s taxes divided by its taxable income

Average tax rate ranges from 15 to 34%, reaching 34% when taxable income ≥ $335.000

Average tax rate for PT X = $80.750 / $250.000 = 32.3%

Marginal Tax Income

The rate at which additional income is taxed

Pretax Tax Average Tax rate Income Liability [(2) : (1)] (1) (2) (3)

$ 50.000 $ 7.500 15.00% 75.000 13.750 18.33% 100.000 22.250 22.25% 200.000 61.250 30.63% 335.000 113.900 34.00% 500.000 170.000 34.00% 1.000.000 340.000 34.00% 2.500.000 850.000 34.00%

If PT X’s earnings go up to %300.000, the marginal tax rate on the additional $50.000 of income will be 39%. The company will therefore have to pay additional taxes of $19.500 (0.39 x $50.000)

Total Taxes on the $300.000 = $80.750+$19.500 = $100.250

Using Taxe rate schedule:Total Taxes = $22.250+[0.39x($300.000 - $100.000)]

= $22.250+$78.000 =$100.250

Managerial Finance



Interest and Dividend Income

Interest received by the corporation is included as ordinary income

Devidend received on common and preferred stock held in other corporation, and representing less than 20% ownership in them, on the other hand, are subject to a 70% exclusion for tax puposes

Only 30% of these intercorporate dividends are included as ordinary income

Avoid tripletaxation

Example

Charnes Industries received $100.000 interest on bonds it held and $100.000 in dividends on common stock it owned in other corporation. The firm is subject to a 40% marginal-tax rate and is eligible for 70% exclusion on its intercorporate dividend receipts

InterestIncome

DividendIncome

(1) Before-tax amount Less: Applicable Exclusion

Taxable amount(2) Tax (40%)

After-tax amount (1)-(2)

$100.000 0

$100.000 40.000

$ 60.000

$100.000 70.000

$ 30.000 12.000

$ 88.000

(0,70x$100.000) =

Indonesia ?

Managerial Finance



Tax-Deductible Expenses

Corporation are allowed to deducti operating expenses. The tax-deductible expenses reduces their after-tax cost.

Advertising expenses

Sales commision

Bad debt

Interest expenses

Insurance?

CSR?

Example

Company X and Y each expect in the coming year to have earnings before interest and taxes of $200.000. Company X during the year will have to pay $30.000 in interest; Company Y has no debt and therefore will have no interest expenses. Calculate the earnings after taxes for these two firm, which pay 40% tax on ordinary income

InterestIncome

DividendIncome

Earning before interest&taxLess: Interest expenses

Earnings before taxLess: Taxes (40%)

Earnings after taxes

$200.000 30.000

$170.000 68.000

$ 102.000

$200.000 0

$200.000 80.000

$120.000

Difference in earning after taxes $18.000

Dividends are not tax-deductible expense

Managerial Finance


Business TaxationCapital Gains

Amount by which the price at which an asset was sold exceeds the asset’s initial purchase price

For corporation, capital gain are added to ordinary corporate income and taxed at the regular corporate rates

Example

The Ross Company has operating earnings of $500.000 and hast just sold for $40.000 a capital asset initially purchased two years ago for $36.000.

Since the asset was sold for more than its initial purchased, there is capital gain of $4000

($40.000 sale price - $36.000 initial purchase price)

The corporation’s taxable income will total $504.000

($500.000 ordinary income plus $4.000 capital gain)

Since this total is above$335.000, the capital gain will be taxed at the 34%, resulting in tax of $1.360

(0,34 x $4000)

Managerial Finance


Financial Institutions and Markets: An Overview

Financial institutions and markets are important elements in a firm’s operating environment ?

