Finanças

Study Guide

These are guidelines to help students to understand the key components of each chapter. They will also be the focus of your exam. However, the exam might cover more than the guidelines.

Topic I, Tools: Financial Statement Analysis

Chapter 1: Overview • Careers in finance • Business organization • Financial staff’s responsibility • Goals of the corporation

Chapter 3: Financial statements • Balance sheet and income statement • Preparing cash flow statement from balance sheet and income statement • Free Cash Flow (FCF)

Chapter 4: Analysis of financial statements • Five groups of ratios • Do Pont system and decomposition ▪ $1M equity--$2M TA--$10M Sales—$2M NI ▪ PM20%--ROA100%--ROE 200% ➢ Find ROE? Given PM, TATO, EM/capital structure ➢ Find PM/NI, TATO/A, Capital structure;

Topic II, Tools: Time Value of Money and Risk and Return

Chapter 5: Time value of money

• Future value (ex. Saving) o How much money you will have in 10 years if you deposit $100 today, given interest 5%? • Present value (Saving) o How much do you need to deposit today if you want to accumulate $40,000 in 5 years, given interest 5%? • Annuity o PMT of an annuity (Car loan): N=60m I=5%/year PV=-20,000 FV=0 PMT=? o PV of an annuity ▪ How much can I borrow? N=60m I=5% FV=0 PMT=-300 PV=? ▪ ( find a real value of lottery) N=5 I=10% PMT=1M FV=0 PV=? o FV of an annuity (Saving a fix amount every year) N=5 I=10% PMT=1M PV=0 FV=? • Perpetuity (preferred stock) • Using calculator and tables: o Correctly input five variables ( N, I, PV, PMT, FV) ▪ N is the number of payment periods ▪ I is the interest rate per period ▪ The amount and sign of PV, PMT, FV depend on the time, the amount of the cash flow and