Financial Management questions

1)

a) Explain the goal and major financial decisions in corporate finance.

b) Explain the major components of the entrepreneurial process.

c) Explain at least three major areas with the financial decisions could differ between established firms and new ventures? (Hint: discuss from both the operation and financing perspectives.)

2)

Explain the five major stages in the life cycle of a successful new venture? Describe the major
activities and
sources of financing for each stage.

3)

In its first year, JustWin Company had revenues of $125,000 and cost of goods sold of $81,250, which was the only variable cost. Depreciation was $20,000, and cash costs were $5,000 in financing costs, admin expenses of $50,000, and $45,000 in marketing expenses – all of which were fixed. What is the survival breakeven revenue?

R	Revenue	??
VC	Variable Cost	??
CFC	Cash Fixed Cost	??
SR	Survival Revenue	??

4)

Testcom Corp. has net income of $2 million, an effective tax rate of 35%, interest expense of $400,000, an asset turnover of 2, and $14 million in total assets, of which $7 million is debt. Use the DuPont system to calculate its profit margin, asset turnover, equity multiplier, and return on equity.

profit margin = ??

asset turnover = ??

equity multiplier = ??

return on equity = ??

Following is a partial 2012 corporate income tax schedule:

Taxable Income

Beginning Ending Bracket Marginal

Amount Amount Amount Tax Rate

$1 $50,000 $50,000 0.15

$50,000 $75,000 $25,000 0.25

$75,000 $100,000 $25,000 0.34

For a corporation with taxable income of $60,000, calculate:

Total tax = ??

Average tax rate = ??

Marginal tax rate = ??

 

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