Firms that require funds from external sources can obtain them in three ways

Financial Institution

Financial Market

Private placement

That accept savings and transfers them to those needing funds

Organized forum where the suppliers and demanders of various type of funds can make transaction

Managerial Finance



Financial Institution

An intermediary that channels the savings of

individuals, businesses, and governments into loans or investment

Major Financial InstitutionsUSA Indonesia

Commercial Bank

Savings Bank

Savings and Loan

Credit Union

Life Insurance Company

Pension Fund

Mutual Fund

Accepts both demand (checking) and time (savings) deposits. Makes loans directly to borrowers or through the financial market

Not hold demand (checking) deposits. Generally lends or invest funds through financial markets

Similar to a saving bank. Also raise capital through the sale of securities. Lends funds for real estate mortgage loans and some funds are channeled into financial market

Deals primarily in transfer of funds between consumers. Accept members’ deposit and lends to other members

Receive premium payments that are placed in invesments to accumulate funds to cover future benefit payment

Money is sometimes transferred directly to borrowers, but the majority is lent or invested via the financial markets

Pools funds of savers and makes them available to business and government demanders. Creates a portfolio of securities to achieve a specified investment objective

Bank Umum

BPR

Asuransi

Dana Pensiun

Reksa dana

Modal Ventura

Anjak-Piutang

Sewa guna usaha

Managerial Finance



Financial Markets

Provide a forum in which suppliers of funds and demanders of loans and investments can transact business directly

Money Market

Capital Market

Primary market

Secondary Market

Transactions in short-term debt instruments, or marketable securities, take place in the money market

Long-term securities (bonds and stocks) are traded in the capital market

Financial market in which securities are initially issued; the only market in which the issuer is directly involved in the transaction

Financial market in which preowned securities (those that are not new issues) are traded

Managerial Finance



Financial Markets

Flow of funds for financial institutions and market

FinancialInstitutions

FinancialMarkets

Suppliers ofFunds

Demanders ofFunds

Funds Funds

Funds Funds

Fu

nd

s

Deposits/Shares Loans

Securities Securities

Secu

rities

Funds

Securities

PrivatePlacement

Managerial Finance



The Money Market

A financial relationship created between suppliers and demanders of short-term funds, which have maturities of one year or less

Most money market transactions are made in marketable securities

Short-term debt instruments, such as US Treasury Bill, Commercial Papers, and Negotiables Certificate of Deposits issued by government, business, and financial institution

Indonesia?

Certain individuals, businesses, governments, and financial institution have temporary idle funds that they wish to place in some type of liquid asset or short-term, interest earning instrument

Other individuals, businesses, gevernments, and financial institution find themselves in need of seasonal or temporary financing

MoneyMarketexists

Managerial Finance



The Capital Market

A financial relationship created by institutions and arrangements that allows suppliers and demanders of long-term funds- funds with maturiry of more than one year- to make transactions.

The backbone of the capital market is formed by the various securities exchange that provide a forum for debt and and equity transaction

Key Securities

Bond

Long-term debt instrument used by business and governments to raise large sums of money

Common stock

Units of ownership interest, or equity. In a corporation

Common stockholders expect to earn a return by receiving Dividend

Periodic distribution of earnings to the owners of stock in a firm

Preferred stock

A special form of ownership having a fixed periodic dividend that must be paid prior to payment of any common stock dividends

Managerial Finance



The Capital Market

Major Securities Exchange

1. Organized Securities ExchangesProvide the marketplace in which firms can raise funds through the sale of new securities and in which purchasers can resell securities

Tangible organozations on whose premises outstanding securities are resold

New York Stock Exchange (NYSE)

Jakarta Stock Exchange (JSX)

To make transaction on the “floor”, individual or firm must own a “seat” on the exchange

For “listing”, a firm must file an application and meet a number requirements

Have at least 2000 stockholders with 100 ≤ shares

Min 1,1 million share of publicly held stock

Earning power of $2,5 million before taxes

Net tangible asset of $16 million

A total of $18 million in market value of publicly traded shares, etc

Persyaratan“listing”?

Managerial Finance



The Capital Market

Major Securities Exchange

2. The-Over-the-Counter Exchange (OTC)

Not an organization, but an intangible market for the purchase and sale of securities not listed by the organized exchange

The market price of OTC securities results from a matching of the forces of supply and demand for securities by traders known as dealer

National Association of Securities Dealers Automated Quotation (NASDAQ)

Sophisticated telecommunications system that provide current bid and ask prices on thousands of actively traded

The bid price is the highest price offered by dealer to purchase a given security

The ask price is the lowest price at which the dealer is willing to sell the security

Automatedmatched

Jakarta Automated Trading System(JATS) ?

Managerial Finance


Interest Rates and Required Return

The level of funds flow between suppliers and demanders can significantly affect economic growth

Interest rates and required returns represent the costs of obtaining various forms of financing

?

?Growth results from the interaction of variety of economic factors, such as the money supply, trade balance, and economic policy, that affect the cost of money – the interest rate or required return

?The level of interest rate acts as regulating device that controls the flow of funds ?The lower the interest rate, the greater the funds flow and therefore the greater the economic growth, and vice versa

?

Managerial Finance



Interest Rate Fundamentals

The compensation paid by the borrower of funds to the lender; from the borrower’s point of view, the cost of borrowing funds

Interest rate

Required Return

The level of return expected on equity investment

Ignoring risk factors, the nominal or actual interest rate (cost of funds) results from the real rate of interest adjusted for inflationary expectation and liquidity preferences

General preferences of investors for shorter-term securities

Rate that creates an equilibrium between the supply of savings and the demand for investments funds in perfect world, without inflation, where funds suppliers and demanders have no liquidity preferences, and all outcomes are certain

The actual rate of interest chargeb by the supplier of funds and paid by demander

DSo

S1

ko*

k1*

D

So

S1

Funds supplied/demandedSo=D S1=D

Re

al

Ra

te o

f In

tere

st

k1= k* + IE + IC1

k1= RF + IC1

Risk-freerate

RiskPremium

The required return on a risk-free asset, tipically a three-month US Treasury Bill (Obligasi Pemerintah)

Managerial Finance



Term Structure of Interest Rates

The relationship between the interest rate or rate of return and the time to maturity

Annual rate of interest earned on a security purchased on a given day and held to maturity

Yield to maturity

Yield Curve

A Graph that depicts the relationship between the yield to maturity (y-axis) and the time to maturity (x-axis)

7

8

9

10

13

14

15

16

17

0 5 10 15 20 25 30

May 22, 1981

October 30, 1987

September 29, 1989

Inverted Yield CurveA Downward-sloping yield curve that indicates generally cheaper long-term borrowing costs than short-term borrowing costs

Normal Yield CurveAn upward-sloping yield curve that indicates generally cheaper short-term borrowing costs than long-term- borrowing costs

It reflects similar borrowing costs for both short- and longer-term loans

Managerial Finance




Theory of Term Structure

1. Expectation Hypothesis

Theory suggesting that the yield curve reflects investor expectations about future interest rates; an increasing inflation expectation results in upward-sloping yield curve, and vice versa

2. Liquidity Preference Theory

Theory suggesting that for any given issuer, long-term interest rates tend to be higher than sort-term rates due to the lower liquidity and higher responsiveness to general interest rate movements of longer term securities; causes the yield curve to be upward-sloping

3. Market Segmentation Theory

Theory suggesting that the market for loans is segmented based on maturity and that the sources of supply and demand for loans, within each segment, determine its prevailing interest rate; the slope of yield curve is determines by the geberal relationship between the prevailing rates in each segment

Example

Nominal interestRate, RFt

RealinterestRate, k*

InflationExpectation,IEt

Maturity, t (1) (2) [(1) - (2)]

3 Months

1 years

5 years

30 years

5,17%

6,51

8,38

9,05

2,00%

2,00

2,00

2,00

3,17%

4,51

6,38

7,05

Managerial Finance




Risk and Return

The expectation that for accepting greater risk, investors must be compensated with greater returns

Risk-Return Trade-off

An

nu

al R

etu

rn (

cost

to

issu

er)

Risk

US Treasury Bills

Prime-Grade Commercial Paper

Investment-Grade Notes

Investment-Grade Bonds

Medium-Grade Bonds

Preferred Stocks

Qualtiy Common Stocks

Speculative Common Stocks

Managerial Finance


Chapter 3

Financial Statement

Managerial Finance


The Stockholders’ Report

A Stockholder’s report summarizes and documents a publicly held corporation’s financial activities over the year. Who receives theses reports? What types of informastion do you think they typically include? Why are they important? ?

1. Regulator or Goverments2. Creditor (lenders)3. Owners4. Management

1. The letter to stockholdersEvents, management philosophy, strategy, and action

2. Financial statements(a) the income statemnet, (b) the balance sheet, (c) the statement of retained earnings, and (d) the statements of cash flows

3. Other featureFirm activities, new product, R&D, etc

An important vehicle for influencing owners’ perceptions of the company and its future outlook.

The stockholders’ report may effect expected risk, return, stock price, and the viability of the firm

?

Managerial Finance


Basic Financial Statements

Income Statement

Provide a financial summary of the operating results during a specified period

Sales revenue

Less: Cost of goods sold

Gross profits

Less: Operating expenses

Selling expense

General and administrative expense

Depreciation expense

Total operating expense

Operating profits

Less: Interest expense

Net profits before taxes

Less: Taxes (rate = 40%)

Net profits after taxes

Less: Prefered stock dividends

Earning available for common stockholders

Earning per share (EPS)

$ 1.700

1.000

$ 700

330

$ 370

70

$ 300

120

$ 180

10

$ 170

$ 1,70

$ 80

150

100

ABC Corporation Income Statement ($000) for the year Ended December 31, 2000

The number of common stock= 100.000

Managerial Finance



Balance Sheet

Summary statement of the firm’s financial position at given point in time

ABC Corporation Balance Sheets ($000)

Current assets Cash Marketable securities Account receivable Inventories Total current assetsGross fixed assets (at cost) Land and buildings Machinery and equipment Furniture and fixtures Vehicles Other Total gross fixed assets (at cost)Less: Accumulated depriciationNet fixed assets Total assets

Assets 2000 2001

$ 400 $ 300 600 200 400 500 600 900$ 2000 $ 1900

$ 1200 $ 1050 850 800 300 220 100 80 50 50$ 2500 $ 2200 1300 1200$ 1200 $ 1000$ 3200 $ 2900

December 31

Managerial Finance



Balance Sheet

Summary statement of the firm’s financial position at given point in time

ABC Corporation Balance Sheets ($000)

Current liabilities Accounts payable Notes payable Accruals Total current liabilitiesLong-term debt Total liabilitiesStockholders’ equity Preferred stock Common stock- $1,20 par, 100000 shares outstanding in 2000&2001 Paid in capital in excess of par on common stock Retained earnings Total stockholders’ equity Total liabilities and stockholders’ equity

Liabilities and stockholders’ equity 2000 2001

$ 700 $ 500 600 700 100 200$ 1400 $ 1400$ 600 $ 400$ 2000 $ 1800

$ 100 $ 100 120 120

380 380 600 500$ 1200 $ 1100$ 3200 $ 2900

December 31

Managerial Finance



Statement of Retained Earning

ABC Corporation Statement of Retained Earnings ($000) for the end yearEnded December, 2001

Retained earnings balance (january 1, 2001) $500Plus: Net Profit after taxes (for 2001) 180Less: Cash dividend (paid during 2001) Preferred stock ($10) Common stock ( 70) 80

Retanined earnings balance (Dec 31, 2001) $600

Reconciles the net income earned during a given year, and any cash dividends paid, with the change in retained earnings between the start and end of that year

Managerial Finance



Statement of Cash Flows

ABC Corporation Statement of Cash Flows ($000) for the end yearEnded December, 2001

Cash Flow from Operating Activities Net Profits after taxes $ 180 Depreciation 100 Decrease in account receivable 100 Decrease in inventories 300 Increase in account payable 200 Decrease in accruals (100) Cash provided by operating $780Cash Flow from investment activities Increase in gross fixed asset ($300) Changes in business interest 0 Cash used for investment activities (300)Cash Flow from financing Activities Decrease in notes payable ($100) Increase in long-term debts 200 Changes in stockholders’ equity 0 Dividends paid (80) Cash provided by financing activities 20

Net increase in cash and marketable securities $500

Provides a summary of the firm’s operating, investment, and financing cash flows, and reconciles them with changes in its cash and marketable securities during the period of concern

managerial finance magister manajemen-universitas gunadarma-1 budi hermana program magister...

Documents

financial manager finance

role of finance

area of finance

financial manager slide

business firm

financial product

financial affairs

managerial skill